1 October 2013 External T.I. 2013-0478801E5 - Examination Fee under 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.

Principal Issues: Is the International Qualification Examination (IQEX) fee for CPAs eligible under the Tuition Tax Credit?

Position: Not likely

Reasons: The payment for the examination fee for the IQEX will not likely qualify under paragraph 118.5(1)(d) as there is no direct relationship between the examination and obtaining the professional status to practice in Canada.

XXXXXXXXXX
2013-047880
George A. Robertson, CMA

October 1, 2013

Dear XXXXXXXXXX:

Re: Licensing Examination Fees

We are writing in response to your query as to whether the fee for the International Qualification Examination (IQEX) for a Certified Public Accountant (CPA) would qualify as a licensing examination fee for purposes of the tuition tax credit.

Additional information you provided states:

• The IQEX is a reciprocity exam that allows Canadian Chartered Accountants (CA) to obtain their United States (US) CPA designation. In order to prepare US tax returns in Canada, you are required to have either a CPA designation or obtain a registered number through a series of examinations. This is required in both Canada and the US.
• Tax professionals that advise in a cross-border context between Canada and the US will require the knowledge of the US tax rules, but the IQEX is not required to practice a cross-border tax practice in Canada.

Written confirmations of the tax implications inherent in particular transactions are provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency publications can be accessed on the internet at www.cra-arc.gc.ca/formspubs/menu-e.html. Where a particular transaction has already been completed, a review of the relevant facts and circumstances surrounding the situation would be required. Such review would normally be conducted by the applicable Tax Services Office during the course of an income tax audit which, if undertaken, would be carried out after the particular taxpayer has prepared and filed its income tax return for the year. Notwithstanding the foregoing, we are prepared to provide the following comments that may be of assistance.

Two of the three criteria noted in paragraph 2.40 of the Income Tax Folio: Tuition Expense Tax Credit are that the examination is "required in order for the individual to obtain a professional status recognized under a federal or provincial statute, ..." and "the status, license or certification allows the individual to practice the profession or trade in Canada". This folio is available at
www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f2/s1-f2-c2-eng.html

Based on the information provided, the individual is a Canadian CA who can practice in Canada. In our view the payment for the examination fees for the IQEX will not likely qualify under paragraph 118.5(1)(d) as there is no direct relationship between the examination and obtaining the professional status to practice in Canada.

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

Yours truly,

Sharmini Ratnasingham
for Director
Business & Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch