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) Whether the fees paid by an individual for the training to obtain a XXXXXXXXXX in XXXXXXXXXX are eligible for the tuition tax credit.
2) Whether the fees paid by an individual for the examination to obtain a XXXXXXXXXX in XXXXXXXXXX are eligible for the tuition tax credit.
Position: 1) Question of fact, it depends
2) If the fee paid is in excess of $100, then likely yes.
Reasons: 1) If the specific educational institution that the student is enrolled in meets the requirements of subparagraph 118.5(1)(a)(i) or (ii), the student will likely be eligible for the tuition tax credit. 2) The exam is required to license an individual to practice a trade in Canada and the fees are paid to a provincial ministry.
XXXXXXXXXX 2019-080366
Chris Brennan CPA, CA
October 3, 2019
Dear XXXXXXXXXX:
Re: Truck driver training and exam fees
This is in reply to your email dated April 4th, 2019, where you have requested our comments on whether fees paid by an individual for the mandatory entry-level training (MELT) course and XXXXXXXXXX (Class 1 licence) exam would qualify for the tuition tax credit.
It is our understanding that, to obtain a Class 1 licence in XXXXXXXXXX, individuals (at least XXXXXXXXXX years of age) are required to complete the MELT course, which consists of a minimum of XXXXXXXXXX hours of training, and pass the Class 1 licence exam. MELT courses are provided by driver training schools that are certified by XXXXXXXXXX Government Insurance, XXXXXXXXXX. XXXXXXXXXX. The fees for the MELT course are paid to the driver training schools. Class 1 licence exams are administered and undertaken with XXXXXXXXXX examiners. Class 1 licence exam fees are paid to XXXXXXXXXX.
This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R9, Advance Income Tax Rulings and Technical Interpretations.
MELT course fees
An individual must meet the requirements of subsection 118.5(1) of the Income Tax Act to qualify for the tuition tax credit. Our views on the tuition tax credit are discussed in Income Tax Folio S1-F2-C2, Tuition Tax Credit (the “Tuition Folio”).
As indicated in paragraph 2.3 of the Tuition Folio, pursuant to paragraph 118.5(1)(a) of 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 (in accordance with subsection 118.5(1.1)). Specifically, an educational institution in Canada whose tuition fees may be eligible for the tuition tax credit is an educational institution in Canada that is:
a) a university, college or other educational institution providing courses at a post-secondary school level (subparagraph 118.5(1)(a)(i)); or
b) certified by the Minister of Employment and Social Development (ESD) 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 (subparagraph 118.5(1)(a)(ii)).
It is the specific educational institution that a student is enrolled with that must meet the requirements of subparagraph 118.5(1)(a)(i) or (ii) of the Act. Paragraph 2.5 of the Tuition Folio provides more information regarding the eligibility of an institution for purposes of subparagraph 118.5(1)(a)(i). Based on the information available, the driver training schools that appear to be eligible educational institutions, for the purposes of subparagraph 118.5(1)(a)(i), are XXXXXXXXXX.
Driver training schools that are not educational institutions described in subparagraph 118.5(1)(a)(i), may be eligible educational institutions, for the purposes of subparagraph 118.5(1)(a)(ii), if they are certified by the Minister of ESD 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.
Paragraph 2.9 of the Tuition Folio states that the phrase to obtain skills for an occupation means that there must be sufficient skills to be acquired in the course to enable the student to work at an occupation. The phrase to improve the student’s skills in an occupation implies that the student already possesses sufficient skills to enable the student to work at an occupation and the course must be capable of improving those skills. An occupation, for this purpose, is considered to be a profession, vocation, trade, or other particular employment. It is our view that the driver training schools provide courses that furnish a person with skills, or improve a person’s skills, in an occupation.
It is our view that fees paid for the MELT course (when the fees paid are in excess of $100), by an individual, to an education institution as described in either paragraph 118.5(1)(a)(i) or 118.5(1)(a)(ii), would likely be eligible for the tuition tax credit, provided that the fees are not: 1) paid on behalf of, or reimbursed to, an individual by the individual's employer unless the amount is required to be included in computing the individual's income, or; 2) paid under a federal or provincial job training program for the benefit of an individual who is entitled to a reimbursement or assistance in respect of the program, unless the amount of the reimbursement or assistance is included in the individual's income.
Class 1 license exam
Pursuant to paragraph 118.5(1)(d), fees paid in respect of an occupational, trade, or professional examination are eligible for the tuition tax credit, with certain exceptions. An occupational, trade, or professional examination is one that satisfies all of the following:
a) it is an examination required in order for the individual to obtain a professional status recognized under a federal or provincial statute, or to be licensed or certified as a tradesperson;
b) the status, licence or certification referred to in 1) allows the individual to practice the profession or trade in Canada; and
c) the fees in respect of the examination are paid to an educational institution referred to in paragraph 118.5(1)(a), a professional association, provincial ministry or other similar institution.
The Class 1 licence exam is required to licence an individual to practice the trade of truck driving in the province of XXXXXXXXXX. Furthermore, the fees paid by the individual are paid to XXXXXXXXXX. Therefore, it is our view that exam fees paid, when the exam fees paid are in excess of $100, by individuals to XXXXXXXXXX for the Class 1 licence exam would be eligible for the tuition tax credit pursuant to paragraph 118.5(1)(d). The fees for the Class 1 licence exam can not be: 1) paid on behalf of, or reimbursed to, an individual by the individual's employer unless the amount is required to be included in computing the individual's income, or; 2) paid under a federal or provincial job training program for the benefit of an individual who is entitled to a reimbursement or assistance in respect of the program, unless the amount of the reimbursement or assistance is included in the individual's income.
Yours truly,
Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
c.c. XXXXXXXXXX
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