Section 118.6

Subsection 118.6(1) - Definitions

See Also

Zhang v. The Queen, 2017 TCC 258 (Informal Procedure)

“may deduct” means “is permitted to deduct” rather than “chooses to deduct”

The taxpayer (Dr. Zhang) was a dentist who had $52,040 in tuition and education tax credits available to be carried forward to her 2014 taxation year. She earned dividend income in 2014 and claimed a dividend tax credit for 2014, and did not claim any of her unused tuition and education tax credits. When she instead claimed them in her 2015 return, they were denied on the basis that they had been applied by the Minister for Dr. Zhang’s 2014 taxation year.

The Crown argued that the words “may deduct” in element “D” of the formula mean “is permitted to deduct,” so that her credits carried forward from 2014 were reduced whether she actually deducted that amount or not. Dr. Zhang argued that the words “may deduct” in D “acknowledge the fact that the taxpayer has a choice whether to deduct the amount or not and thus refer to the choice that the taxpayer has actually made” (para. 7). Since she did not choose to deduct any amount under s. 118.61(2) in 2014, Dr. Zhang argued that the value of element “D” was nil in that year.

In rejecting Dr. Zhang’s position, Graham J found (at paras 9, 10-11, 13-14):

If Parliament had intended Dr. Zhang’s interpretation, it could have simply changed the tense of the word “deduct” to “deducted”. …

A contextual analysis of subsection 118.61(1) supports Dr. Zhang’s position … [as] unlike element “B”, which uses the phrase “which may be deducted”, element “D” uses the phrase “that the individual may deduct”. …

The purposive analysis supports the Respondent’s position … [as in the] Department of Finance Technical Note … “amount of the tuition and education tax credits carryforward that is deductible for the current year” is used to describe element “D”. Note that the word “deductible” is used rather than the word “deducted”.

Graham J concluded (at para 18):

… I am satisfied from the purposive analysis that the contextual problem is simply a result of poor drafting. I find that element “D” in subsection 118.61(1) should be read as if it said:

D is the amount which may be deducted under subsection (2) for the year; and

Words and Phrases
may deduct

Administrative Policy

11 March 1993 T.I. (Tax Window, No. 30, p. 22, )2495)

Students taking courses provided by the Certified General Accountants Association who are employed in the accounting field will not be entitled to the deduction because of the exception in paragraph (b) of the definition of "qualifying educational program" in s. 118.6(1).

5 August 1992 T.I. 921713 (May 1993 Access Letter, p. 203, ¶C117-187; Tax Window, No. 23, p. 22 ¶2135)

Students in "co-operative courses" who attend school for a period and then work for a like period in a business relating to their academic studies are only eligible for the credit in respect to those calendar months in which they are enrolled as full-time students at the school for at least part of the month.

14 July 1992, T.I. 921748/921721 (March 1993 Access Letter, p. 77, ¶C117-181)

In response to an inquiry as to whether the credit was available for participation in the Canadian Job Strategies Program or the Ontario Basic Skills Program it was noted that a student participating in a program which was available to the public at large would not be considered to have received the benefit solely by reason of tuition not being charged for that program. There was no obligation for the student to complete the course.

Designated Educational Institution

See Also

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).

Administrative Policy

S1-F2-C1 - Qualifying Student and the Education and Textbook Tax Credits

The expression enrolled in the program to obtain skills for an occupation means that there must be sufficient skills to be acquired in the program to enable the student to work at an occupation. The expression enrolled in the program to improve skills in an occupation implies that the student already possesses sufficient skills to enable the student to work at an occupation and the program must be capable of improving those skills. An occupation, for this purpose, is considered to be employment as well as a profession, vocation, or trade. It is a question of fact whether a particular program 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. 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 purpose of gaining or improving language skills required for an occupation.

Where a course is taken at an HRSDC-certified institution for personal or recreational purposes, no education tax credit is available.

Qualifying Educational Program

See Also

Kandasamy v. The Queen, 2014 DTC 1075 [at 3053], 2014 TCC 47 (Informal Procedure)

being a student and an employee are not mutually exclusive

Rip CJ found that the taxpayers, who were medical residents, were eligible for educational and textbook tax credits. The residency programs were administered by the medical schools of various Canadian universities, which were designated educational institutions.

The residency program was a qualifying educational program notwithstanding that residents did not take at least 10 hours of classes. Rip CJ stated (at para. 55):

The word "or" in the phrase "course or work" ... must be conjunctive. The word "or" permits an individual to follow a qualifying educational program that is wholly made up of academic courses or one that is wholly made up of work.

Regarding the Minister's argument that residents were employees rather than students, Rip CJ stated (at para. 54):

I do not find it illogical in reading Subsection 118(6) that a person can be both a full-time student and a full-time employee or even carry on his or her own business on a full-time basis while a full-time student.

Lahlou v. The Queen, 2014 DTC 1010 [at 2540], 2014 TCC 16

Before going on to follow Huang in finding that post-doctoral fellowships received by the taxpayer (prior to 2010 amendments to the definition of "qualifying educational program") from McGill University qualified for the s. 56(3) scholarship exemption, Boyle J stated (at para. 19) "that in this case it appears clear that the purpose and structure of the post-doctoral fellow program was the continued training and education of the fellows within a fixed period of time following the receipt of their doctoral degree."

Words and Phrases
student

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

The taxpayer did not qualify as being in "full-time" attendance in an online-MBA program at the University of Liverpool given that the University expected that the program would take between 20 to 25 hours per week to complete.

Castela v. The Queen, 2005 DTC 781, 2005 TCC 109 (Informal Procedure)

The taxpayer, who was earning her Master of Arts in Education/Curriculum and Instruction, "attended the program on a full-time basis at the Vancouver campus of the University of Phoenix while continuing to work full-time as a resource teacher at a Burnaby District Elementary school" (p. 782). It was found that her program of study was not part of her duties of employment but, rather, was connected with her profession. Accordingly, she was entitled to the credit claimed.

Reiner v. The Queen, 2005 DTC 308, 2005 TCC 115 (Informal Procedure)

The taxpayer, who was a full-time teacher, also was pursuing a course of studies at a U.S. university leading to a Master of Arts in Curriculum Instruction. This program was found not to be undertaken as part of her duties of employment or "in connection with" her duties of employment but, rather, was undertaken in connection with her profession. The "joining, fastening or linking together" is with the Appellant's personal skill ...".

Words and Phrases
in connection with

Administrative Policy

22 September 2011 External T.I. 2011-0403991E5 F - Crédit d'impôt pour études

program means program of study, not individual course

A part-time student at a university registered for courses in 3 modules comprising one module per month of 2 consecutive days of 7.5 hours each, for a total of 45 hours per course. Each course generates 3 credits and leads to a degree. Do the courses meet the "3 consecutive weeks" requirement in order to qualify as a qualifying educational program? CRA stated:

[T]he term "program" used in the definition of "qualifying educational program" … refers to the program of study rather than to each individual course. A course offered in 3 modules with a module of 2 consecutive days per month could therefore qualify for the education tax credit under subsection 118.6(2) if the program otherwise qualifies as a qualifying educational program or a specified educational program in which the student must devote at least 12 hours per month, within the meaning of section 118.6.

Words and Phrases
course

16 December 2011 External T.I. 2011-0412502E5 F - Remboursement - frais de scolarité

no benefit denying credit if employee is subsequently required to reimburse employer for employer-paid tuition

An employer paid the tuition fees of one of its employees at a master's program. However, the employee was required to reimburse the employer upon the employee’s failure to return to work for a specified minimum period following the program completion. CRA stated:

[A] taxpayer receives a benefit for the purposes of section 118.6, where the taxpayer’s tuition is paid by the taxpayer’s employer with whom the taxpayer is dealing at arm's length. We are of the view, however, that the taxpayer would not receive a benefit for the purposes of section 118.6 if the taxpayer were to reimburse all tuition fees paid by the taxpayer’s employer. In such a situation, the taxpayer could generally, subject to satisfying all the other conditions set out in section 118.6, claim the education tax credit.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(5) - Paragraph 118.1(5)(a) - Subparagraph 118.1(5)(a)(iii) credit can be claimed where employee is subsequently required to reimburse employer for employer-paid tuition 113

14 November 2014 External T.I. 2014-0540411E5 F - Crédit d'impôt pour études

program with essentially no admission criteria was not at the post-secondary level

Respecting an educational program offered in part to those still in the job market for which there were essentially no admission criteria, CRA stated that programs were not at the post-secondary level, so that the enrolled students were not eligible for the education credit under s. 118.6.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.6 - Subsection 118.6(2) T2202A obligatory for student but not the school 78

4 February 2015 External T.I. 2014-0551931E5 F - Crédit d'impôt pour études - résidents en médecine

Kandasam (re medical residents’ entitlement to education tax credits etc.) will be followed on similar facts

CRA indicated that Kandasamy (finding that medical residents were entitled to claim the "education tax credit" and the “post-secondary textbook tax credit” as full-time students enrolled in a “qualifying educational program” of a “designated educational institution") “would be applied in similar or identical situations.”

S1-F2-C1 - Qualifying Student and the Education and Textbook Tax Credits

It is not necessary for the three consecutive weeks to be in the same calendar month. Periods where there are no classes, such as reading week may be included in the three week period as long as the hourly work requirement is met. A student may qualify for the part-time education tax credit for those months in which the student was enrolled at a designated educational institution but was not in a qualifying educational program ... .

S1-F2-C1 - Qualifying Student and the Education and Textbook Tax Credits

The amendment to restrict the education tax credit to programs that lead to a degree clarified the intent of the legislation and confirmed the CRA's existing position. Post-doctoral fellowships have consistently been viewed and treated by the CRA in the same manner as other programs that require individuals to undertake a period of paid training after the completion of an individual's studies and prior to pursuing an independent professional career (for example, apprentices, articling students for accounting and law, and medical residents).

S1-F2-C1 - Qualifying Student and the Education and Textbook Tax Credits

An occupational training allowance similar to that in [para. (c) of "qualifying educational program"] but given by any other granting authority must be examined to determine if it is included in income under a separate provision of the Act. If it is, the student is disqualified from claiming the education tax credit unless the amount is an award or prize described in [para. (a) of "qualifying educational program"]. A non‑repayable portion of a student loan is not considered to be a grant and does not disqualify a student from claiming the education tax credit.

S1-F2-C1 - Qualifying Student and the Education and Textbook Tax Credits

The CRA generally considers free tuition to be a benefit unless a program is available to the public at large at no cost. For example, if an educational institution were to offer free tuition only to persons age 65 or older, these individuals would have received a benefit such that they would not be entitled to the education tax credit. Where free or reduced tuition is determined to be a scholarship or bursary pursuant to paragraph 56(1)(n), the student's ability to claim the education tax credit is not affected by the benefit.

13 September 2006 External T.I. 2006-0185081E5 F - Crédit d'impôt pour études: sens du mot "semaine"

week means 7 consecutive days

In finding that educational program running from Friday September 8, 2006, to Monday September 18, 2006, or from September 8 to September 22, 2006, did not satisfy the requirement of “not less than three consecutive weeks duration,” CRA referred to various dictionary definitions of week including “a period of seven consecutive days of time.”

Words and Phrases
week

29 June 1995 Internal T.I. 9506657 - EDUCATION TAX CREDIT

RC employees receiving reimbursements for CGA or CMA courses typically would not be entitled to the education tax credit, because typically they are employed in an accounting-related occupation (as broadly defined) and, moreover, they are being reimbursed by their employer.

12 April 2007 External T.I. 2007-0220561E5 F - Crédit pour études - stages de formation pratique

paid internships are not necessarily disqualifying

Regarding training programs offered by a college that require students to complete practicums (lasting 3 weeks at 10 hours per week) in a private business in order to graduate are qualifying educational programs, CRA stated:

[T]he fact that student interns are paid for work performed during the internships will not, in and of itself, prevent them from qualifying for the education tax credit as long as the remuneration is not an allowance, benefit, grant or reimbursement by the employer for the costs of the program in question. … The definition of "qualifying educational program" in subsection 118.6(1) excludes a student who receives a benefit in respect of the program fees. However, the absence of tuition fees is not considered a benefit if the program is generally available to the public without charge.

Qualifying Student

Administrative Policy

7 July 2008 External T.I. 2008-0275961E5 F - Crédit d'impôt pour études

post-doctoral fellow focusing on research is not a student

The Directorate stated that “where a postdoctoral fellow pursues an internship whose purpose is to acquire more specialized or complementary research expertise, the fellow is not a student for the purposes of the Act.”

