19 February 1999 Income Tax Severed Letter e9901795.txt - EDUCATION 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: (a) The wording set out in new proposed subsection 118.6(2) of the Income Tax Act states “and, in respect of a designated educational institution described in subparagraph (a)(ii) of the definition “designated educational institution” in subsection (1), the individual is enrolled in the program to obtain skills for, or improve the individual’s skills in, an occupation”. How does this requirement relate to the preparation of Form T2202 where the institution does not know whether it is satisfied?

(b) Paragraph (b) of B within the formula set out in proposed subsection 118.6(2) states that “$60 is multiplied by the number of months in the year ... each of which is a month during which the individual is enrolled at a designated education institution in a specified educational program that provides that each student in the program spend not less than 12 hours in the month in the program.” Does a part of a month only qualify if the 12 hour test is met?

Position: (a) It is our view that the educational institution is not required to certify that the above requirement has been met. Rather, it is the student who will be required to make the required certification on Form T2202.

(b) Yes

Reasons: (a) The position is consistent with comments in file 921732

(b) The wording supports the position on the basis that “month” is defined in subsection 35(1) of the Interpretation Act to mean a calendar month. In addition, it has been indicated to us in a telephone conversation (Eisner/Dubrule) that the position is correct from a tax policy standpoint

XXXXXXXXXX 990179
M. Eisner
Attention: XXXXXXXXXX

February 19, 1999

Dear Sir:

Re: Education Tax Credit

This is in reply to your letter of January 22, 1999 concerning the proposed amendments to section 118.6 of the Income Tax Act (the “Act”) concerning the education tax credit. You have asked whether special interest courses will qualify for the proposed part-time education tax credit, for example, where an individual is taking a single course in the evening regarding music. You have also asked if continuing education courses taken in the evening would qualify for the part-time education tax credit in a situation where the courses ran for eleven weeks, one night per week, three hours per night.

We have enclosed Interpretation Bulletin IT 515R2, Education Tax Credit (the “bulletin”) and where relevant, have made reference to its content for your convenience.

Our Comments

Under proposed subsection 118.6(2), 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 proposed 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.

With respect to your first enquiry, where the institution is an institution described in subparagraph (a)(i) of the definition of “designated educational institution” (see paragraph 8(a) of the bulletin), then, pursuant to the definition of “qualifying educational program” (see paragraphs 10 to 16 of the bulletin), the program must be, among other criteria, at a post-secondary school level. A special interest course would generally not meet this test. Where the institution is described in subparagraph (a)(ii) of the definition of “designated educational institution” (see paragraph 8(b) of the bulletin), then the “post-secondary school level” test does not apply. With respect to the current law regarding the full-time education tax credit, this generally would not be an issue because special interest courses would not meet the 10 hour per week test in the “qualifying educational program” definition. Now that the 10 hour per week test is reduced to a 12 hour per month test with respect to the proposed part-time education tax credit, in certain circumstances an individual enrolled in a special interest course may qualify for the proposed $60 per month credit. However, whether under the current law regarding the full-time education tax credit or the proposed law regarding the part-time education tax credit, there remains a test that where the institution is described in subparagraph (a)(ii) of the definition of “designated educational institution”, the individual must be enrolled in the program to obtain skills for, or improve the individual’s skills in, an occupation (the “job function test”). The job function test would generally preclude most individuals enrolled in a special interest course from qualifying for either the full-time education tax credit or the proposed part-time education tax credit.

We agree with you that the certification with respect to the job function test can not be made by the institution and would have to be made by the student. The Department’s comments in paragraph 1 of the bulletin would be of some assistance on this issue. However, as a further comment in respect of your first enquiry, certification should only be provided in respect of a special interest course to the extent that the “12 hour” test described below has been met.

In response to your second enquiry, the proposed law with respect to the part-time education tax credit requires that “each student in the program spend not less than 12 hours in the month on courses in the program”. Accordingly, it is our view that a part of a calendar month would only qualify if the 12 hour test with respect to that month has been met. For example, if a student were to enrol in a program part way through a month and only spent 2 weeks in that month for a total of 6 hours (3 hours a week) on courses, that month would not qualify for purposes of the part-time education tax credit.

We trust that our comments will be of assistance to you.

Yours truly,

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

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