5 August 1999 External T.I. 9918405 - PART-TIME EDUCATION TAX CREDIT & TUITION

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.

Pleaae 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:

Whether students under 16 may, in certain circumstances, be eligible for 1) the tuition tax credit and 2) the education tax credit.

Position TAKEN:

1) No
2) Yes, if they meet the "occupational skills test"

Reasons FOR POSITION TAKEN:

2) 118.6(2)

5-991840
D. Miller
Attention: XXXXXXXXXX

August 5, 1999

Dear XXXXXXXXXX:

Re: Tuition Credit and Education Tax Credit

This is in reply to your letter of June 25, 1999 regarding the tuition credit and the education tax credit as they are described in sections 118.5 and 118.6 of the Income Tax Act (the "Act").

The XXXXXXXXXX offers part-time programs for Piano Teacher Training and Voice Teacher Training that require at least 3 hours of instruction per week. You consider students enrolled in these two programs to be eligible for the part time education tax credit. XXXXXXXXXX also offers other programs which individually require less than 3 hours per week of instruction. For example, students enrolled in a Violin Teacher Training Program, which involves 2 hours per week, may also be taking 1 or more hours of violin instruction or theory study. In other cases students are working on their certificate in a senior music grade. In order to receive a certificate, students must complete requirements in their instrument and in theory which, if taken in one year, would require three or more hours per week of instruction. You have requested our opinion on whether these students are considered to be in a "specified educational program" and eligible for the part-time education tax credit.

You also indicate that students who complete the Grade 8 Music requirements are eligible for a grade 12 High School Credit. Certain students, often gifted with a chance of becoming career musicians, attain this level, and higher, prior to becoming 16 years of age. You have enquired whether the music courses above Grade 8 level would be considered post-secondary study allowing the students, under age 16, to be eligible for the tuition credit. Also you have enquired if these same students, taking 3 or more hours per week of instruction at the level above that required for the High School Credit, would qualify for the part-time education tax credit.

Our Comments

We understand that XXXXXXXXXX is certified by the Minister of Human Resources Development (“HRD") to be an educational institution pursuant to subparagraphs 118.5(1)(a)(ii) and 118.6(1)(a)(ii) of the Act and is not considered "a university, college or other educational institution providing courses at a post-secondary school level" for purposes of subparagraph 118.5(1 )(a)(i) of the Act. With respect to institutions described in subparagraph 11 8.5(1)(a)(i) of the Act, reference should be made to paragraphs 3 and 8 of Interpretation Bulletin IT-5l6 r2, Tuition Tax Credit (copy enclosed).

Education Tax Credit

To qualify for the part-time education tax credit pursuant to clause (b) of variable B of subsection 118.6(2) of the Act, a student must be enrolled at a "designated educational institution" in a “specified educational program" that provides that each student in the program spend not less than 12 hours in the month on courses in the program. A "specified educational program" is a "qualifying educational program" with the 10 hours per week reference removed. A "qualifying educational program" must, among other things, be a program of not less than 3 consecutive weeks duration. Pursuant to subparagraph 118.6(1 )(a)(ii) of the Act a "designated educational institution" means an educational institution in Canada that is "certified by the Minister of Human Resources Development to be an educational institution providing courses, ... that furnish a person with skills for, or improve a person's skills in, an occupation".

With respect to your first enquiry, paragraph 10 of Interpretation Bulletin IT-515R2, Education Tax Credit (copy enclosed), discusses the meaning of"qualifying educational program". The comments in IT-515R2 pertaining to the "10 hours per week" test generally apply to the "12 hours per month" test with respect to the recently enacted part-time education tax credit. In your circumstances, a student taking one course of 2 hours per week and another related course of 1 hour per week throughout the same month would generally be considered to have met the "12 hours in the month" requirement for purposes of the part-time education tax credit.

However, in addition to the requirement that the institution be a "designated educational institution", subsection 118.6(2) of the Act also requires that when enrolment is at an institution certified by HRD the student must be enrolled in the program to obtain skills for, or improve the student's skills in, an occupation. The Department's interpretation of"enrolled in the program to obtain skills for, or to improve skills in, an occupation" is discussed in paragraph 1 of IT-5l5R2 and paragraph 8 of IT-516R2. The expression "enrolled in the program to obtain skills for an occupation" means that there must be sufficient skills to be acquired in the program to work at an occupation. The expression "enrolled in the program to improve skills in an occupation" implies that the student already possesses sufficient skills to, enable the student to work in an occupation and the program must be capable of improving those skills. It is a question of fact whether the students, prior to completing their teacher training, possess sufficient music skills to enable them to work in that occupation.

With respect to your second enquiry involving students under age 16 going for senior music grades (Grade 9 or above), again, it is a question of fact whether a particular certificate (e.g. Grade 9, 10 or 11), in itself, is sufficient to furnish a high school student (whether under age 16 or not) with enough skills to enable the student to work at an occupation. It is likely that most high school students would not already possess sufficient music skills to enable them to work in that occupation and without evidence to the contrary, we would be inclined to think that a certificate (assuming that the Grade 9, 10 or 11 certificate is inferior to the teaching level) does not, in itself, provide sufficient skills to enable the student to work in that occupation. However, your institution is in a better position to make this determination. In certain circumstances, when the student goes on and takes a teacher training program, the facts pertaining to each program will be considered to determine if both programs could qualify (see the closing comments in paragraph 8 of IT-516R2)

Tuition Credit

Since XXXXXXXXXX is an educational institution certified by HRD, clauses 118.5(1)(a)(ii.2)(A) and (B) of the Act apply. Clause (A) disqualifies an individual from claiming the tuition credit unless they have attained the age of 16 by the end of the year. Clause (B) is the "occupational skills test" (identical to the test explained above in subsection 118.6(2) of the Act) stating that the credit is only available if the student is enrolled in a program to obtain skills for, or improve skills in, an occupation. In no circumstances can a student under the age of 16 be entitled to a tuition credit with respect to tuition fees paid to an institution certified by IRD.

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