3 July 2007 External T.I. 2007-0236551E5 F - Crédit d'impôt pour études

post-doctoral fellow is not a student

Regarding whether a post-doctoral fellow entitled to the education tax credit under s. 118.6(2) in respect of the fellowship, CRA stated that “to be eligible for the education tax credit … the individual must be a student and enrolled in an educational program,” before finding that a fellow did not so qualify.

Specified Educational Program

Administrative Policy

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

determination of duration of enrolment

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. After referring to its position in S1-F2-C1, paras. 1.17 and 1.24, CRA stated:

It is the university that determines the number of months a student is enrolled in a specified educational program. We understand that the university will generally consider, and subject to certain exceptions (such as when a student has dropped out of a course or program), that a student is enrolled in an educational program for the expected duration of the program. In this regard, it is not essential that registration be reflected by the university's computer system during all months of the course duration that the student is enrolled in that program.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.5 - Subsection 118.5(1) - Paragraph 118.5(1)(a) tuition fees determined on accrual basis 104

Subsection 118.6(2) - Education credit

Cases

Ahmad v. The Queen, 2016 TCC 113 (Informal Procedure)

full-time employee not entitled to full-time credit

The taxpayer, who worked full-time as an employed pharmacist, claimed the tuition tax credit for full-time studies for courses taken in Buffalo, one course per semester, through the University of Florida, even though the university itself indicated her attendance was part-time on the Revenue Canada form. Boyle J noted (at para. 6) that “the syllabus hours for the three courses, one taken each semester, show that the hours equivalency guidelines…for instruction learning activities…would have ranged between about five or six hours per week in the first semester and nine and a quarter hours… for the second and third semesters.

In dismissing the appeal, Boyle J found that travel time should not be included (para 4) and respecting her individual study hours, stated (at para. 7):

I do not think those individual study hours are the equivalent of instruction learning activities time spent, but rather reflect additional student work outside of instructional hours in a normal university setting.

Administrative Policy

14 November 2014 External T.I. 2014-0540411E5 F - Crédit d'impôt pour études

T2202A obligatory for student but not the school

Before concluding that on the basis of redacted facts the program in question did not qualify as "at a post-secondary level" so that it was not a "qualifying educational program, CRA stated (TaxInterpretations translation):

There is no section of the Act…which requires an educational institution to deliver a T2202A. However, the education credit will be refused if the enrolment of an individual is not attested to by a T2202A.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.6 - Subsection 118.6(1) - Qualifying Educational Program program with essentially no admission criteria was not at the post-secondary level 50

S1-F2-C1 - Qualifying Student and the Education and Textbook Tax Credits

Generally, an educational institution's classification of a student as full-time or part-time will be accepted if the method of classification is reasonable and consistent.

A student who is in regular attendance in a qualifying educational program is considered to be enrolled as a full‑time student. Similarly, a student who is participating in graduate studies on a regular basis in a particular month is ordinarily considered to be enrolled as a full-time student if the student is registered for the regular academic year even though the requirements for attendance in class for such studies are minimal. Therefore, such a student who spends much of the time in a laboratory or library engaged in research or writing a thesis or who spends part of the academic year engaged in research elsewhere than at the university would normally be regarded as being a full-time student at the institution where the student is so registered.

A student is not considered to be enrolled during work terms, e.g. in a co-op program (para. 1.27).

Part-time enrollment at two designated educational institutions will be considered full-time enrollment if the two enrollments represent a single program of study that would otherwise qualify (including that the sum of hours meets the full-time threshold) (para. 1.28).

13 February 2013 External T.I. 2013-0477151E5 F - Crédit d'impôt pour études

given 2012 disruptions, months to be computed based on the original schedule

After referencing the disruptions to the scheduling of Quebec university and CEGEP classes respecting the 2012 winter and fall terms resulting from student boycotts and various catch-up adaptations, CRA stated:

For the 2012 winter semester, the number of months a student was enrolled in a training program must be established as follows. In CEGEP, if the 2012 winter session were to begin in January and end in May, it must be considered that the student was enrolled in an educational program for 5 months. Similarly, at the university, when the 2012 winter session was scheduled to begin in January and end in April, it must be considered that the student was enrolled in an educational program for 4 months [and similarly for the fall 2012 session].