31 January 2001 External T.I. 2000-0047275 - TUITION TAX CREDIT-ENGLISH LANG. TRAINING

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: Whether English second-language training qualifies for the tuition tax credit.

Position: Likely no.

Reasons: It is our view that tuition paid for English second language training would not qualify for the tuition tax credit because English is generally considered a lifeskill and does not necessarily improve the student's occupational skills.

XXXXXXXXXX 	J. Gibbons, CGA
		2000-004727
January 31, 2001

Dear XXXXXXXXXX:

We are replying to your letter of September 1, 2000, concerning the tuition tax credit. You wish to know if XXXXXXXXXX (the "College") may issue receipts for the tuition paid by its students and, if not, why other institutions with similar programs are allowed to do so. The College provides full-time "English as a second language" training.

As requested, we have considered your questions and have provided some comments below. However, we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4. Thus, our comments are of a general nature only.

In your letter, you indicated that the XXXXXXXXXX Tax Services Office provided you with a copy of Interpretation Bulletin IT-516R2, "Tuition Tax Credit". It is your understanding from this bulletin that the critical test in determining whether or not tuition qualifies for the tuition tax credit is whether there are sufficient skills to be acquired in the course to enable the student to work at an occupation, or, where the student already possesses sufficient skills to enable the student to work at an occupation, whether the course is capable of improving those skills.

Our Comments

We were not provided with any information as to whether the College has been certified by the Minister of Human Resources Development to be an educational institution providing courses (other than courses designed for university credit) that furnish a student with skills for, or improve a student's skills in, an occupation, as required under subparagraph 118.5(1)(a)(ii) of the Income Tax Act (the "Act"). (See paragraphs 2 and 4 of IT-516R2.) However, in the situation where the tuition tax credit relates to tuition fees paid to an educational institution which has received such certification, we agree with your understanding that the above is a critical test. This test stems from the requirement in clause 118.5(1)(a)(ii.2)(B) of the Act that the purpose of the enrolment must be to furnish a person with skills for, or improve a person's skills in, an occupation.

It is a question of fact whether a particular course is capable of improving a student's occupational skills or is sufficient to furnish the student with enough skills to enable the student to work at an occupation. However, it is our view that tuition paid for English second language training would not qualify for the tuition tax credit because English is generally considered a lifeskill and does not necessarily improve the student's occupational skills. In regard to your statement that other institutions similar to yours are providing tuition receipts, we can assure you that the rules discussed above are applied equally to all educational institutions. If some educational institutions are incorrectly issuing tuition receipts, their students may be subject to adverse reassessment action by the Canada Customs and Revenue Agency (the "CCRA").

You indicated that you wish to discuss your concerns with officials from the CCRA. Please note that the role of the CCRA is to administer and enforce the Act as passed by Parliament. Any changes to the rules relating to the income inclusion of financial assistance and the tuition credit would require amendments to the Act and a change in tax policy, which are the responsibilities of the Department of Finance. Should you wish to pursue your concerns further, you may contact the Tax Policy Branch of the Department of Finance by writing to L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario K1A 0G5.

We trust that these comments will be of assistance.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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