The Canada Revenue Agency (CRA) recognizes that post-secondary education can be expensive, and to help, the agency offers students deductions and credits to offset educational expenses. In some cases, students may transfer a portion of these deductions to their parents.
Tuition Fees
Eligible students receive certificates from their educational institutions reporting their tuition and fees paid for the year. Students may transfer qualifying tuition and fees from these certificates and use them to claim deductions on their tax returns.
However, if the certificate reports income from scholarships, grants or bursaries, the students may have to declare these monies as income depending on whether or not they are eligible for the education amount.
The Education and Textbook Amount
Please note that the education and textbook amounts are no longer available starting in 2017.
In addition to claiming tuition fees, your child may also claim an education amount. The education amount is $400 per month for full-time students or part-time students with qualifying mental or physical impairments, and it is $120 per month for part-time students.
To calculate the education amount on their tax returns, students must take the number of months noted in box C or B of the tax certificate issued by their university, and they must multiply it by $400 or $120 depending on their enrolment status.
If a student qualifies for the education amount, he also can claim the textbook amount. The textbook amount is equal to $65 times the amount in box C or $20 times the amount in box B.
Scholarships, Grants and Bursaries
If you qualify for the education amount, you only have to claim the amount of your scholarships, grants and bursaries that exceed the tuition and fees of your program, as income. If you do not qualify for the education amount, you must claim all of your grants, scholarships and bursaries as income except for $500 which is tax exempt.
Filing Student Taxes
In most cases, post-secondary institutions do not send tax certificates to their students. Instead, they require their students to download these forms from the university’s web portal.
If you are a parent helping pay your child’s tuition, remind your child to download the T2202A/ T2202 tax certificate from their university’s web portal. However, you cannot simply transfer the numbers to your tax return, even if you pay your child’s tuition. Instead, your child must complete their own tax return while paying special attention to schedule 11.
Schedule 11 helps the student to calculate tax credits related to tuition and fees paid as well as to education and textbook amounts earned. However, if the student doesn’t earn a large amount of money, he may not need the entire amount. Instead, if applicable, he may transfer some of the deductions to you, the parent.
Transferring the Tuition Amount
Students are required to claim some of the tuition amount on their own tax returns if needed, but once they have used what they need, they may transfer the amount. Students may transfer tuition amounts to their spouses or common-law partners, their parents, their grandparents, or the parents or grandparents of their spouse or common-law partners.
Students may transfer a maximum of $5,000 minus the amount they claimed on their taxes. For example, if a student claimed $1,000, they could transfer $4,000 to their parents to help offset their taxes owed.
If you claim an amount transferred from your child, you do not have to complete schedule 11. Instead, make sure that your child signs any supporting documentation you have regarding the transfer, and make sure that your child keeps his schedule 11 on file with their tax information.
If your child is married and their spouse or common-law partner claims them as a dependent, your child cannot transfer the tuition amount to anyone other than their spouse.
Paying for Tuition
The way you remit your child’s college tuition does little to change how you are taxed. Whether you pay the tuition in cash or with loans, the post-secondary institution still releases the same certificate with the same tuition fees noted on it. In most cases, the student can claim these fees unless they were reimbursed by the student’s employer or the employer of the student’s parents.
Registered Educational Savings Plans
To help families plan for their children’s educations, the CRA recognizes Registered Educational Savings Plans (RESPs). If you set up one of these plans for your child, you may contribute to it annually, but unfortunately, your contributions are not tax deductible.
However, when your child starts university and begins to make withdrawals from their RESP, their withdrawals directly tied to the contributions are not considered taxable income. However, their withdrawal tied to money that your contributions have earned, such as interest, are referred to as educational assistance payments, and they are taxable.
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