Section 118.5

Subsection 118.5(1) - Tuition credit

See Also

Van Helden v. The Queen, 2014 DTC 1156 [at 3505], 2014 TCC 196 (Informal Procedure)

private piano lessons ineligible; obiter dictum that neither are music schools

In the course of finding that the taxpayer's alleged fees paid for private piano lessons were not deductible (see also Kam), VA Miller J suggested that the finding in Tarkowski that the Mississauga School of Music was an educational institution was "over-reaching," although she did not elaborate (para. 14).

Zailo v. The Queen, 2014 DTC 1087 [at 3128], 2014 TCC 60 (Informal Procedure)

undergrad courses outside Canada ineligible when taken for a certificate rather than a bachelor's degree

The taxpayer enrolled in an audio engineering program that could lead either to a certificate or to an associate's degree - although it could also lead to a bachelor's degree if the student combined it with a musical performance program. Rossiter ACJ found that the taxpayer was ineligible for a tuition credit, as Klassen establishes that "degree" means at least a bachelor's degree. Rossiter ACJ stated (at para. 7):

[W]hy would courses leading to an associate's degree, which could in fact be included as part of the qualification to a bachelor's degree, not be eligible for a tuition credit? ... The answer is that, as per the Appellant's testimony, these courses were used towards a certificate program and not towards a bachelor's degree.

Kam v. The Queen, 2013 DTC 1218 [at 1210], 2013 TCC 266 (Informal Procedure)

piano lessons

Favreau J stated (at para. 22):

I do not think that a one-hour piano lesson per week is sufficient for the Appellant's son to be considered as being enrolled at an university, college, or other educational institution providing courses at a post-secondary level.

Abdalla v. The Queen, 2011 DTC 1247 [at 1412], 2011 TCC 328 (Informal Procedure)

"course" duration requirement could be satisfied by multiple consecutive "courses"

The Minister denied the taxpayer's deduction for her husband's studies in Arizona at the University of Phoenix. Webb J. found (at para. 14) that the husband had not studied "in Canada." The facts were distinguishable from Cammidge, where the taxpayer had studied at the University of Phoenix's Edmonton campus.

Nevertheless, the taxpayer could claim a deduction under s. 118.5(1)(b). Although none of the husband's individual courses exceeded eight weeks in duration, his studies comprised multiple consecutive courses over at least 13 weeks. Webb J. found (at para. 22) that the singular "course" in s. 118.5(1)(b)(i) includes the plural.

Words and Phrases
course consecutive

Cammidge v. The Queen, 2011 DTC 1146 [at 782], 2011 TCC 172 (Informal Procedure)

The taxpayer studied at the University of Phoenix's Edmonton campus. Little J. found that the university was an "institution in Canada" for the taxpayer's purposes under s. 118.5(1)(a), given that the taxpayer's studies occurred on a Canadian campus. She could therefore deduct tuition expenses.

Little J. pointed out, however, that the taxpayer could not deduct education tax credits, because the University of Phoenix did not qualify as a "designated educational institution" under s. 118.6.

Ferre v. The Queen, 2010 1405 [at 4635], 2010 TCC 593 (Informal Procedure)

The taxpayer, who was enrolled in an online-MBA program at the University of Liverpool, did not qualify for the tuition credit because the courses of study were broken down into modules of approximately six weeks, so that the tuition paid by him was in respect of courses of less than 13 consecutive weeks.

Tarkowski v. The Queen, 2007 DTC 1555, 2007 TCC 632 (Informal Procedure)

The taxpayer was able to claim a tuition credit in respect of his son, who was taking music lessons at the Mississauga School of Music in Grade 3 and 4 Harmony and Grade 8 piano under the Royal Conservatory of Music system. The Mississauga School of Music was an educational institution notwithstanding that the method of teaching was by tutoring and notwithstanding that exams were given by the Royal Conservatory rather than this School; and the courses in question qualified as post-secondary courses given that a Grade 12 high school credit was accorded for Grade 8 piano and Grade 2 theory.

McGrath v. The Queen, 2007 DTC 894, 2007 TCC 295 (Informal Procedure)

The taxpayer who enrolled in a Masters program at Walden University in Chicago, and participated in courses on line, was found to have satisfied the requirement of "attendance" within the meaning of s. 118.5(1)(b).

Krause v. The Queen, 2004 DTC 3265, 2004 TCC 594 (Informal Procedure)

attendance online

Before finding that the appeal of the taxpayer, who was enrolled in a Ph.D. program at a college of business administration in California (Touro University International), should be dismissed because the appeal was from a nil assessment, Bowman A.C.J. went on to state in obiter (at p. 3271):

I think it is strongly arguable that full-time attendance at a foreign university can include full-time attendance through the internet or on-line as is the case here. That view conforms to common sense and to the reality of modern technology.

Words and Phrases
full time attendance

Van de Water v. MNR, 91 DTC 276 (TCC)

Pierrefonds, Quebec, which was some 75 to 80 kilometres from the Canada-U.S. border, was not "near" that boundary.

The Queen v. Gaudet, 78 DTC 6556, [1978] CTC 686 (FCA)

The taxpayer's spouse who spent seven hours per week attending evening classes was not in "full-time attendance".

Administrative Policy

20 June 1994 T.I. 940486 (C.T.O. "Tuition Fees to Medical Council of Canada")

Fees paid to the Medical Council of Canada or to the Educational Commission for Foreign Medical Graduates (Pennsylvania) are not in respect of "tuition" but are simply examination fees (with the examination not forming an integral part of a course of study).

19 December 1991 T.I. (Tax Window, No. 12, p. 18, ¶1573)

A deposit in respect of tuition fees will not qualify for the credit if the student decides not to attend the institution, even if the deposit is forfeited.

7 August 1991 Memorandum (Tax Window, No. 7, p. 7, ¶1388)

Where a student taking courses leading to a post-graduate degree in business management is required to attend the university for only a few weeks in the year but is required to apply in a work environment the advance management techniques being learned and to maintain contact with other students and the tutors through a computer and through the submission of assignments by correspondence, the student will be considered to be in full-time attendance for purposes of s. 118.5(1)(b).

Paragraph 118.5(1)(a)

Administrative Policy

5 February 2015 External T.I. 2014-0526991E5 F - Émission d'un T2202A

tuition fees determined on accrual basis

Can a university in Canada, as an accredited educational institution issue T2202A forms to students taking a particular course of 6 credits as part of a post-secondary program, where the courses are for several months, straddle two calendar years and provide one class per month. In the course of a general discussion, CRA stated:

[F]or the purpose of issuing a T2202A certificate, the calculation of fees paid by a student should be done on an accrual basis (for each calendar year) rather than on a cash basis (for the year in which the fee was paid).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.6 - Subsection 118.6(1) - Specified Educational Program determination of duration of enrolment 150

Subparagraph 118.5(1)(a)(i)

Administrative Policy

S1-F2-C2 - Tuition Tax Credit

a) Unless there is specific information to the contrary, an educational institution is generally accepted to be a university or college if the applicable province or territory in which the institution is located considers it to be a university or college, as long as courses are given at a post‑secondary school level. ...

b) An other educational institution may include a professional organization that provides educational courses at a post-secondary school level to members, as long as one minimum qualification for membership is secondary school graduation. Generally, a professional organization is one that is empowered, under federal or provincial legislation, to make regulations governing certification and licences to practice the profession, examination of candidates for membership and the right to practice, and the institution of a professional code of conduct for its members. An organization, professional or otherwise, that provides evaluation, examination, or other such services, but does not provide educational courses, is not considered to be an educational institution for purposes of paragraph 118.5(1)(a);

c) An educational institution is not ineligible under subparagraph 118.5(1)(a)(i) solely by reason of the fact that it provides other courses in addition to post‑secondary school level courses; or

d) An institution in Canada that has been designated as a specified educational institution under the Canada Student Loans Act or that has been recognized for the purposes of the Canada Student Financial Assistance Act or An Act respecting financial assistance for education expenses of the Province of Quebec is presumed to satisfy the eligibility requirements.

S1-F2-C2 - Tuition Tax Credit

Generally, for a course to be considered to be at the post‑secondary school level:

a) the course should provide credit towards a degree, diploma or certificate; and

b) a prerequisite for taking the course should be completion of secondary school.

It is generally assumed that a course is at the post‑secondary school level if the education ministry for the province in which the course is given considers it to be at that level. In any case, it is the status of the course and not the status of the individual that is relevant.

Subparagraph 118.5(1)(a)(ii)

Administrative Policy

S1-F2-C2 - Tuition Tax Credit

If a student takes a number of courses that are required in order to acquire the skills necessary to work at an occupation, each course will qualify. On the other hand, if a student takes only an initial or introductory course in a particular trade or profession, that course will normally not qualify because sufficient skills have not been obtained. However, if the student goes on and takes the necessary additional courses required for a person to carry on that trade or profession, both the initial course and the additional courses will qualify. Second language training (in particular, French or English) may be viewed as providing a student with skills in an occupation as long as the course is undertaken for the specific purpose of gaining or improving language skills required for an occupation.

Paragraph 118.5(1)(b)

Cases

Archibald v. Canada, 2018 FCA 2

on-line MBA program that progressed 3-times more slowly than full-time course did not qualify

The taxpayer appealed an assessment that tuition fees paid to the University of Liverpool for an on-line MBA program did not qualify for the tuition tax credit because the taxpayer was not enrolled at the University on a full-time basis as required by paragraph 118.5(1)(b). Woods J.A. stated (at para. 6):

[T]here is no reversible error with the approach of the Tax Court which gave significant weight to the policy of the University that gives credits for this on-line course at a rate of 30% to 40% of the rate that credits are accumulated for equivalent on-campus studies. As a result, the on-line course takes three years to complete whereas the equivalent course attended by students on campus takes just one year.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) taxpayers cannot rely on favourable CRA treatment of similarly-situated taxpayers 98

Klassen v. Canada, 2007 DTC 5612, 2007 FCA 339

institution conferring only 2-year degrees not "university"

In finding that an American educational institution called "Minot State University - Bottineau, which granted a two-year associate degree, with students following the two years being permitted to transfer course credits towards a bachelor degree at Minot State University, was not a "university outside Canada" for purposes of ss.118.5(1)(b) and 118.6(1)(b), Noël J.A. stated (at para. 21):

"I therefore conclude that the expressions 'university outside Canada' refers to an educational institution which confers degrees usually granted by universities, that is a doctorate degree, a masters degree or at minimum degrees at the baccalaureate level or its equivalent. The degree granted by MSU - Bottineau in this case (i.e., the 'associate degree') attests to the successful completion of a two year undergraduate program. As this is the highest degree which MSU - Bottineau can confer, it does not qualify as a 'university outside Canada'. The fact that MSU - Bottineau calls itself a university cannot alter this conclusion."

Words and Phrases
university

See Also

Fortnum v. The Queen, 2018 TCC 126 (Informal Procedure)

succession of 1 or 2 week courses satisfied the duration test

The taxpayer attended an accelerated one year MBA program at the University of Notre Dame in Indiana. The summer session included 10 consecutive courses, each of which was of one or two weeks’ duration. The Minister denied the taxpayer’s tuition tax credit (that had been claimed under s. 118.5(1)(b)) on the basis that each course was less than three consecutive weeks’ duration

After noting that Siddell (2011 TCC 250) found that the intent of the legislation was to interpret the word "course" as referring to the entire program taken by the individual in an academic year, and that Abdalla found that, under s. 33(2) of the Interpretation Act, “course” referred to multiple consecutive courses aggregating to the required duration, Smith J stated (at paras 22, 23, and 24):

…[T]he Appellant was in full‑time attendance during the summer semester following courses that lead to a degree. Attendance at all ten courses was mandatory. … She registered for the summer semester and paid a single fee. All courses were taken consecutively or “one after the other”, over a ten week semester.

A textual, contextual and purposive analysis of the subject provision leads me to conclude that the tuition fee paid by the Appellant in respect of the summer semester meets the requirements of paragraph 118.5(1)(b) of the Act.

If I am wrong in reaching that conclusion, I find that this is a case where the application of the ordinary principles of interpretation may not resolve the issue, in which case the matter should be resolved by recourse to the residual presumption in favour of the Appellant: Placer Dome ... .

Words and Phrases
course consecutive
Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Resolving Ambiguity residual presumption in taxpayer's favour 127

Zochowski v. The Queen, 2012 DTC 1224 [at 3624], 2012 TCC 277 (Informal Procedure)

The Ontario-resident taxpayer's claims for tuition tax credits and textbook credits were denied in respect of an online masters of science program from a US university because the courses were 10 weeks in duration. Because the 10-week course duration meant that the university was not a "designated educational institution" for the taxpayer, his education credit was also denied.

Yakubowicz v. The Queen, 2011 DTC 1084 [at 475], 2011 TCC 64 (Informal Procedure)

Sotheby's Institute of Art New York was not a degree-granting institution during the relevant period, but it ran a program wherein students could, through studies at Sotheby's, earn a Masters of Arts recognized by the University of Manchester.

