19 February 2003 External T.I. 2003-0002555 - TUITION TAX CREDIT DISTANCE LEARNING

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Are tuition fees paid to a U.K. university for a distance learning program eligible for the tuition tax credit.

Position TAKEN: No

Reasons: Not in full-time attendance.

XXXXXXXXXX 	2003-000255
		Cornelis Rystenbil, CGA
February 19, 2003

Dear XXXXXXXXXX:

Re: Tuition Tax Credit

This letter is in response to your letter dated February 11, 2003 in which you ask whether tuition fees paid to a U.K. university for a distance learning course are eligible tuition fees.

We understand that you are a Canadian resident, you have a full-time job in Canada, and you have enrolled in a distance education Master of Arts program at XXXXXXXXXX (the "University") in the U.K. You note that, in your view, the program you are enrolled in would qualify for the tuition tax credit since as stated in paragraph 12 of IT-516R2, Tuition Tax Credit, that "... a post-graduate student holding a full-time job is not necessarily precluded from being considered in full-time attendance at a university".

Comments:

The Canada Customs and Revenue Agency's (CCRA) general views regarding the tuition tax credit are found in Interpretation Bulletin IT-516R2 entitled "Tuition Tax Credit".

One of the specific requirements of section 118.5 of the Income Tax Act (the "Act"), for claiming a tuition tax credit with respect to tuition fees paid to a university outside Canada, is that the student must be in full-time attendance at the university. The full-time attendance requirement is discussed in paragraphs 10 to 12 of IT-516R2. In any case, the determination of whether you would be considered a student in full-time attendance at a University is a question of fact.

Paragraph 10 of IT-516R2 states that, where a University or college considers that the students enrolled in their programs are in full-time attendance, the students are generally considered to have met the full-time attendance requirement under the Act. However, as noted in paragraph 11 of IT-516R2, a student is not considered to be in full-time attendance at a university outside Canada where the courses are taken only by correspondence, or where the student is carrying only a minor course load and is devoting much of his or her time to money earning activities. Generally, if there is no physical presence at the foreign university, the students cannot claim the tuition tax credit.

The definition of full-time was interpreted in the case Reddam v. M.N.R. (64 DTC 382) where it was stated that full-time means all the time. Attendance was interpreted in E.A. Hunt v M.N.R. (77 DTC 79) and in Frank Albert Ritchie v. M.N.R. (70 DTC 1407). as "... being present when necessary for the purpose of instruction and should not be stretched to mean physically and permanently present at all times, but only to the extent of enabling the candidate to pursue studies...". Thus we accept that full-time attendance does not automatically require day-to-day physical attendance. However, it should be noted that the court cases have generally been in the context of whether a full-time employee can, at the same time, be considered to be in "full-time attendance". These court cases have not, in our opinion, established a precedence that physical presence at the foreign university is not necessary where the program is a distance learning program. In this regard, recent amendments to subsection 118.6(2) of the Act removed the requirement that an individual be in full-time attendance at a designated educational institution to benefit from the education tax credit. The purpose of that amendment was to ensure that the credit was available to full-time post-secondary students enrolled in distance education programs or correspondence courses. In our view, had the Department of Finance wanted foreign university distance learning education programs to qualify for the tuition credit they could easily have made the amendment to paragraph 118.5(1)(b) of the Act at the same time.

In our view, your tuition fees are not eligible for the tuition tax credit. For your information, the CCRA administers and enforces the laws set out in the Act. The Department of Finance is responsible for tax policy and amending the Act. Should you wish to write to the Department of Finance to reconsider its existing position to take into account your situation, you may do so by writing to the following address: Department of Finance, Tax Policy Branch, L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5

We trust that our comments will be of assistance.

Yours truly,

Mickey Sarazin, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate