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: Various questions related to the completion of Form T2202A, Tuition and Education Amounts Certificate.
Position: See questions and answers in our response.
Reasons: See Rulings file # 971711, 951676, 930195, 961018, 910602
XXXXXXXXXX 982792
G. Moore
December 18, 1998
DearXXXXXXXXXX:
Re: Tuition Tax Credit and the Education Tax Credit
This is in reply to your letter of October 26, 1998, regarding the tuition tax credit and the education tax credit.
In your letter, you indicate that the XXXXXXXXXX offers courses through a variety of delivery methods but primarily distance education courses are offered. A 3-credit course with a normal duration of four months (i.e. September - December) at a traditional on-campus institution would be offered over a 30-week period by distance education at XXXXXXXXXX. Students may register or commence courses at any time during a month, and have 30 weeks from that date to complete the course. The following are two examples:
(a) September 7, 1998 - March 30, 1999 (7 calendar months) or
(b) September 29, 1998 - April 20, 1999 (8 calendar months).
You have asked for our comments regarding the following issues:
1. What is Revenue Canada's definition of "month"? Is it a calendar month or a 30 day period?
2. Should the XXXXXXXXXX 3-credit course in the scenario above be recognized as 4 or 7 or 8 months?
It is your view that XXXXXXXXXX should be reporting 4 months on the T2202A form, Tuition and Education Amounts Certificate, since this is the amount of time it would have taken on-campus and it is what you would consider to be "normal" completion time. Because XXXXXXXXXX courses are self-paced, students may use the entire 30 weeks or accelerate their studies and complete in less time. Financial aid students are required by their contract to complete their courses in 4 months. If you can report 7 or 8 months on the T2202A form, then in a reporting year in which a student starts a course but is scheduled to finish it in the following year (ex. September 7, 1998 - March 30, 1999), it is your view that XXXXXXXXXX would report 4/7 of the tuition fees for 1998 and 3/7 of the tuition fees for 1999. If the student then finishes the course early (ex. February 1999 and after XXXXXXXXXX has mailed the T2202A forms for 1998) the student would probably request an amended tax receipt (4/6 of the tuition fees on the 1998 T2202A forms and 2/6 of the tuition fees on the 1999 T2202A form).
3. Should XXXXXXXXXX issue amended certificates based on actual study time (which can only be determined after course completion) or should XXXXXXXXXX base the T2202A forms on the maximum time allowed and not issue amended T2202A forms if students complete the course early? XXXXXXXXXX uses the course duration to decide how to prorate the tuition when courses span two years so that the number of months determines the proration of tuition.
4. What is Revenue Canada's definition of full-time studies?
For financial aid purposes, XXXXXXXXXX recognizes any month in which a student is actively registered in 9 credits of study in XXXXXXXXXX courses as having full-time status. XXXXXXXXXX has used this as its overall definition of "full-time".
Further to the telephone conversation (Moore/XXXXXXXXXX) of December 9, 1998, it is our understanding that a student taking an XXXXXXXXXX correspondence course can commence taking a course at any time during the year and has up to 30 weeks to complete the course, with the exception of students who are receiving financial aid who only have 4 months to complete the course. XXXXXXXXXX permits the student to write the exam for the course he or she is taking even if the student has not completed the assignments; however, the assignments have to be completed before the course is considered to be completed. A student taking a correspondence course may write the course exam at any of the exam sessions which are held in February, April, June, August, October and December. In addition, it is our understanding that XXXXXXXXXX generally considers that a student would complete a correspondence course in 4 months if a student spends 15 hours per week on the course.
We will address your questions in the order in which you have asked them in your letter:
1. You have asked for Revenue Canada's definition of "month". The term "month" is not defined in the Income Tax Act (the "Act"). However, subsection 35(1) of the Intrepetation Act defines "month" to mean a calendar month. For purposes of subsection 118.6(2) of the Act, a student may claim an education tax credit determined by formula for each month in the calendar year during which the student is enrolled in a "qualifying educational program" (as defined in subsection 118.6(1) of the Act) as a full-time student at a "designated educational institution", including the months in which a course starts and ends.
2. Paragraph 118.5(1)(a) of the Act sets out the circumstances under which a student may claim a tuition tax credit for tuition fees paid to an educational institution in Canada. In general, the amount of the tuition tax credit is determined by multiplying the lowest tax rate percentage referred to in subsection 117(2) of the Act by the amount of any fees for the individual's tuition paid in respect of the year to a qualifying educational institution. The total of such fees paid to an educational institution in Canada for the year must exceed $100. The requirements of subsection 118.5(1) of the Act are discussed in Interpretation Bulletin IT-516R2, Tuition Tax Credit, (copy enclosed). With respect to the scenario you outlined in your letter, it is our view that the phrase "in respect of the year to the educational institution" in subsection 118.5(1) of the Act should be interpreted as the time period over which the course is taken. If a student completes an XXXXXXXXXX correspondence course in a shorter time period than the maximum 30-week period permitted by XXXXXXXXXX , then it is our view that the tuition fees shown on the T2202A form should reflect the actual number of months over which the student completed the course, rather than the maximum 30-week period permitted to students who are not receiving financial aid or the 4-month period permitted to students who are receiving financial aid. As we understand it, XXXXXXXXXX would not consider that the student has completed the correspondence course until the student has successfully completed the assignments and exam.
3. You have asked whether XXXXXXXXXX should issue amended T2202A forms based on actual study time, which can only be determined after course completion, or should XXXXXXXXXX base T2202A forms on the maximum time allowed even if students complete courses early. It is our view that, based on the wording in subsection 118.1(5) of the Act, as discussed in (2) above, the T2202A form should reflect the actual number of months over which the course is completed by a student. Accordingly, the T2202A form should be amended by XXXXXXXXXX, if necessary, after the completion of a course, to reflect the actual number of months over which a student has completed the course.
4. 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. While the terms "designated educational institution" and "qualifying educational program" are defined in subsection 118.6(1) of the Act, the term "full-time student" is not defined in the Act. Paragraphs 5 to 7 of Interpretation Bulletin IT-515R2, Education Tax Credit, (copy enclosed) provide general comments regarding the Department's interpretation of this term.
As indicated in paragraph 5 of IT-515R2, the requirement for enrolment as a full-time student at a designated educational institution must ultimately be met on the basis of the facts of each case. Therefore, the Department must rely on the educational institution's determination as to whether the student meets its requirements for registration as a full-time student. It should be noted that subsection 118.6(2) of the Act specifically requires "enrolment as a full-time student at a designated educational institution". Therefore, the institution's classification of its students is relevant for purposes of this provision.
Also, it is important to note that the "qualifying educational program" criterion must also be met as it is a test separate from the requirement for enrolment as a full-time student at a designated educational institution. Paragraphs 10 to 16 of IT-515R2 discuss the term "qualifying educational program". 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 10 hours per week on courses or work in the program.
Under proposed law, 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 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 replaced by the requirement that a student spend not less than 12 hours per month on courses in the program.
You have indicated in your letter that for financial aid purposes, XXXXXXXXXX recognizes any month in which a student is actively registered in 9 credits of study in XXXXXXXXXX courses as having full-time status. XXXXXXXXXX has used this as its overall definition of "full-time" for purposes of the education tax credit. As indicated above, the Department does not have a definition of "full-time" for purposes of the education tax credit in subsection 118.6(2) of the Act. However, it is our view that a student who is enrolled in 9 credits of study in XXXXXXXXXX correspondence courses and who has completed these courses in a shorter period of time (ex. 26 weeks) than the 30-week maximum permitted by XXXXXXXXXX, should not be allowed to claim the education tax credit in respect of weeks 27 to 30, assuming that the student did not enroll in another 9 courses commencing in week 27. It is also our view that if a student is taking 9 credits of study in XXXXXXXXXX courses over a 30 week period, even if the student is considered to be "full-time" by XXXXXXXXXX for purposes of the education tax credit, the student would also still have to meet the test of being enrolled in a qualifying educational program of at least 3 weeks duration that provides that each student taking the program spend not less than 10 hours per week on courses or work in the program.
We trust our comments will be of assistance to you.
Yours truly,
J. Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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