Boyle J. found that the taxpayer could not deduct her tuition amounts for studies at Sotheby's. Unlike s. 118.5(1)(a), paragraph (b) requires that studies take place at a "university." Prior cases have established that a "university" must at least be able to grant bachelor's degrees. It is not sufficient that the course of study at a non-university can result in a degree from an affiliated university (para. 8).

In respect of study periods outside Canada, the s. 118.6(2) education credit and s. 118.(2.1) textbook credit are likewise only available for university studies (para. 11).

Zaluski v. The Queen, 2010 DTC 1231 [at 3655], 2010 TCC 338 (Informal Procedure)

Little, J. applied the decision in Klassen to find that tuition fees paid to the New York campus of the American Academy of Dramatic Arts did not qualify given that the Academy did not grant bachelor degrees.

Shea v. The Queen, 2008 DTC 3376, 2008 TCC 184 (Informal Procedure)

The London School of Economics and Political Science was on the list of 19 colleges forming part of the University of London and it was permitted to grant degrees of the University of London. It qualified as a "university outside Canada".

Valente v. The Queen, 2006 DTC 2685, 2006 TCC 145 (Informal Procedure)

In finding that the taxpayer was entitled to a tax credit in respect of tuition fees paid to a university in England that provided online courses (Open University in a program leading to a Masters of Science in Manufacturing, Management and Technology), Woods J. stated (at p. 2687):

"The expression 'full-time attendance' is ambiguous and in my view it should be interpreted liberally to include programs that require the 'attention' of the student on a full-time basis, such as the online program taken by Ms Valente."

Dean v. The Queen, 2005 DTC 322, 2005 TCC 138 (Informal Procedure)

The taxpayer took some courses at the Nelson Marlborough Institute of Technology in New Zealand that would have led to a Diploma in Aviation Science (Helicopter) or a Bachelor of Commerce degree although he quit after obtaining sufficient courses to get a job as a helicopter pilot. It was found that the Institute qualified as a university given that it granted Bachelor of Commerce degree and the taxpayer's courses were creditable towards the Bachelor of Commerce degree.

Words and Phrases
university

Administrative Policy

S1-F2-C2 - Tuition Tax Credit

An educational institution located in a country outside Canada is presumed to qualify for purposes of paragraph 118.5(1)(b) if it is recognized by an accrediting body (that is nationally accepted in that country) as being an educational institution which confers degrees at least at the bachelor or equivalent level. For example, an institution listed in the current edition of Accredited Institutions of Postsecondary Education published by the American Council on Education and indicated in that publication as being an institution granting degrees at [the bachelor's, master's, doctoral, or professional level or an equivalent degree] will be regarded as a university that qualifies under paragraph 118.5(1)(b). Also, an institution listed in Schedule VIII of the Regulations is recognized as satisfying the requirements of paragraph 118.5(1)(b), as is a university that is a member of the Association of Commonwealth Universities if it can grant degrees at the bachelor or higher level.

S1-F2-C2 - Tuition Tax Credit

A student may engage in full-time studies over the Internet. Full-time online courses are distinguished from correspondence courses by "scheduled, interactive, course-related activities conducted over the internet (for example, the use of on-line course rooms, live on-line conferences, chat-lines and/or virtual libraries."

Correspondence courses, on the other hand, tend to use email instructor correspondence and assignment submission, and access to an "online database or class Web site."

S1-F2-C2 - Tuition Tax Credit

With respect to satisfying the 13 or 3 consecutive week requirement outlined in (a) and (b) above, the tuition tax credit would not be denied simply because:

  • the student dropped out of the course before completing 13 or 3 weeks of study under the course (as applicable), provided they were in full–time attendance before leaving the course;
  • the course (which usually satisfies the necessary consecutive weeks requirement) does not do so in a particular academic term because the term itself happens to fall a little short of being a full 13 or 3 weeks (for example, because of a holiday at the beginning or end of the term); or
  • the particular academic term in which the course falls is interrupted, for example, by Easter Holidays.

Paragraph 118.5(1)(c)

Cases

Napier v. Canada (Attorney General), 2002 DTC 6725, 2001 FCA 358

The graduation of the taxpayer from high school before attending a program did not demonstrate that the program provided courses at a post-secondary level.

