19 February 1998 External T.I. 9800225 - TUITION AND EDUCATIONAL CREDIT TRANSFER

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 118.94 applies to deny a deduction under 118.6 where the individual has no income from whatever source.

Position:

No

Reasons:

The individual is deemed to have income for the year in an amount equal to zero pursuant to paragraph 3(f) of the Act. For a similar reason, the individual has a taxable income earned in Canada equal to zero (see 115(1) and 3(f)). Since the individual's "income for the year" is equal to his "taxable income earned in Canada for the year", one can only conclude that "all or substantially all of the individual's income for the year is included in computing the individual's taxable income earned in Canada for the year."

980022
XXXXXXXXXX J.E. Grisé

Attention: XXXXXXXXXX

February 19, 1998

Dear Sirs:

Re: Tuition and Educational Credit Transfer

This is in reply to your letter of January 2, 1998 requesting our views on the transfer of the tuition and education tax credits from a child who is a non-resident of Canada to a parent who is a resident of Canada for the full year.

In the situation you are concerned with, the child has no income from any source whatever in the particular taxation year of the father.

In circumstances where the non-resident child has no income from any source, we are of the opinion that section 118.94 of the Income Tax Act does not apply to deny an amount under section 118.6 of the Act (the education tax credit). Section 118.94 of the Act would apply to deny the education tax credit to the child if the child had a source of foreign income and no taxable income earned in Canada.

Accordingly, if the provisions of sections 118.5 and 118.6 otherwise apply to the child, the father would be entitled, subject to subsection 118.9(2) of the Act, to a tax credit pursuant to subsection 118.9(1) of the Act. The tax credit would be restricted to a maximum of $850, which is 17% of a total of $5,000 for the combined tuition fees and educational amount.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch