6 April 1999 External T.I. 9907085 - PART-TIME EDUCATION 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: (a) Paragraph (b) of B within the formula set out in proposed subsection 118.6(2) states that "$60 is multiplied by the number of months in the year ... each of which is a month during which the individual is enrolled at a designated education institution in a specified educational program that provides that each student in the program spend not less than 12 hours in the month in the program." Does a month with respect to the 12 hour test mean a calendar month?

What functions are to be taken into account in determining whether the 12 hour test has been met in a particular month?

Position: (a) yes

(b) The functions would generally include all forms of direct instruction such as lectures, practical training or laboratory work. When the program of a student falls short of providing 12 hours per month of direct instruction, the student's time may be augmented by a reasonable estimate of time outside the classroom or laboratory, normally required and expected of a student during a particular program, for work assignments or other items set out in paragraph 11(a) to (f) of IT-515R2.

Reasons: (a) refer to the comments in 982792.

(b) The Department of Finance has indicated to us that the position is consistent with the intent of the part-time education credit.

XXXXXXXXXX 990708
M. Eisner
Attention: XXXXXXXXXX

April 6, 1999

Dear Sir/Madam:

Re: Education Tax Credit

This is in reply to your letter of March 15, 1999 concerning the proposed amendments to section 118.6 of the Income Tax Act (the "Act") in respect of the part-time education tax credit.

You have set out information concerning a number of programs on which you have asked us about the part-time education tax credit. However, your situations are based on instruction or lecture time when, as discussed in our telephone conversation (Eisner/XXXXXXXXXX) on March 24, 1999, there are other factors that need to be taken into account. Accordingly, we have proceeded, as discussed, to provide general comments in that regard rather than addressing those situations. In addition, you have asked us to confirm your understanding that a month with respect to the part-time credit means a calendar month.

Our Comments

Under proposed subsection 118.6(2) of the Act, for 1998 and subsequent taxation years, a student can claim an education amount of $60 per month if the student was enrolled part-time at a designated educational institution in a "specified educational program". A "specified educational program" is a program that would be a "qualifying educational program" except that the requirement that a student enrolled in the program spend not less than 10 hours per week on courses or work is removed. However, paragraph (b) of variable B in proposed subsection 118.6(2) of the Act adds a new requirement with respect to the credit for part-time students, namely, that a student spend not less than 12 hours per month on courses in the program ("the 12 Hour Test").

We have enclosed a copy of Interpretation Bulletin IT-515R2 "Education Tax Credit" (the "Bulletin") which includes comments in paragraphs 10 to 16 on the requirements of a "qualifying education program".

With respect to the 12 Hour Test, the proposed law states that "each student in the program spend not less than 12 hours in the month on courses in the program. For example, if a student were to enrol in a program part way through a month and only spent 2 weeks in that month for a total of 6 hours (3 hours a week) on courses, that month would not qualify for purposes of the part-time education tax credit. Accordingly, a part of a calendar month would only qualify if the 12 Hour Test with respect to that month has been met.

In the case of the other enquiry, it is the Department's position that all forms of direct instruction, such as lectures, practical training, or laboratory work should be taken into account in determining whether the 12 Hour Test has been satisfied. When the program of a student does not meet the 12 Hour Test (i.e., the program falls short of providing 12 hours monthly of lectures, practical training and/or laboratory work), the student's time may be augmented by a reasonable estimate of time outside the classroom or laboratory, normally required and expected of a student during a particular program, for work assignments or other items listed below:

(a) after enrolment, taking a test at the beginning of a program to establish the program level at which the student will participate;

(b) taking an achievement test at the end of a program;

(c) essays;

(d) term papers; and

(e) other written work.

The above comments would be of particular importance with respect to a program taken by correspondence. We also note that the above comments are similar to those in paragraph 11 of the Bulletin.

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