18 May 1999 External T.I. 9908365 - UNUSED TUITION AND EDUCATION TAX CREDITS

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 tax professional has requested clarification of the carry forward of unused tuition and education tax credits pursuant to section 118.61 of the Act. This section does not seem to agree with Schedule 11, a calculation form for an individual’s 1997 and 1998 income tax returns.

Position TAKEN:

Schedule 11 has a deficiency with respect to the calculation of the student’s unused tuition and education amounts available for carry forward.

Reasons FOR POSITION TAKEN:

Line 5 of the 1997 Schedule 11, in its application to section 118.61, does not take into account certain creditable amounts, one being the section 121 deduction for taxable dividends. The tax credit deduction on line 5, restricted to “lines 300 to 318 of your return”, is inconsistent with variable C of subsection 118.61(1).

Our Directorate recently communicated this deficiency in writing to the publications section upon reviewing the 1999 General Tax Package.

XXXXXXXXXX 5-990836
D. Miller
May 18, 1999

Dear XXXXXXXXXX:

Re: Unused Tuition and Education Tax Credits - Section 118.61

This is in reply to your letter of March 29, 1999, regarding the amount of unused tuition and education tax credits that may be carried forward pursuant to subsection 118.61(1) of the Income Tax Act (“the Act”). Following Schedule 11, a form provided in the 1997 tax return, you have given an example where the computation of the carry forward is different from that computed in accordance with subsection 118.61(1) of the Act.

We agree with your analysis. There is a deficiency in Schedule 11 as it applies to section 118.61 of the Act. Line 5 on the 1997 Schedule 11 only refers to the tax credits described in “lines 300 to 318 of your return”. This is deficient, as you have pointed out, because there are other tax credits (e.g. dividend tax credit) that should be taken into consideration.

Thank you for bringing this matter to our attention. The Publications and Forms Directorate was recently made aware of the above deficiency.

Yours truly,

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