Post-secondary education can place a burden on any taxpayer, and when a chosen major leads to a master’s and doctoral degree, the cumulative cost of tuition can be substantial. The tuition tax credit, available to Canadian students and their families for post-secondary courses from qualifying institutions, is similarly available for students in post-graduate studies. Some provinces provide additional incentives.
The Tuition Tax Credit
“The tuition tax credit is a nonrefundable and transferable tax credit available to Canadian residents studying at a post-secondary level,” says Mary Gillick, certified financial planner and elder planning counselor with Investors Group in London, Ontario. “Study may be in Canada or abroad, as long as the institution is approved by the CRA.” Study outside Canada is also subject to minimum program length of three weeks, and all tuition paid must be over $100 for eligibility. The amount of the credit is calculated by multiplying eligible tuition amounts by the lowest federal personal tax rate for the current year. Since 2006, the rate has been 15 percent, so a student paying $3,000 in tuition would be entitled to a credit of $450. The tuition tax credit has the potential to reduce the amount of tax you owe to zero, but it does not result in a cash refund.
Claiming Tuition on Your Return
Calculating and claiming tuition credits on your federal tax return requires completion of Schedule 11. Although there are situations where education amounts can be transferred to others, only the student completes this schedule. On Schedule 11, you can declare unused tuition credits from previous years, as well as eligible tuition from your college or university tax certificates for the current year. The total amount is calculated on line 17 of Schedule 11 and transferred to line 323 of your federal tax return. There is no special procedure for post-graduate study tuition.
Transferring and Carrying Forward
When the tuition credit in a given tax year reduces the amount of tax owed, any surplus can be carried forward to another tax year. Surplus credits up to a maximum of $5,000 — less any amount claimed — can be transferred to an eligible relative. Transfers and forwards are reported through Schedule 11 by the student. When the recipient of the education credit is a parent or grandparent, the transfer is reported in field 324 of the parent or grandparent’s federal return. When transferring an amount to a spouse, the education amount is reported in field 360 of Schedule 2, Federal Amounts Transferred From Your Spouse or Common-Law Partner.
Provincial Tuition Programs
Several regions in Canada offer graduate and post-graduate students aggressive incentives to stay in the region after graduation. Plans offer credits or rebates of provincial income tax — available only to residents of the provinces — and spread over several years to encourage career development in localities where students earn their degrees. Each provincial program has its own requirements and benefits. All but Saskatchewan’s program recognize post-graduate studies, while Quebec’s tax credit applies to recent graduates working in remote resource regions.
References & Resources
- Mary Gillick, CFP EPC; Investors Group; London, Ontario
- Canada Revenue Agency: Line 323 — Your Tuition, Education and Textbook Amounts
- Canada Revenue Agency: Line 324 — Tuition, Education and Textbook Amounts Transferred from a Student