See Also

Humphreys v. The Queen, 2010 DTC 1084 [at 2948], 2010 TCC 88 (Informal Procedure)

The taxpayer lived on the south of Vancouver Island and each week commuted for four hours to the Diver's Institute of Technology in Seattle. Sheridan J. found that the taxpayer lived "near the boundary between Canada and the United States" and so was entitled to tuition and textbook credits for his expenses.

Sheridan J. considered Van de Water v. MNR, 91 DTC 276 (TCC), in which a student whose home in a suburb of Montreal was 80 kilometers from the border and whose commute to a college in Plattsburg, New York did not qualify, noted that Dussault J. in that case stated that "the relief was granted so that those individuals could have access to educational institutions situated on the other side of the border but perhaps less distant than the ones situated in Canada...", and stated (para. 11) that "[w]hat may be 'not near enough' in the confined spaces of urban Quebec may be very 'near' indeed in the watery expanses of the Pacific coast."

Words and Phrases
near

Yankson v. The Queen, 2005 DTC 1346, 2005 TCC 527 (Informal Procedure)

The taxpayer, who resided in Calgary and was enrolled in the Seattle Midwifery School, attended classes in Seattle for five days a month initially and two days a month later on, and also did online studies and practical studies in Calgary.

In finding that the taxpayer "commuted" to Seattle, Rip J. stated (at p. 1349) "if the individual is wont to travel from his or her residence to another locality hundreds of miles away on a regular or frequent basis, that person is commuting between the two places." However, she did not reside "near" to the Canada-U.S. border.

Words and Phrases
near commute

Paragraph 118.5(1)(d)

Administrative Policy

3 May 2013 External T.I. 2013-0480991E5 F - Frais d'examen et de préparation à un examen

fees for U.S. exam were necessary for actuarial accreditation in Canada

The U.S.-based Society of Actuaries (the “Association") for the professional Retirement CSP Exam (the “Exam") is recognized by the Canadian Institute of Actuaries, which does not offer examinations of this nature. Anyone who wishes to become an actuary in Canada in the taxpayer's type of practice must pass the Exam offered by the Association.

In addition, in preparation for the Exam the taxpayer pays the fees for an online training seminar that is offered by a teacher from the United States, not the Association. In finding eligibility for the tuition credit under s. 118.5(1)(d), CRA stated:

[W]e are unable to determine whether it is a professional association. Notwithstanding this … the fees paid by the taxpayer to write the Association Exam are fees paid to an institution similar to those listed in paragraph 118.5(1)(d), given that it provides mandatory examinations for a title that would be mandatory for the purpose of actuarial practice in Canada. …

However, the online seminar fee would not be an eligible ancillary fee for the taxpayer because it does not constitute a mandatory ancillary fee for a professional examination that is paid to a relevant professional association or institution referred to in subsection 118.5(4).

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

CPA cross-licensing exam fee

Does the fee for the International Qualification Examination (IQEX), which is a reciprocity exam that allows Canadian Chartered Accountants to obtain their U.S. CPA designation, qualify for purposes of the tuition tax credit? CRA stated:

[P]ayment 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.

S1-F2-C2 - Tuition Tax Credit

Examinations taken in order to begin study in a profession or field, such as a medical college admission test, are not considered to be an occupational, trade, or professional examination for purposes of paragraph 118.5(1)(d). In contrast, fees paid by a foreign-trained lawyer or law graduate to the National Committee on Accreditation (NCA) to undertake a challenge examination that is required to obtain a Certificate of Qualification to access the bar admission process of a Canadian law society would be considered an occupational, trade, or professional examination for purposes of paragraph 118.5(1)(d).

Subsection 118.5(3)

Paragraph118.5(3)(c)

Subparagraph118.5(3)(c)(ii)

Administrative Policy

20 May 2011 External T.I. 2011-0394391E5 F - Tuition Tax Credit

costs of laptops purchased pursuant to bundled purchase program did not qualify

Would the cost of purchasing a laptop computer by students who have opted for participating in a bundled purchasing program set up by their university qualify as tuition fees? CRA responded:

Subparagraph 118.5(3)(c)(ii) provides that fees of any kind that are charged in respect of property to be acquired by students are not tuition fees for the purpose of calculating the tuition tax credit.

Consequently, we are of the view that in the situation you described to us, the cost of acquiring a laptop by the students who opted for the bundled purchase program does not qualify as tuition fees … .