Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether a school should be issuing T2202As to its "Mature Students". The students' tuition is funded by the provincial government.
Position: T2202As should not be issued.
Reasons: In relation to the Mature students, the program appears to not be a qualifying educational program due to the benefit of free tuition not available to all students in the program. Pursuant to paragraph (a) of the definition "qualifying educational program" in subsection 118.6(1), where a particular student receives a benefit from an arm's length person (other than a benefit described in subparagraphs (a)(i), (ii) or (iii) of the definition), the program will not be a qualifying educational program to that student. As noted in paragraph 16 of IT-515R2, "free tuition" is not considered to be a benefit where the program is available to the public at large at no cost. However, where a particular program is offered to some students for tuition, and to others free of charge, the students receiving free tuition are considered to be receiving a benefit.
XXXXXXXXXX 2005-012734
R. Maley
June 6, 2005
Dear XXXXXXXXXX:
Re: The Education Tax Credit - subsection 118.6(2) of the Income Tax Act
This is in reply to your letter of April 21, 2005 requesting our comments on the responsibility of the XXXXXXXXXX ("the School") to provide T2202As to its "Mature Students" who complete courses the School offers that are provincially approved high school credit courses (Vocational and Technology). At issue is the eligibility of Mature Students to claim the "education tax credit" pursuant to subsection 118.6(2) of the Income Tax Act ("the Act").
You advise that the School's Mature Students are students at least 19 years of age, who have not finished high school, who have been out of school for six months or more, and whose last high school class has graduated. Your Mature Students do not pay any tuition because the provincial government considers them to be high school students, and the School to be providing them their high school education. As such, the provincial government pays their tuition.
You have also explained that the School also offers its services to high school students at the Grade 11 and 12 levels and to high school graduates. The high school graduates are required to pay tuition for their training. Upon successful completion of your School's program, all students receive a certificate.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an Advance Income Tax Ruling request. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments.
Subsection 118.6(2) of the Act authorizes an education tax credit for the period in which the student is enrolled in a qualifying educational program as a full time student at a designated educational institution as defined in subsection 118.6(1) of the Act. These terms are explained in more detail in Interpretation Bulletin IT-515R2 ("the Bulletin") which is available on the Canada Revenue Agency website at http://www.cra-arc.gc.ca/E/pub/tp/it515r2/README.html .
Paragraph 12 of the Bulletin states that for a student enrolled at a designated educational institution, e.g., a college, the program must be at a post-secondary level in order to qualify for the credit. Where the program is not at a post-secondary level, the educational institution must be certified by the Minister of Human Resources Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for or improves a person's skill in an occupation, if the program is to qualify as a "qualifying educational program". Paragraph 1 of the Bulletin explains what is meant by obtaining or improving skills and states that the facts pertaining to each program will be considered in making the determination.
Your letter indicates that the School's academic program has a level of instruction at a secondary school level. You have also confirmed that the School is a "designated educational institution". However, your letter does not indicate whether the School has been certified by the Minister of Human Resources Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for or improves a person's skill in an occupation in order for the program to qualify as a "qualifying educational program". If it has not been so certified, the School's academic program would not be a qualifying educational program in respect of any of its students for purposes of the education tax credit. If the School has been so certified, the following additional comments are provided in respect of the effects of free tuition accorded to Mature Students.
While there is no requirement for a student to pay tuition fees in order to claim the education tax credit, the credit is not available to a student who receives, from an arm's length person, any allowance, benefit, grant or reimbursement of expenses other than certain benefits described in subparagraphs (a)(i) to (iii) of the definition "qualifying educational program (which in general terms make an exception for recipients of scholarships, certain student loans and government assistance under programs established under the authority of the Department of Human Resources Development Act or similar provincial programs).
As indicated in paragraph 16 of the Bulletin, "free tuition" is not considered to be a benefit if the program is available to the public at large at no cost. However, where a particular program is offered to some students for tuition, and to others free of charge, the students receiving free tuition are considered to be receiving a benefit. For this reason, it would appear that the School's Mature Students would not qualify for the education tax credit and the School should not issue T2202As to them.
While we hope that our comments will be of assistance to you, they are given in accordance with the practice referred to in paragraph 22 of IC 70-6R5 and are not binding on the CRA in respect of any particular situation.
Yours truly,
Roxane Brazeau-LeBlond, CA
Manager
Aboriginal and Non-Profit Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch
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