23 February 2009 External T.I. 2008-0301351E5 - Application fees and the tuition tax credit

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: Can application fees paid to an institution in which the student has enrolled qualify for the tuition tax credit if they were paid in relation to a program in which the student was not accepted?

Position: Yes, as long as they otherwise qualify.

Reasons: The student must be enrolled in the institution, but there is no requirement that the application fees must relate to the specific program of study in which the student ultimately is enrolled.

									2008-030135
XXXXXXXXXX 								P. Burnley
(613) 957-3498
February 23, 2009

Dear XXXXXXXXXX :

Re: Application Fees and the Tuition Tax Credit

This is in response to your letter of November 23, 2008, inquiring whether certain application fees paid by students to your institution qualify for the tuition tax credit. You have mentioned that in some situations, students will apply to more than one program offered by your institution to increase their chances of being accepted. Specifically, you have asked whether application fees to be included on the T2202A should be only those application fees related to the program in which the student ultimately enrols, or if the amount should include all application fees paid to the institution.

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 submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings". This Information Circular and other Canada Revenue Agency ("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. Although we cannot comment on your specific situation, we are able to provide the following general comments, which may be of assistance.

Subsection 118.5(1) of the Income Tax Act (the "Act") provides that a tuition tax credit is available "where an individual was during the year a student enrolled at an educational institution in Canada that is

(i) a university, college or other educational institution providing courses at a post-secondary school level, 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 skill in, an occupation,..."

The tax credit is available with respect to "any fees for the individual's tuition paid in respect of the year to the educational institution if the total of those fees exceeds $100".

Paragraph 26 of Interpretation Bulletin IT-516R2, "Tuition Tax Credit" explains that tuition for purpose of the tuition tax credit includes application fees that relate to a program offered by the institution, but only if the student subsequently enrols in the institution. The requirement is that the student is enrolled in the institution, not that the student is enrolled in a particular program. Consequently, all application fees paid to the institution at which the student ultimately enrols can be included on the T2202A provided that all other requirements of section 118.5 of the Act are met.

We trust that these comments will be of assistance.

Yours truly,

Eliza Erskine
A/Manager
Non-Profit Organizations and Aboriginal Issues Section
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch