30 October 1998 External T.I. 9822655 - TUITION 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: First year business may study their curriculum by enrolling in theXXXXXXXXXX rather than using traditional methods. A student who is enrolled in theXXXXXXXXXX will be provided with a laptop computer that must be returned at the end of the academic year. In connection with computer, the student must pay a technology fee of $XXXXXXXXXX each semester. Does the technology fee qualify for the tuition tax credit?

Position: Yes

Reasons: The position is consistent with the Department’s position in paragraph 26(I) of IT 516R2.

XXXXXXXXXX 982265
M. Eisner
Attention: XXXXXXXXXX

October 27, 1998

Dear Sir/Madam:

Re: Tuition Tax Credit

This is in reply to your letter of August 7, 1998, concerning the above noted subject.

In your letter, you have indicated that XXXXXXXXXX (the “University”) has recently introduced a new program for first year business students who opt to study in their program using a XXXXXXXXXX (the “Program”) rather than using traditional methods. Each student enrolled in the Program will be issued with a laptop computer. Course notes, assignments, readings, exercises and demonstrations will be available online. The Program will enable the student to develop computer skills. A “help desk” is available for any questions that a student may have. All students enrolled in the Program must pay a “technology fee” of $XXXXXXXXXX each semester to the university for use of the laptop computer and applicable software. At the end of the academic year, the student must return the computer to the University. A student may also enrol in the first year business program in which the student studies through the use of traditional methods (i.e., the student is not provided with a computer).

At the end of the academic year, the University might rent the laptop computer to a student, who had participated in the Program, for $XXXXXXXXXX from the end of the winter semester up to the end of July. A computer that is rented must be returned to the University prior to August. You have indicated to us that no part of the technology fee is considered to be in respect of such a rental period.

Your concern is whether the technology fee qualifies for the tuition tax credit under section 118.5 of the Income Tax Act.

Our Comments

With respect to the above situation, it is the Department’s position, as set out in paragraph 26(i) of Interpretation Bulletin IT-516R2 “Tuition Tax Credit”, that mandatory computer service fees that relate to a particular program are eligible tuition fees. Consistent with this position, it is our view that the technology fee of $XXXXXXXXXX can also qualify as tuition fees that are eligible for the tuition tax credit.

We trust that our comments will be of assistance to you.

Yours truly,

Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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