8 August 2013 Internal T.I. 2012-0447351I7 - TTC - Non-transferable professional credit courses

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 the fact that the professional course credits are non-transferrable to a university academic program prevents a student from claiming the tuition fees

Position: No

Reasons: The legislation.

August 8, 2013

Individuals Returns Directorate Income Tax Rulings Directorate
Assessment and Benefit Services Branch Business and Employment Division
Legislation Section Ananthy Mahendran
905-721-5204

Attention: Marc Grignon 2012-044735
Senior Programs Officer

Tuition Tax Credit - Fees Paid to the XXXXXXXXXX Professional Courses

This is in response to your e-mail query wherein you requested our views as to whether the fact that the professional course credits are non-transferrable to a university academic program prevents a student from claiming the tuition fees.

You described a situation where a student attended a twelve-month professional program called "XXXXXXXXXX" at the XXXXXXXXXX School of Business, Carleton University, Ontario. The program is a non-academic, open-enrolment program approved by the Senate of Carleton University. The courses are recognized by the XXXXXXXXXX Professional Association of Ontario and the student was able to achieve all XXXXXXXXXX credits required to write the national knowledge-based examination. Courses were conducted on Saturdays from September 2011 to June 2012 with a new course each month. The student was attending classes every Saturday, approximately for 6 hours, throughout the year. Tuition fees paid for the year-long program exceed $6,000. The course grades achieved by the student are strictly for the purpose of professional designation and cannot be transferred to a university academic program.

Pursuant to paragraph 118.5(1)(a) of the Income Tax Act (the Act), a student who is enrolled at an educational institution in Canada may be eligible to claim a tuition tax credit for eligible tuition fees paid in respect of the year to that educational institution, as long as the total of such fees exceeds $100 [subsection 118.5(1.1)]. Specifically, sub-paragraph 118.5(1)(a)(i) allows for a tuition tax credit for eligible tuition fees paid to a university providing courses at a post-secondary school level. However, sub-paragraphs 118.5(1)(a)(ii.1) to (v) impose restrictions on the student's ability to claim the tuition tax credit.

The general position with respect to these restrictions is stated in Income Tax Folio S1-F2-C2, Tuition Tax Credit, which is available at www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1 /f2/s1-f2-c2-eng.html.

Pursuant to paragraph 118.5(1)(a), tuition fees will not qualify for the tuition tax credit to the extent that they are any of the following:

• Fees that, although paid to a university, are not in respect of courses at a post-secondary school level [Sub-paragraph 118.5(1)(a)(ii.1)].
• Fees paid on behalf of, or reimbursed to, the student by his or her employer and not included in the student's income [Sub-paragraph 118.5(1)(a)(iii)].
• Fees that are part of an allowance received by the student's parent on the student's behalf from an employer and are excluded from the parent's income by reason of subparagraph 6(1)(b)(ix) [Sub-paragraph 118.5(1)(a)(iii.1)].
• Fees for which the student is entitled to receive a reimbursement or any form of assistance under a program of the federal or a provincial government designed to facilitate the entry or re-entry of workers into the labour force, if the amount of the reimbursement or assistance is not included in computing the student's income [Sub-paragraph 118.5(1)(a)(iv)].
• Fees paid on the student's behalf, or fees for which the student is or was entitled to receive a reimbursement, under a federal government program designed to assist athletes, where the fees so paid or reimbursed are not included in computing the student's income [Sub-paragraph 118.5(1)(a)(v)].

None of these provisions require the credits earned from the courses be transferable to a university academic program. In the absence of this requirement in paragraph 118.5(1)(a), there is no legislative basis to prevent a student from claiming the tuition fees, when all other conditions are met.

We hope that these comments will be of assistance to you. If you have any questions or comments, please feel free to contact us.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Customs and Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer.

Yours truly,

Sharmini Ratnasingham
for Director
Business and Employment Division
Income Tax Rulings Directorate