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: Can fees paid to the University of Toronto for enrolment in the National Committee on Accreditation (NCA) Challenge Examination Review Program by a foreign trained lawyer that is a NCA candidate qualify for the tuition tax credit?
Position: No.
Reasons: Subparagraph 118.5(1)(a.ii) of the Act requires that courses for which the fees are paid must be at the post-secondary school level. The fee paid for the Program is not for an examination that is required to obtain professional status that allows the individual to practice their profession in Canada and therefore does not qualify under subparagraph 118.5(1)(d) of the Act.
XXXXXXXXXX
2012-043981
N. Shea-Farrow
April 26, 2012
Dear XXXXXXXXXX:
Re: Fees paid by a foreign trained lawyer
This is a response to your e-mail of March 13, 2012 asking if fees, paid to the University of Toronto (University) for enrolment in the National Committee on Accreditation (NCA) Challenge Examination Review Program (Program) by a foreign trained lawyer that is a NCA candidate, qualify for the tuition tax credit.
You have stated the following:
1) You hold a L.L.B. from the XXXXXXXXXX.
2) In order to practice law in the Province of Ontario you are required to write 9 challenge exams based on the assessment by the NCA.
3) If you successfully complete these exams the NCA will issue a Certificate of Qualification.
4) You enrolled in the Program to assist you in writing your first XXXXXXXXXX challenge examinations.
5) You requested a T2202A, Tuition, Education and Textbook Amounts Certificate (T2202A) from the University and were informed that the University does not issue a T2202A in respect of the Program.
Comments
The Canada Revenue Agency's (CRA) general view regarding the tuition tax credit is contained in Interpretation Bulletin IT-516R2, Tuition Tax Credit (IT-516R2) which is available on the CRA web site at www.cra-arc.gc.ca.
Paragraph 118.5(1)(a) of the Income Tax Act (the “Act”) allows a tuition tax credit for fees paid by a student enrolled at an educational institution in Canada that is a university, college or other educational institution providing courses at a post-secondary level. Subparagraph 118.5(1)(a.ii) of the Act requires that courses for which the fees are paid must be at the post-secondary school level. Generally for a course to be considered to be at the post-secondary level the course should provide credit towards a degree, diploma or certificate; and a prerequisite for taking the course should be completion of secondary school. It is generally assumed that a course is at the post-secondary level if the education ministry for the province in which the course is given considers it to be at that level.
According the University’s website, the Program offers examination review classes to help foreign trained lawyers or law graduates in Canada who are NCA candidates prepare for challenge examinations in 8 subjects. The website also states that the program is not intended to teach the entire NCA syllabus, but instead it is to provide a guided overview only of the NCA subject syllabus. It does not appear this Program offers courses that are at a post-secondary level as the Program offers only an overview of various subjects to help prepare individuals to write challenge examinations given by the NCA and the Program does not lead to a degree, diploma or certificate at the University. Also the fact that the University does not issue a T2202A for the Program also indicates that the Program does not offer courses at the post-secondary level. Therefore the Program would not qualify for the tuition tax credit under subparagraph 118.5(1)(a) of the Act.
Generally speaking, for 2011 and subsequent tax years, paragraph 118.5(1)(d) of the Act allows fees paid by an individual for an examination taken in the year that is required to obtain a professional status recognized under a federal or provincial statute, or to be licensed or certified as a tradesperson, where that status, licence or certification allows the individual to practice the profession or trade in Canada. The fee must be paid to an educational institution in subparagraph 118.5(1)(a) of the Act, a professional association, a provincial ministry or other similar institution.
According to the University’s website the Program is voluntary and is not required by the NCA or the provincial law society. The fee was paid to the University to prepare for challenge examinations that are given by the NCA in order to obtain a Certificate of Qualification from the NCA. The fee paid for the Program is not for an examination that is required to obtain professional status that allows the individual to practice their profession in Canada and therefore does not qualify under subparagraph 118.5(1)(d) of the Act.
According to the Federation of Law Societies of Canada’s website the provincial and territorial law societies of Canada have the statutory responsibility to regulate the legal profession and this responsibility includes the task of admitting lawyers to the profession. In all common law provinces and territories there are three requirements for admission to the bar: a Canadian law degree or its equivalent, successful completion of a bar admission or licensing program and completion of an apprenticeship known as articling. For applicants who receive their training outside Canada the determination of what constitutes qualifications “equivalent to” a Canadian law degree is made by the NCA, a committee of the Federation of Law Societies of Canada.
The NCA’s primary mandate is to protect the public interest by assessing the legal education and professional experience of individuals who obtained their credentials outside Canada or in a Canadian civil law program, and who want to apply for admission to a common law Bar in Canada. According to you, the NCA requires you to write 9 NCA challenge examinations. Once you have successfully completed these examinations, the NCA will issue a Certificate of Qualification. Most law societies in Canada require the NCA’s Certificate of Qualification to access their Bar admission process, if an individual did not graduate from a common law program offered by a university in Canada approved by Convocation. According to the 2011 Federal Budget proposal, which is now legislated, foreign-trained workers are often required to complete additional examinations in order to obtain their professional status in Canada and if the examination is required to obtain a professional status that is recognized by federal or provincial statute and allows the individual to practice in Canada the fees paid should be allowed for the tuition tax credit. In our opinion fees paid to the NCA for challenge examinations that are required to obtain a Certificate of Qualification would be eligible under paragraph 118.5(1)(d) of the Act, provided all other conditions are met for the tuition tax credit.
The lawyer licensing process in the Province of Ontario is governed by the Law Society of Upper Canada (the “Society”). An individual can apply to this Society to enter the lawyer licensing process if the individual has obtained a Certificate of Qualification or has graduated from a common law program offered by a university in Canada approved by Convocation. It is our understanding that the lawyer licensing process in Ontario includes two examinations the Solicitor Licensing Examination and a Barrister Licensing Examination. The fees paid for these examinations would also qualify under paragraph 118.5(1)(d) of the Act, provided all other conditions are met for the tuition tax credit. The CRA’s website has more information on what examination fees are eligible under “Tuition Amount – Examinations”.
We trust our comments will be of assistance.
Sharmini Ratnasingham
Assistant Director
for Director
Financial Industries Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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