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:
XXXXXXXXXX , in light of the proposed amendments to the education credit contained in Bill C-72. Whether students taking XXXXXXXXXX courses qualify for the education tax credit.
Position TAKEN:
Our position is unchanged: Students enrolled in distance learning courses in the XXXXXXXXXX program would only qualify for the education credit in limited circumstances.
Reasons FOR POSITION TAKEN:
The students are ordinarily employed in the XXXXXXXXXX field and, as such, they do not meet the requirements of paragraph (b) of the definition of “qualifying educational program” in subsection 118.6(1).
XXXXXXXXXX 5-990800
M. AZZI
Attention: XXXXXXXXXX
June 1, 1999
Dear Sirs:
Re: Education Tax Credit
This is in reply to your letter of March 16, 1999, wherein you requested that we confirm XXXXXXXXXX our views on the education tax credit, in light of proposed amendments to this credit contained in Bill C-72 (which received first reading on March 16, 1999).
We understand that the XXXXXXXXXX program (the “XXXXXXXXXX program”) consists of four sessions in the XXXXXXXXXX academic year. Full-time enrolment, as determined by the XXXXXXXXXX (the “Association”), is typically one course per session. The courses are provided through distance learning, and each course is 13 weeks in duration, with students committing an average of 20 hours a week to their studies. In your view, the new part-time student category of the education tax credit, contained in the draft legislation, will not affect the XXXXXXXXXX students enrolled in the XXXXXXXXXX program, such that they will continue to be classified as full-time. However, you question whether the XXXXXXXXXX students will continue to generally not meet the requirements of paragraph (b) of the definition of “qualifying educational program” in subsection 118.6(1) of the Income Tax Act (the “Act”).
Under proposed subsection 118.6(2) of the Act, for 1998 and subsequent taxation years, a student can claim an education tax credit of $60 per month, multiplied by the appropriate percentage (17%), if the student was enrolled part-time at a designated educational institution in a “specified educational program”. As proposed in subsection 118.6(1), 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 requirement, with respect to the credit for part-time students, that a student spend not less than 12 hours per month on courses in the program. In addition, paragraph (b) of variable B specifically excludes the months described in paragraph (a) of variable B. As a result, the part-time student rules in paragraph (b) of variable B will not apply in respect of the months to which to full-time student rules in paragraph (a) apply.
Based on our above understanding of the duration of the courses in the XXXXXXXXXX program, the weekly study time and, since the normal course load for the XXXXXXXXXX program is one course during a session and the Association considers a student enrolled for such a course as a full-time student, the full-time student rules in paragraph (a) (rather than the part-time student rules in paragraph (b)) of variable B of proposed subsection 118.6(2) of the Act will apply for the months during which a student is enrolled for one such course provided, however, that the requirements of “qualifying educational program” have all been met with respect to the student.
The criteria required to be met in order for the program to qualify as a “qualifying educational program” are set out in subsection 118.6(1) of the Act but excludes any such program
“(b) if the program is taken by the student
(i) during a period in respect of which the student receives income from an office or employment, and
(ii) in connection with, or as part of the duties of, that office or employment.”
XXXXXXXXXX, it is our view that the term “in connection with” has a broader meaning than the adjoining phrase contained in (ii) above, “as part of the duties of” and would include any students who are employed in an accounting related field. Consequently, in light of the foregoing and our understanding of the XXXXXXXXXX program, we remain of the view that students enrolled in distance learning courses in the XXXXXXXXXX program would only qualify for the education credit in limited circumstances since such students are ordinarily employed in the XXXXXXXXXX field. It should also be noted that the requirements of paragraph (b) of the definition of “qualifying educational program”, in subsection 118.6(1) of the Act, also apply to the proposed definition of “specified educational program” in subsection 118.6(1), such that our above comments with respect to the term “in connection with” would also apply to part-time students.
As regards your concerns with the proposed definition of “qualifying educational program” in proposed subsection 146.02(1) of the Act, for purposes of the Lifelong Learning Plan, please note that that definition applies only for purposes of proposed section 146.02 of the Act. Accordingly, the definition of “qualifying educational program” in subsection 118.6(1), and all the requirements contained therein, still apply for purposes of the education tax credit.
Finally, we would stress that the role of Revenue Canada is to administer and enforce the Act as passed by Parliament. The concerns raised in your letter, with respect to the definition of “qualifying educational program” in subsection 118.6(1) of the Act, relate to tax policy, which is the responsibility of the Department of Finance. If you wish to pursue the tax policy concerns further, we suggest that you contact the Department of Finance.
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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