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.
Dear Sirs:
This is in reply to your letter of November 14, 1990, referring to earlier correspondence, concerning the deductibility of the Goods and Services Tax (“GST”) portion of tuition fees.
Based on the information provided, we understand that the tuition fees in question, although eligible for computing the tuition tax credit for income tax purposes, do not fall within the exemptions from GST.
In setting out what is eligible for computing the tuition tax credit, paragraph 118.5(a) of theIncome Tax Act(the “Act”) refers to “the amount of any fees for his tuition paid in respect of the year to the educational institution”. In contrast, in other areas of the Act, the terms “cost” or “capital cost” are used when referring to qualifying amounts. Neither of these terms is defined in the Act. However, the Department has generally interpreted “capital cost” to mean the full cost to the taxpayer of acquiring property and whether an expenditure qualifies as part of “cost” depends on sound business and commercial principles. Therefore, the cost of property would include costs like legal, accounting, engineering and other fees and also such expenses as commissions, brokers' fees and sales tax incurred in order to acquire the property. Use of the phrase “the amount of any fees paid” suggests that it is not the cost of attending an educational institution which qualifies but rather the actual tuition fees paid to an educational institution. The Act also does not contain a specific definition of tuition fees; however the Department has set out in paragraph 26 of Interpretation Bulletin IT-516 items which are considered eligible tuition fees. It is our position that the GST would not be eligible for the purpose of computing the tuition tax credit because the GST would be, in this case, a tax on fees rather than an additional tuition fee and the GST is not similar to any of those items which are considered eligible.
We trust these comments will prove helpful.
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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