19 May 1999 External T.I. 9912105 - 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:

An association provides professional development correspondence courses to members and other interested individuals. One of the formats offered are “XXXXXXXXXX ”, a self study module, costing $30 for members and $50 for non-members. With a self-administered quiz, individuals can fit the estimated 8 to 10 hours into their timetable at their discretion. The association requested an opinion on the issue of “income tax receipts”.

Position TAKEN:

In exceptional circumstances, individuals may be eligible for tuition or education tax credits.

Reasons FOR POSITION TAKEN:

Questions of fact.

Since subsection 118.5(1) tuition credits only applies when the total tuition fees paid in the year exceed $100. Members would have to have paid fees for at least 4 courses in the year and non-members for at least 3 courses to qualify on the basis of dollar value.

The course outline estimates 8 to 10 hours to complete a program. With no lectures, essays, term papers or formal achievement test on completion, it is unlikely that participants in the course could fulfil the “12 hours in the month” test to qualify for the 118.6(1) education tax credit.

XXXXXXXXXX 5-991210
D. Miller
May 19, 1999

Dear XXXXXXXXXX:

Re: Tuition Tax Credit

This is in reply to your letter of April 26, 1999, requesting an opinion on the issuance of income tax receipts with respect to a program you offer entitled “XXXXXXXXXX”. Your letter has been forwarded to our Directorate by the XXXXXXXXXX Tax Services Office (“TSO”).

We understand that your association is certified by Human Resources Development Canada to be an educational institution as per subparagraph 118.5(1)(a)(ii) of the Income Tax Act (the “Act”) and offers various correspondence and self-study courses in the field of XXXXXXXXXX to members of your association and other interested persons. You provided copies of portions of your brochure relating to “XXXXXXXXXX”. These courses are self-contained self-study modules with a self-administered quiz at the end. They are expected to be completed over an 8 to 10 hour period and cost $30 per module for members and $50 for non-members.

Our Comments

The Department’s comments with respect to the tuition tax credit are provided in Interpretation Bulletin IT-516R2 Tuition Tax Credit (copy enclosed). Paragraphs 26 through 29 of the bulletin describe generally what the Department considers eligible tuition fees. The fact that tuition fees are paid to the association in respect of a course that is of a short duration is not relevant with respect to its eligibility for the tuition tax credit. However, we should point out that the tuition fees paid to the association in respect of the year must exceed $100 before a tuition tax credit receipt can be issued.

It should also be noted that even though your association is certified by the Minister of Human Resources Development for purposes of subparagraph 118.5(1)(a)(ii) of the Act, tuition fees are not deductible to the extent that the purpose of the individual’s enrolment at the association cannot reasonably be regarded as being to provide the individual with skills, or to improve the individual’s skills, in an occupation. Non-members of your association enrolled in your “XXXXXXXXXX” may or may not meet this condition. However, in the preparation of the tuition fee receipts, we do not believe that it is the educational institution’s responsibility to make the necessary enquiries to ascertain whether the student meets the condition. While this requirement must be satisfied by the student, the educational institution is not expected to be aware of the student’s circumstances in relation to that condition.

Even though your inquiry was with respect to the tuition tax credit, we note that in our letter dated May 4, 1999, addressed to your association, we provided comments with respect to the proposed part-time education tax credit. Those comments apply equally to students enrolled in your “XXXXXXXXXX”. In this regard, with no lectures, work assignments, essays, term papers or formal achievement test at the end of the program, it is our opinion that the students enrolled in the “XXXXXXXXXX” program would not meet the 12 hour per month “instruction or work” criteria and thus would not be eligible for the proposed part-time education tax credit.

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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