29 June 1995 Internal T.I. 9506657 - EDUCATION 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.

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 Revenue Canada employees receiving 	reimbursements for CGA or CMA courses taken are entitled 	to the education tax credit.

Position TAKEN:

Typically, no.

Reasons FOR POSITION TAKEN:

	Revenue Canada employees would typically be excluded 	under the exclusions within the definition of 	"qualifying educational program" because they are 	employed in an accounting related occupation (as broadly 	interpreted) and moreover they are being reimbursed by 	their employer.

		June 29, 1995

	Winnipeg Tax Services	HEADQUARTERS
	Public Affairs	Sandra Short
(613) 957-8953
	Attention:  Lynne Labossiere-Ivey
            Problem Resolution Co-ordinator
		950665

Education Tax Credit

This is in reply to your memorandum of March 2, 1995 which queries whether Revenue Canada employees enrolled in CMA or CGA courses outside of their work hours qualify for the education tax credit under subsection 118.6(2) of the Income Tax Act (the "Act").

You indicate that the employees are reimbursed in respect of their tuition fees and such reimbursement is reported as a taxable benefit on their T4 information returns each year. You have noted that paragraph 17 of Interpretation Bulletin IT-515R states that if a student receives an allowance, benefit, grant or reimbursement of expenses....that program is excluded from the definition of a "qualifying educational program" found in subsection 118.6(1) of the Act. An exception to this occurs where the amount reimbursed is brought into income under paragraph 56(1)(n) of the Act. You have asked whether the amounts reimbursed to Revenue Canada employees represent income under paragraph 56(1)(n) of the Act. Secondly, you have noted that paragraph 20 of the bulletin states that the definition of a qualifying educational program excludes any program taken by a student (a) during a period for which the student receives income from an office or employment, and (b) in connection with or as part of the duties of that office or employment. Paragraph 25 cites the example of individuals who are taking a course leading to an accounting designation and are employed in a related field as an example of individuals to whom paragraph (b) would apply. You have asked whether this exclusion applies to all employees of Revenue Canada or whether the decision would be made on the basis of the type of work done by the employee in the performance of their duties. Specifically, you have asked whether employees in the Client Assistance Division or Appeals Division would be eligible to claim the Education Tax Credit.

It is our view that employees of Revenue Canada who are taking courses outside their regular working hours and which will lead to a professional accounting designation and for which they are reimbursed are not entitled to an education tax credit. The criteria required to be met in order for a program to qualify as a "qualifying educational program" are set out in subsection 118.6(1) of the Act and the definition excludes situations discussed in paragraphs (a) and (b) therein. We believe that paragraph (a) would serve to deny an education tax credit to all reimbursed employees. As paragraph (a) would deny the credit, a review of paragraph (b) is not necessary in the circumstances, however we would comment that paragraph (b) could also serve to deny the credit to most Revenue Canada employees in this situation.

We do not believe that a reimbursement of tuition fees by Revenue Canada to Revenue Canada employees pursuing a professional accounting designation can be considered to be "an amount received by the student as or on account of a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the student" nor does the reimbursement fall into the situation described in subparagraph 118.6(2)(a)(ii) of the Act. A reimbursement of a tuition fee by an employer is ordinarily included in the employee's income (under paragraph 6(1)(a) of the Act) as discussed in paragraph 18 of Interpretation Bulletin IT-470R.

Paragraph (b) of the definition of "qualifying educational program" excludes any program taken by the student

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

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

In our view the expression "in connection with" has a broad meaning and the reference to "that office or employment" is simply a reference to the "office or employment" which entitles the student to receive income, as referred to in subparagraph (i). We believe that most CMA/CGA programs undertaken by Revenue Canada employees would be taken "in connection with" or "as part of the duties of" their office or employment.

J.A. Szeszycki
for Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch