4 October 1999 External T.I. 9919315 - TUITION-UNIVERSITY OUTSIDE CANADA

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:

1) Whether an individual taking courses on a part-time basis would be entitled to the tuition tax credit for tuition fees paid to a university outside Canada, in respect of a graduate degree program of the university. The taxpayer lives in XXXXXXXXXX and takes courses at XXXXXXXXXX , which is an 8-hour drive from where she resides. The taxpayer took an airplane to XXXXXXXXXX three times during the period in which she studied part-time at xxxxxxxxxx

2) Whether an individual would be entitled to the part-time education tax credit with respect to her enrollment at a university outside Canada, in respect of a graduate degree program of the university.

Position TAKEN:

1) Not likely that the individual can claim the tuition tax credit in respect of part-time studies at a university outside Canada.

2) Question of fact. Depends on whether the educational institution is a "designated educational institution" as defined in subsection 118.6(1) of the Act and whether the individual is enrolled at a "qualified educational program" at the educational institution.

Reasons FOR POSITION TAKEN:

1) The individual is taking courses on a part-time basis at a university outside Canada and therefore, would not be in "full-time" attendance at a university outside Canada" as required in paragraph 118.5(1)(b). In addition, as indicated in paragraph 11 of IT-516R2, where the courses are taken only by correspondence, the student is not considered to be in full-time attendance at the university.

With respect to whether the individual could claim tuition fees for part-time studies at a university outside Canada pursuant to paragraph 118.5(1)(c) of the Act, that provision requires that the individual resided throughout the year near the boundary between Canada and the United States, was enrolled at any time in the year as a student at a university, college or other educational institution providing courses at a post-secondary school level, and commuted to that educational institution in the United States. As there is no definition of "commute" in the Act, the ordinary dictionary meaning of the word would be used, that is, "to travel to and from one's daily work usually in a city, especially by car or train" or "to travel back and forth regularly". In our view, if the distance between two locations is sufficiently great that a daily commute would not be considered reasonable, then we would not view the taxpayer as "commuting" between these two locations. The distance between XXXXXXXXXX is sufficiently great that it is, in our view, beyond a daily reasonable commuting distance. In addition, taking the airplane XXXXXXXXXX , only three times in a semester would not constitute commuting on a daily or regular basis and the taxpayer would therefore not likely qualify under paragraph 118.5(1)(c).

2) Subsection 118.6(2) of the Act provides that in order for an individual to qualify for the education tax credit, the individual has to be enrolled in a designated educational institution, as defined in subsection 118.6(1). Paragraph (b) of the definition of "designated educational institution" in subsection 118.6(1) provides that a "designated educational institution" includes a university outside Canada at which an individual was enrolled in a course of not less then 13 weeks duration leading to a degree. Paragraph (c) Of that definition provides for an exception to the 13-week course requirement in (b) of that definition if an individual enrolled in an educational institution outside Canada was residing throughout the year near the boundary between Canada and the United States and commuting to a university, college or other educational institution providing courses at a post-secondary school level.

xxxxxxxxxx 5-991931
G. Moore

October 4, 1999

Dear XXXXXXXXXX:

Re: Tuition and Education Tax Credits

This is in response to your letter of July 12, 1999, regarding the tuition and education tax credits.

As we understand it, your client resides and works in the XXXXXXXXXX area and is taking courses at XXXXXXXXXX, in order to get her Masters degree. For part of the year, she takes a full course load and for the balance of the year, due to the demands of her employment, she takes only a part-time course load. Your client's part-time studies are 16 weeks in duration and are primarily completed by video and telephone. For a minimum of three times during this. period, she is required to attend the university. While she can drive to the university, she chooses to fly there to complete the required classes. Further to the telephone conversation (Moore/XXXXXXXXXX) of September 23, 1999, it is approximately an 8-hour drive by car from XXXXXXXXXX to XXXXXXXXXX. During the telephone conversation, you also indicated that you did not know whether, during the period your client was taking a full-time course load at XXXXXXXXXX, she was taking such courses on a correspondence basis or whether she was actually in full-time attendance at that university.

The university provides form TL11A for the tuition relating to her full-time studies but refuses to provide form TL11C for her part-time tuition because they believe that the distance is beyond commuting distance and they do not think three times a semester would constitute commuting. For purposes of the tuition tax credit, you are seeking clarification on the meaning of "commuted" as referred to in subparagraph 118.5(1)(c)(ii) of the Income Tax Act (the "Act"). You are asking if your client is entitled to claim tuition paid of $XXXXXXXXXX for part-time studies, and the part-time education amount for the period during which she was enrolled at the university part-time.

