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: Eligibility of students enrolled in "Directed Field Studies" programs for the education tax credit.
Position: Question of Fact - See general comments below.
Reasons: A student may work in a related field or industry while enrolled in University, however such a student must otherwise meet the criteria in subsection 118.6(1) to be eligible to claim the education tax credit.
XXXXXXXXXX 2007-023757
Mike Thomson
October 16, 2007
Re: Directed Field Studies and the Education Tax Credit
This is in reply to your letter dated May 18, 2007, wherein you sought advice regarding whether students enrolled in Directed Field Studies ("DFS") programs at a particular educational institution are eligible for the education tax credit (the "ETC") pursuant to section 118.6 of the Income Tax Act (the "Act").
We understand that a DFS program is an educational program in which students are required to complete both course work and a work term during which they are employed in positions related to their field of study. A DFS program differs from a co-operative program described in paragraph seven of Interpretation Bulletin IT-515R2, "Education Tax Credit" as the course work and employment would be completed during the same semesters.
The situation outlined in your letter appears to relate to a factual one, involving a specific group of taxpayers. 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. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office ("TSO") for their views. A list of TSOs is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.
The CRA's general view regarding the ETC is contained in Interpretation Bulletin IT-515R2 Education Tax Credit (the "Bulletin"), which is also available on the CRA web site at http://www.cra-arc.gc.ca.
Pursuant to subsection 118.6(2) of the Act, a student's ETC is based on the number of months that the student is enrolled in a "qualifying educational program" as a full-time student at a "designated educational institution". A part-time student may also be eligible for the ETC if he or she is enrolled in a "specified educational program". These terms are defined in subsection 118.6(1) of the Act and are explained in more detail in the Bulletin.
A "designated educational institution" is defined in subsection 118.6(1) to include those educational institutions in Canada that are either:
(i) a university, college, or other educational institution designated by the Lieutenant Governor in Council of a province as a specified educational institution under the Canada Student Loans Act, designated by an appropriate authority under the Canada Student Financial Assistance Act, or designated by the Minister of Higher Education and Science of the Province of Quebec for the purposes of An Act respecting financial assistance for students of the Province of Quebec, or
(ii) certified by the Minister of Human Resources and Skills Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for, or improve a person's skills in, an occupation.
A designated educational institution may issue a T2202 or T2202A to a full-time student enrolled in a "qualifying education program" or to a part-time student enrolled in a "specified educational program".
The term "qualifying educational program" requires, in part, that the program run for at least 3 consecutive weeks and must provide that each student taking the program spend at least 10 hours per week on courses or work in the program. If the student receives any benefit in respect of the program from a person with whom the student was dealing at arm's length (other than certain forms of financial assistance), the program is not a qualifying educational program.
The phrase "enrolled...as a full-time student" is not defined in the Act. However, paragraphs five to seven of the Bulletin provide general comments regarding the CRA's interpretation of this term. The CRA generally relies on the institution's determination as to whether the individual is registered as a full-time student. However, as indicated in paragraph five of the Bulletin, the requirement for enrolment as a full-time student at a designated educational institution must ultimately be met on the basis of the facts of each case.
While in many instances, a student will be considered a full-time student for ETC purposes if the student's program is a qualifying educational program, these tests remain distinct and are not necessarily the same. For example, an institution may base its full-time enrolment requirements on a minimum amount of credits, whereas a qualifying educational program requires that the student spend a minimum numbers of hours (10 hours per week) on courses or work in the program, which may include both lecturing time and a reasonable estimate of time for work assignments. In this regard, time spent related to a student's employment cannot be counted towards satisfying the hourly requirement for a qualifying educational program, even in circumstances where the educational institution recognizes the employment as a work term. See paragraphs 10 and 11 of the Bulletin for further detail on the types of work that may be considered in determining if the hourly requirement is satisfied.
Where the student is enrolled at a designated educational institution but does not qualify as a full-time student, the student may still qualify for the part-time ETC. To qualify, the student must be enrolled in a "specified educational program" that provides that each student in the program spend not less than 12 hours in the month on courses in the program. A specified educational program means a program that would be a qualifying educational program if the definition for that term were read without reference to the 10 hours per week.
If the institution offering the program satisfies itself that it meets the definition of a designated educational institution and that the student is enrolled in a program that meets the above noted criteria for either a qualifying educational program or a specified educational program, the institution may issue a T2202 to the student.
However, the receipt of a T2202 from an institution does not guarantee that the student will qualify for the ETC. Eligibility for the ETC is determined on a case-by-case basis. The student must satisfy all the conditions of subsection 118.6(2) in order to qualify. The CRA can only determine whether the student has met these requirements after the student's specific fact situation is reviewed.
We trust that our comments will be of assistance to you.
Yours truly,
Robin Maley
For Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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