19 March 2012 External T.I. 2011-0402091E5 - tuition education and textbook 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: 1. What additional claim or benefit, beyond the costs incurred, does full-time or part-time status provide to the individual that is enrolled at a flight training school?
2. What constitutes course instruction in a flight training school? Does it include ground school and ground briefing?

Position: 1. The individual may be able to claim the education and post-secondary textbook tax credit if certain conditions are met. 2.Course instruction includes the hours spent on the dual and solo flying hours required to obtain the licence or rating, to the minimum flight training requirements of Transport Canada set out in paragraph 29 of IT-516R2 and hours spent in ground school, ground briefings and flight simulators that are part of the licence or rating program.

Reasons: The legislation.

XXXXXXXXXX
2011-040209
N. Shea-Farrow
March 19, 2012

Dear XXXXXXXXXX :

Re: Technical Interpretation Request - Form TL11B

This is a response to your e-mail of April 6, 2011 regarding form TL11B - Tuition, Education, and Textbook amounts Certificate- Flying School or Club in which you asked the following questions:

1. What additional claim or benefit, beyond the costs incurred, does full-time or part-time status provide to the individual that is enrolled at a flight training school?

2. What constitutes course instruction in a flight training school? Does it include ground school and ground briefing?

Comments

The CRA's general view regarding the tuition tax credit is contained in Interpretation Bulletin IT-516R2 , Tuition Tax Credit (IT-516R2) and the education tax credit is contained in Interpretation Bulletin IT-515R2 Education Tax Credit (IT- 515R2), which are both available on the CRA web site at www.cra-arc.gc.ca.

Subject to certain conditions outlined in paragraph 8 of IT-516R2 fees paid by a student enrolled at a flying school or club certified by the Minister of Human Resources and Skills Development are eligible tuition fees under paragraph 118.5(1)(a) of the Income Tax Act (the "Act"), for purposes of the tuition tax credit, only if the student is taking flying lessons to acquire skills or improve his or her skills in an occupation, such as a commercial pilot or a professional instructor. Fees paid for the cost of dual and solo flying hours required to obtain the licence or rating to the minimum flight training requirements of Transport Canada set out in paragraph 29 of IT-516R2 are eligible tuition fees. Fees paid for ground school, ground briefings and flight simulators are also eligible for the tuition tax credit but costs incurred by a student in flying a personal aircraft while taking a course at a flying training school or club are not eligible. The tuition tax credit equals the tuition amount multiplied by the appropriate percentage which is currently 15%.

Pursuant to subsection 118.6(2) of the Act, a full-time student may claim an education amount of $400 for each month 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 claim an education amount of $120 for each month if he or she is enrolled in a "specified educational program" at a "designated educational institution" that provides that each student in the program spend not less than 12 hours in the month on courses in the program. These terms are defined in subsection 118.6(1) of the Act and are explained in more detail in IT-515R2. For each month that a student is able to claim an education amount, the student may also claim a textbook amount of $65 for full-time students and $20 for part-time students pursuant to subsection 118.6(2.1) of the Act. The education tax credit and the post-secondary textbook tax credit each equal the total of the respective education amounts and textbook amounts multiplied by the appropriate percentage which is currently 15%.

A designated educational institution includes an educational institution in Canada that is 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.

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 and in respect of a program at a designated educational institution. Paragraph 11 of IT-515R2 states that courses or work in the program (described as course instruction or work in the program on TL11B form) includes all forms of direct instruction, such as lectures, practical training or laboratory work. IT- 515R2 does not specifically address what constitutes courses or work in the program for flying schools or clubs, but in our opinion it would include the hours spent on the dual and solo flying hours required to obtain the licence or rating, to the minimum flight training requirements of Transport Canada set out in paragraph 29 of IT-516R2 and hours spent in ground school, ground briefings and flight simulators that are part of that licencing or rating program. It would not include the time a student spends in flying a personal aircraft while taking a course at a flying school or club.

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 term "enrolled...as a full-time student" is not defined in the Act. It should be noted that the requirement for "full-time" enrolment is in paragraph (a) of variable B of subsection 118.6(2) of the Act, and not in the definition of "qualifying educational program". As indicated in paragraph 5 of IT-515R2 the requirement for enrolment as a full-time student at a designated educational institution is a separate test over and above the requirement respecting "qualifying educational program". While in many instances meeting the minimum requirements of a "qualifying educational program" may result in the student also meeting the educational institution's requirements for full-time enrolment, these tests remain, as explained above, distinct and are not necessarily the same.

A student may meet the requirements of a "qualifying educational program" and still not qualify for enrolment as a full-time student at the educational institution. 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. Thus, the CRA must generally rely on the institution's determination as to whether an individual is registered as a full-time student.

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 education tax credit. 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.

We trust our comments will be of assistance.

Sharmini Ratnasingham
Assistant Director
for Director
Financial Industries Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch