11 March 1993 Income Tax Severed Letter 9301955 - Education Tax Credit for CGA Students not Working in Acting

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

                                           A. Humenuk
XXXXXXXXXX                                 (613) 957-2134
                                           930195

Attention: XXXXXXXXXX

March 11, 1993

Dear Sir:

Re: Subsection 118.6(2) of the Income Tax Act (the "Act") and the Education Tax Credit

This is in reply to your letter of March 11, 1992, concerning the recent amendments to subsection 118.6(2) of the Act. Reference is also made to our telephone conversation of February 16, 1993 (XXXXXXXXXX/Humenuk) during which we explained the reasons for the delay in our response and expressed our regrets.

In particular, you ask for the Department's official position on whether students who are taking courses provided by the Certified General Accountants Association XXXXXXXXXX (the Association) by correspondence would qualify for the education credit.

OUR OPINION

As a result of changes to the legislation wherein a student who is enrolled in a qualifying educational program as a full time student need no longer be in full time attendance at the educational institution in order to claim the educational tax credit, the tax credit will be available for 1991 and subsequent taxation years where a student who otherwise qualifies is taking courses by correspondence or is enrolled in a distance education program. Therefore, the comments in paragraphs 8 to 12 of Interpretation Bulletin IT-515 under the heading "Full-Time Attendance" will only be relevant for taxation years prior to 1991.

In order to be entitled to claim the education tax credit, a student must meet the criteria set out in subsection 118.6(2) of the Act. Subsection 118.6(2) of the Act reads, in part, as follows:

"For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula

A x $60 x B

(...)"

"A" has been 17% since 1988. "B" was recently amended to read "B is the number of months in the year during which the individual is enrolled in a qualifying educational program as a full-time student at a designated educational institution, ..." (emphasis ours)

The requirement in subsection 118.6(2) of the Act for enrolment as a full-time student in a qualifying educational program at a designated educational institution must be met on the basis of the facts in each case. The criteria required to be met in order for the program to qualify as a "qualifying educational program" are set out in subsection 118.6(1) of the Act but excludes any such program if

(b) "the program is taken by the student

(i) during a period in respect of which he receives income from an office or employment,

and

(ii) in connection with, or as part of the duties of, that office or employment."

It is our understanding that the Certified General Accountants program (the "CGA program") is administered on a trimester basis with full time enrollment as determined by the Association, to be one course per trimester. Each course is 13 weeks in duration with an average student study commitment of approximately 15 to 20 hours per week. The course materials are designed for independent study and to facilitate fulltime student employment. Students are required to complete weekly assignments which act as a qualifier in order to write the national examinations. It follows that, since the normal course load for the CGA program is one course during a session, a student would qualify for the education credit for a particular month within a session if he enrols for one course and does not receive income during the period from an office or employment in a field related to the CGA program.

In our telephone conversation, you suggested that only students who were required by their employer to enroll in the CGA program would be disqualified from the tax credit by reason of paragraph (b) of the definition of "qualifying education program". In our view the expression "in connection with" has a broader meaning than the adjoining phrase contained in (ii) above, "as part of the duties of" and would include any students who are employed in an accounting related field. Consequently, in view of the foregoing and our understanding of the CGA program, students following correspondence courses in the CGA program would only qualify for the education credit in limited circumstances since such students are ordinarily employed in the accounting field.

While we believe a designated educational institution can certify that the essence of the preamble of the definition of "qualifying educational program" is met and that the student is enrolled as a full-time student at the designated educational institution, we do not think that it is the educational institution's responsibility to make the necessary enquiries in order to ascertain whether the student meets the requirements in paragraphs (a) or (b) of the definition of "qualifying educational program" in subsection 118.6(1) of the Act. Consequently, in Part I of Form T2202, we concur that the designated educational institution's responsibility is to certify that the taxpayer is enrolled as a full-time student at the educational institution and that the relevant requirements in the preamble of the definition in subsection 118.6(1) of "qualifying educational program" have been met. It is the student's responsibility, in Part II of Form T2202, to make the required certifications related to paragraphs (a) and (b) of the definition of "qualifying educational program" in subsection 118.6(1) of the Act. Appropriate changes to Form T2202 will be made in due course.

                    XXXXXXXXXX

While there is no Regulation requiring the educational
institution to issue the prescribed form, it must be
understood that a student's entitlement to the credit is not
complete unless the duly certified form is submitted with
the appropriate tax return.  Furthermore, concern has been
expressed that students who are entitled to the tax credit
may not be aware that the credit is available to them unless
such information is communciated to them by some means.
                    XXXXXXXXXX

we would like to stress the fact that the educational institution's certification and issuance of the form is in no way dependant upon the prior certification by the student.

Please note as well that Interpretation Bulletin IT-515 is undergoing a review at the present time, to reflect the recent amendments to section 118.6 of the Act, which will result in the issue of a Special Release in the near future. In addition, the June 1992 Notice of Ways and Means Motion proposes two changes to section 118.6 effective in 1992. The first amendment would increase from $60 to $80 the monthly amount used in the formula to calculate the credit. Second, under specified conditions, the requirement that a student be enrolled on a full-time basis may be removed for students with mental or physical impairment.

We trust our comments will help to clarify the Department's position in this matter.

Yours truly, J.A. Szeszycki for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch