27 January 2006 External T.I. 2006-0167441E5 - Eligible tuition fees

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: Are fees paid by students to attend post-secondary courses at a qualifying educational institution on an audit basis eligible tuition fees for purposes of the tuition and education tax credits under the Act?

Position: Question of fact, but likely yes

Reasons: wording of the legislation

								2006-016744
XXXXXXXXXX 							Kimberly Duval
(613) 599-6054
January 27, 2006

Dear XXXXXXXXXX:

Re: Eligible Tuition Fees

This is in response to your e-mail correspondence of January 19, 2006 requesting our comments as to whether certain fees paid by students of XXXXXXXXXX (the "College") would be considered eligible tuition fees for purposes of the tuition and education tax credits where the fees were in respect of courses taken on an audit basis. You explain in your e-mail that students enrolled in a course on an audit basis pay half the regular course fee to attend lectures and to receive the course material. However, they are not permitted to write the course exam, nor are they awarded a grade upon completion of the course.

The situation outlined in your e-mail appears to relate to a factual one, involving a specific taxpayer. It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.

The Income Tax Act does not define the term "tuition fees" for the purposes of the Act. Therefore, the ordinary or common meaning of the term prevails. The Concise Oxford Dictionary defines the word 'tuition' to mean "teaching, instruction, especially as a thing to be paid for". The Canada Revenue Agency ("CRA") has provided a list of eligible tuition fees in paragraph 26 of the Interpretation Bulletin IT-516R2, Tuition Tax Credit, a copy of which is available on the CRA website at http://www.cra.gc.ca. Generally, these fees are considered eligible fees as they relate to the process of instruction whereas the fees described in paragraph 27 of IT-516R2 relate to fees paid for some other goods or services provided by the educational institution and are therefore, not considered eligible tuition fees for purposes of the Act.

In our view, fees paid to the College in respect of post-secondary level courses taken on an audit basis represent fees paid by the student for instruction and/or teaching. As such, these tuition fees will be considered eligible tuition fees for purposes of the tuition tax credit under subsection 118.5(1) of the Act, provided the other requirements of the provision are satisfied.

We are unable to provide you with our comments as to whether enrolment in these types of courses would qualify the student for the education tax credit. As you know, the education tax credit in subsection 118.6(2) of the Act is available to certain students who are enrolled in a "qualifying educational program" or a "specified educational program". These terms are defined in subsection 118.6(1) of the Act and we note, for example, that each student must meet a specific predetermined hour requirement on courses or work in the program. Whether or not this requirement would be met in the circumstances, is a question of fact.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and
Regulatory Affairs Branch