16 May 1994 External T.I. 9403345 - EDUCATION TC FOR UI RECIPIENTS ATTENDING SCHOOL AT NO COST

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.

Principal Issues:

whether UI recipients attending classes for which no tuition
is charged can claim education tax credit

Position TAKEN:

issue not resolved as it is a question of fact as to whether
the student is receiving a benefit -need to review
UI/college documentation to know

Reasons FOR POSITION TAKEN:

while no charge courses sound like a benefit, if the course
is available to public at large for no cost, then the
individual did not receive a benefit

A. Humenuk
XXXXXXXXXX 940334

May 16, 1994

Dear XXXXXXXXXX:

Re: Education Tax Credit

We are replying to your letter of January 24, 1994 concerning the availablity of the education tax credit to certain students enrolled in full time programs at XXXXXXXXXX.

The students in question are enrolled in various programs offered by XXXXXXXXXX in conjunction with the Department of Employment and Immigration. It is our understanding that these programs form part of the government retraining
program and are only available to qualified individuals who are receiving unemployment insurance benefits. While the students typically do not receive any form of allowance, grant or reimbursement of expenses in respect of the program, they are entitled to continued benefits under the Unemployment Insurance Act. You have asked whether these students are entitled to an education tax credit despite the fact they are not required to pay tuition for the program in which they are registered.

Your question involves a finding based on fact which cannot be accurately made without a complete review of all relevant
facts and documentation pertaining to the specific situation. However, we would like to offer the following comments which may be of assistance to you.

The enclosed Interpretation Bulletin IT-515R "Education Tax Credit" explains the meaning of the terms "qualifying educational program" and "designated educational institution" as defined in section 118.6 of the Income Tax Act. For the purpose of our response we will assume that the institution is a designated educational institution as described in paragraph 12 of the bulletin and that the program of courses is a "qualifying educational program" as described in paragraphs 14 -16 of the bulletin.

While there is no requirement for a student to pay tuition fees in order to claim the education tax credit, the credit
is generally not available to a student who receives an allowance, benefit, grant or reimbursement of expenses (other than a scholarship, fellowship, bursary, prize for achievement in a field of endeavour ordinarily carried on by the student or loan granted in accordance with the Canada Student Loans Act or Student Loans and Scholarships Act of the Province of Quebec) from an unrelated person or organization. It is a question of fact as to whether a particular student has received a benefit in any particular situation.

While there is a presumption that "free tuition" would normally constitute a benefit and that the student would accordingly not be entitled to the education tax credit, it is our view that a student participating in a program which is available to the public at large would not be considered to have received a benefit solely by reason of the fact that tuition was not charged for that program. If, on the other hand, the Department of Employment and Immigration has paid the tuition on behalf of these students, the education tax credit would not be available to them. In order to provide you with a more definitive reply, we would need to review the arrangements made between the college and the Department of Employment and Immigration as well as the criteria by which individuals are chosen for participation in the program.

However, for greater certainty the education tax credit would not be available to those students who are in receipt of an allowance for travelling or for child care to enable them to attend the classes.

We regret that our responsive could not be more definitive.

Yours truly,

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