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 XXXXXXXXXX is required to issue form T2202A for its tuition free courses (all its courses are free).
Position TAKEN:
We have not been provided with sufficient information to establish whether XXXXXXXXXX students qualify for the education tax credit. However, in the event that they do qualify, XXXXXXXXXX would then be required to complete form T2202 in respect of the education tax credit.
Reasons FOR POSITION TAKEN:
As indicated in paragraph 16 of IT-516R2, it is our general view that a recipient of tuition provided at no charge by an educational institution is not entitled to claim a tuition tax credit for the value of the tuition, since no fees were “paid” to the institution. In this particular case, we were advised that XXXXXXXXXX does not charge tuition fees for any of its programs, that financing for its program operations comes directly to XXXXXXXXXX under contract from the Federal Government, and that the Federal Government does not pay any tuition fees on behalf of any particular student (no seats are purchased, XXXXXXXXXX receives lump sum financing for its operations).
We were not provided with sufficient information on XXXXXXXXXX , its programs and a particular former student to determine whether her enrolment at XXXXXXXXXX qualifies for the education tax credit. However, we noted that, 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 from an unrelated person or organization (subject to specific exceptions in the definition of “qualifying educational program” in subsection 118.1(6)). It is a question of fact as to whether a particular student has received a benefit in any particular situation. Although 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 is not charged for that program.
XXXXXXXXXX 5-981101
M. Azzi
Attention: XXXXXXXXXX
September 10, 1998
Dear Sir:
Re: Form T2202A
This is in reply to your letter of March 10, 1998, wherein you requested our views on whether XXXXXXXXXX should issue form T2202A for tuition free courses.
We understand that XXXXXXXXXX is a private college located in XXXXXXXXXX and that it is registered and accredited by the Private Post-Secondary Education Commission (Ministry of Education, Skills and Training). All students attending your programs are adults, and you do not charge tuition fees for your programs (all classes are free). You indicate that financing for your program operations comes directly to you under contract from the Federal Government - Human Resources Development Canada, and Citizenship and Immigration Canada. In our telephone conversation of August 24, 1998 (Azzi/XXXXXXXXXX), you confirmed that the Federal Government does not pay any tuition fees on behalf of any particular student (no seats are purchased), but that you receive lump sum financing for your operations according to your contract with the Government. We also understand that there is no financial subsidization to the students. You indicate that a former student has requested that you issue her form T2202A.
The determination of whether an individual qualifies for the tuition tax credit provided in section 118.5 of the Income Tax Act (the “Act”), or the education tax credit in section 118.6 of the Act, requires a review of all relevant facts of a particular situation. Such a review is normally conducted by officials of your local Tax Services Office, who are in a better position to appreciate all the circumstances of a particular case. We have not been provided with sufficient information to provide you with a definite reply to your request; however, we have enclosed a copy of Interpretation Bulletin IT-515R2, Education Tax Credit, and IT-516R2, Tuition Tax Credit, which will assist you in establishing whether form T2202A is required. We can also provide the following general comments.
In order for a student to be entitled to claim a tuition tax credit under section 118.5 of the Act, tuition fees must, inter alia, be paid to a university, college or other educational institution for courses that are at the post-secondary level, except for certain courses at an educational institution certified by the Minister of Human Resources Development to be an educational institution providing courses (other than courses designed for university credit) that furnish a person with skills for, or improve a person's skills in, an occupation. Based on the information provided, it is unclear whether XXXXXXXXXX, or its courses, fall within section 118.5 of the Act. However, as indicated in paragraph 16 of IT-516R2, it is our general view that a recipient of tuition provided at no charge by an educational institution is not entitled to claim a tuition tax credit for the value of the tuition, since no fees were “paid” to the institution. Therefore, if as indicated above, XXXXXXXXXX does not charge any tuition fees and no such fees are paid to it, in our view, it would not be required to complete form T2202A in respect of tuition fees.
As previously discussed, it is unclear whether your former student may be requesting form T2202A for purposes of the education tax credit. Section 118.6 of the Act authorizes this credit for each month in the calendar year during which a student is enrolled in a qualifying educational program as a full-time student at a designated educational institution. The terms “designated educational institution” and “qualifying educational program” are defined in subsection 118.6(1) of the Act and are explained in IT-515R2. We have not been provided with sufficient information on XXXXXXXXXX, its programs and the former student to determined whether her enrolment at XXXXXXXXXX qualifies for the education tax credit. However, we would note that, 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 from an unrelated person or organization (other than a scholarship, fellowship, bursary, prize for achievement in a field of endeavour ordinarily carried on by the student, a loan granted in accordance with the Canada Student Loans Act or An Act respecting financial assistance for students of the Province of Quebec, or financial assistance given in accordance with the Canada Student Financial Assistance Act). It is a question of fact as to whether a particular student has received a benefit in any particular situation. Although 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 is not charged for that program.
In summary, if it is determined that a student has not received a benefit and all the other conditions with respect to the eligibility for the education tax credit are met, form T2202 should be issued for this credit, regardless that the student may not be entitled to a tuition tax credit for the reasons explained above.
We trust that these comments will be of assistance.
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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