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 the education tax credit is available to UI and social assistance receipients enrolled in a qualifying educational program. The students receive free tuition and certain qualifying students also receive special child care and transportation allowances.
Position TAKEN:
The students would not be eligible for the education credit.
Reasons FOR POSITION TAKEN:
Although the programs qualify as a "qualifying educational program" as they are certified by the Minister of Employment and Immigration (now Human Resources Development Canada), the students are not eligible as UI benefits and social assistance payments are considered an "allowance, benefit, grant or reimbursement for expenses in respect of the program".
961515
XXXXXXXXXX D. Zion
Attention: XXXXXXXXXX
August 29, 1996
Dear Sirs:
Re: Education Credit
We are replying to your letter of April 26, 1996, and our subsequent telephone conversations (Zion/XXXXXXXXXX and Zion/XXXXXXXXXX), concerning the availability of the education credit to certain students enrolled in certified programs at XXXXXXXXXX.
The students in question are enrolled in various certified programs XXXXXXXXXX on behalf of Human Resources Development Canada (HRDC). It is our understanding that these programs are intended for unemployment insurance (UI) and social assistance recipients to furnish them with job-related skills in an occupation. All direct costs such as tuition fees, materials and textbooks are paid for the students. In addition, some students receive reimbursements or allowances for day care and transportation.
As mentioned in our telephone conversations, in order to provide you with a more definitive reply, we would need to review the arrangements made between XXXXXXXXXX and HRDC or social assistance agency as well as the criteria by which individuals are chosen for participation in the program. Nevertheless, based on the limited information you have provided to us, we can offer the following general comments which we hope will be of assistance to you.
Since the students do not pay for their tuition, they do not qualify for the tuition credit. While there is no requirement for students to pay tuition fees in order to claim the education credit under section 118.6 of the Income Tax Act (the "Act"), they must be enrolled in a "qualifying education program." In general, the credit is not available to a student who receives any allowance, benefit, grant or reimbursement for expenses (other than as a scholarship, fellowship or 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 a person with whom the student is dealing at arms length. The student is also not eligible for this credit if he or she is receiving income from an office or employment, or is taking the program in connection with the duties of that office or employment. The education credit is intended to assist those students who are more or less financing their own training, and to avoid providing special tax assistance to those individuals who are already receiving arm's length support from another source.
When the UI and social assistance recipients participating in the program are entitled to continue to receive benefits under the UI Act or support payments under provincial programs, such benefits will normally be considered allowances or benefits for the purposes of section 118.6 of the Act and the recipients would not be eligible for the education credit. Accordingly, if HRDC, or the social assistance agency in question, has paid the direct costs of tuition fees, materials and textbooks on behalf of these students, it is our view that the education credit will not be available to them. In addition, those students who receive reimbursements or allowances for day care and transportation so that they may participate in the program, will not be eligible for the education credit.
Should further clarification be required, please do not hesitate to contact us.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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