Our Comments

The determination of whether an individual qualifies for the tuition tax credit provided in section 118.5 of the Act requires a review of all the relevant facts of each particular situation. Paragraph 9(a) of the Interpretation Bulletin IT-516R2, Tuition Tax Credit, (copy enclosed) provides a summary of the requirements which must be met with respect to tuition fees paid to a university outside Canada. While we were not provided with sufficient information on the facts of your client's case to comment on all these requirements, it appears that during the period your client was taking courses on a full-time basis from the university outside Canada, she may have been taking these courses as correspondence courses. If this was the case, we would draw your attention to the requirement that the student be in full-time attendance at a university outside Canada. As indicated in paragraph 11 of IT-516R2, a student is not considered to be in full-time attendance at a university outside Canada if only a few subjects at evening classes are taken, courses are taken only by correspondence, or although a day student, the student is carrying only a minor course load and at the same time is devoting so much time and energy to other activities such as money-earning activities that they are clearly the student's primary occupation. A student who is participating in postgraduate studies on a regular basis is ordinarily considered to be in full-time attendance if registered for the regular academic year, even though the requirements for attendance in class are minimal. Therefore, such a registered student who spends much of his or her time in a laboratory or library engaged in research elsewhere other than at the university would normally be regarded as being in full-time attendance. A post-graduate student holding a full-time job is not necessarily precluded from being considered in full-time attendance at a university. Although it is a question of fact, if your client was taking correspondence courses on a full-time basis at a university outside Canada, she would not meet the "attendance" requirement for claiming a tuition tax credit as set out in paragraph 118.5(1)(b) of the Act.

With regard to the tuition tax credit provided under paragraph 118.5(1)(c) of the Act to individuals living near the Canada-U.S. border and commuting to post-secondary educational institutions in the U.S., as explained in paragraph 9 of IT-516R2, tuition fees paid for correspondence courses would not qualify for the credit under that paragraph since that provision of the Act requires that the student commute to the educational institution in the United States. For the purpose of paragraph 118.5(1)(c) of the Act, you are asking for our interpretation of the meaning of "the individual resided throughout the year in Canada near the boundary between Canada and the United States" and "commuted to that educational institution in the United States". As you know, the term "commute" is not defined in the Act. In the absence of a definition of a term in the Act, the Courts have used the ordinary dictionary meaning of a word. According to the Concise Oxford Dictionary, (8th Edition), "commute" means to "travel to and from one's daily work usually in a city, especially by car or train." Webster's Seventh New Collegiate Dictionary defines commute" as "to travel back and forth regularly". In our view, "commute", for the purpose of subparagraph 118.5(1)(c)(ii), generally means that the distance between two locations should not be so great that a daily or regular return trip between the two locations would be considered unreasonable, In other words, generally, an individual would be considered to commute if he or she travels back and forth from his or her place of residence daily or on a regular basis to an educational institution in the United States. Since you indicate that XXXXXXXXXX, is approximately an 8-hour' drive by car from XXXXXXXXXX, in our view, we do not think your client would, in fact, be considered to "commute" to XXXXXXXXXX and we do not view her three trips by airplane as such. Accordingly, based on the information available, in our view, your client is not entitled to claim tuition fees paid in respect of her part-time studies at XXXXXXXXXX under subsection 118.5(1) of the Act.

With respect to the education tax credit for full-time students, as explained in Interpretation Bulletin IT-515R2, Education Tax Credit, (copy enclosed) subsection 118.6(2) of the Act permits a student to claim an education tax credit for each month in the calendar year during which the student is enrolled in a qualifying educational program as a full-time student at a designated educational institution. To be considered a qualifying educational program, the program must run for at least three consecutive weeks and must provide that each student taking the program spend not less than ten hours per week on courses or work in the program at a designated educational institution. A "designated educational institution" includes a university outside Canada at which' an individual is enrolled in a course of not less than 13 weeks consecutive duration leading to a degree, or if the individual resided in Canada near the boundary between Canada and the United States throughout the year, an educational institution in the United States to which the individual to which the individual commuted (see comments above) that is a university, college or other educational institution providing courses at a post-secondary school level. Provided that the student also meets the "qualifying educational program" requirement, that is, the ten hour per week test for at least three consecutive weeks, the institution would then be expected to determine the number of "eligible months" that a student would be entitled to claim the full-time education tax credit. With respect to the period during the year in which your client was enrolled as a full-time. student in XXXXXXXXXX, we do not have sufficient information (ex. whether she was enrolled in a course of not less than 13 weeks duration or whether she meets the ten hour per week test) to determine if she is entitled to claim the education tax credit for full-time students.

You are asking if your client would qualify for the part-time education tax credit in respect of her part-time studies at xxxxxxxxxx. Commencing for 1998 and subsequent taxation years, a student can claim an education amount of $60 per month if the student was enrolled part-time at a designated educational institution in a "specified educational program". 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 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 per month on courses in the program. The onus would 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. Hours of "instruction or work" excludes study time (e.g. time spent studying for exams) but includes hours spent in the preparation of assignments, essays, term papers and other written work. Even though your client appears to meet the 13 week test, we still do not have sufficient information (ex. 12 hour per month test) to determine if your client is entitled to claim the part-time education tax credit as this can only be resolved after a review of all the relevant facts. Such a review is normally best conducted by a local tax services office. In this regard, should you require further assistance, we encourage you to contact your client's local tax services office. We would be pleased to provide the local tax services office with assistance should they so request.

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

Enclosures