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:
An association provides professional development correspondence courses to members and other interested individuals. Through the Ottawa TSO, they requested a technical interpretation on whether they should be issuing Education Tax Credit certificates to these individuals.
Position TAKEN:
T2202 forms should be issued. The institution should satisfy themselves that the program meets the definition of a specified educational program. Although, in the circumstances, few students would qualify for the education tax credit, we do not believe it is the educational institution's responsibility to ascertain if the students meet the requirements in paragraphs (a) and (b) of the definition of "qualifying educational program" in subsection 118.6(1) of the Act.
Reasons FOR POSITION TAKEN:
Prior position.
XXXXXXXXXX 5-990786
D. Miller
May 4, 1999
Dear XXXXXXXXXX:
Re: Issuance of T2202 and T2202A Certificates - Education Tax Credit
This is in reply to your letter of March 12, 1999, requesting a ruling on the issuance of Education Tax Credit certificates to persons enrolled in your continuing education courses. Your letter has been forwarded to our Directorate from the Client Assistance Division of the Ottawa Tax Services Office ("TSO").
We understand that your association is certified by Human Resources Development Canada to be an educational institution as per paragraph (a)(ii) of the definition of "designated educational institution" in subsection 118.6(1) of the Income Tax Act (the "Act") and offers correspondence courses in XXXXXXXXXX to members of your association and other interested persons. These persons may, or may not, be working in a related field.
XXXXXXXXXX.
We understand that your enquiry relates to the proposed part-time education tax credit and that your association's continuing education program would not qualify as a "qualifying educational program", as the term is defined in subsection 118.6(1) of the Act, for purposes of the full-time education tax credit.
Proposed subsection 118.6(2) of the Act refers to an individual who is enrolled at a "designated educational institution" in a "specified educational program" and that each student in the program spend not less than 12 hours in the month on courses in the program. If the individual meets all of the above criteria, they may be entitled to an education tax credit of $60 for each month during which the student was so enrolled, times the appropriate percentage (currently 17%).
Subsection 118.6(1) of the Act currently defines a "designated educational institution" and a "qualifying educational program". Pursuant to the proposed amendments under Bill C-72, subsection 118.6(1) of the Act will also define a "specified educational program".
A "qualifying educational program" is a course of a least 3 weeks, requiring, among other criteria, not less than 10 hours per week be spent on the course or work in the program at a "designated educational institution". If the student receives certain forms of financial assistance or concurrent employment income in a related field, the program is not qualified.
A "specified educational program" is a "qualifying educational program" with the removal of the minimum hours per week on courses or work in the program. If the conditions of a "specified educational program" have been met, paragraph (b) of variable B in proposed subsection 118.6(2) adds a new requirement with respect to the credit for part-time students, namely, that a student spend not less than 12 hours in the month on courses in the program. The criteria applied by the Department in determining the hours per week on courses or work in the program for purposes of the full-time education tax credit, is discussed in paragraph 11 of IT-515R2. This criteria will also be applied by the Department to determine the relevant hours of "instruction or work" for part-time students, whether enrolled in a traditional lecture program or a correspondence program.
The hours of "instruction or work" excludes study time (e.g. time spent studying for exams). However, the hours spent in the preparation of assignments, essays, term papers and other written work would be eligible. Students enrolled in correspondence courses may have, in some circumstances, a more difficult time meeting the "instruction or work" criteria as opposed to a student in actual attendance at an educational institution who attends lectures and performs laboratory work.
The onus would generally be on the "designated educational institution" to determine the amount of eligible hours of "instruction or work" that would be expected of a student to complete a particular program. We note that you verbally indicated to Mr. Paisible of the Ottawa TSO that some of your courses do not meet the "12 hours in the month" test. In such cases, the student would not be considered to be enrolled in a "specified educational program".
The course descriptions and the application form in your brochure indicate that the majority of the participants are expected to be employed in the field, thus disqualifying these students from claiming the education tax credit. Although students would only qualify for the education tax credit in limited circumstances, we do not believe it is the educational institution's responsibility to make the necessary enquiries to ascertain whether the student meets the requirements in paragraphs (a) and (b) of the definition of "qualifying educational program" in subsection 118.6(1) of the Act. Consequently, the association would complete Part 1 of Form 2202, certifying that the student is enrolled in a "designated educational institution" in a "specified educational program". The association cannot be expected to be aware of the student's receipt of related income and it is the student's responsibility to make the required certification relating to this aspect of the "specified educational program".
The Department provides standard T2202 and T2202A forms, or an institution may design their own, provided they are approved by Revenue Canada. We are enclosing the current authorized forms for your information. We are also enclosing Interpretation Bulletin IT 515R2, "Education Tax Credit", for your current and future reference.
We trust that these comments will be of assistance.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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