Education, Families

Softening the Tuition Blow: The ABC’s of Transferring Education Amounts

By Sean Cooper

In nearly every case, higher education is anything but cheap. According to the Canadian Federation of Students, the average student has $27,000 in debt after graduation. To offset the rising cost of post-secondary education, many parents are choosing to save towards their children’s education through Registered Education Savings Plans. When your children go to college or university, they can claim the tuition, education and textbook amounts. Students not able to claim the full amount have the option of transferring the tax credit to their parents.

Claiming the Tuition, Education and Textbook Amounts

Your child can claim the tuition, education and textbook amounts if he’s attending an eligible college or university and is at least 17 years old. To find out if your child has any tax credit left to transfer, he must first complete federal Schedule 11, Tuition, Education and Textbook Amounts, and the corresponding provincial schedule.

For the tuition portion, your child should receive a T2202A tax slip from his college or university. This tax slip includes the amount of tuition paid and the number of months your child attended college or university on a full- or part-time basis. Even if your child doesn’t owe any taxes, he should still complete Schedule 11 to keep track of any unused portion carried forward to future years.

Oftentimes, your child may not be able to use the full tuition, education and textbook amounts. This usually occurs because he’s attending college or university full-time and may have little to no income from working. The tuition, education and textbook amounts are non-refundable tax credits, so if your child doesn’t owe any taxes, he won’t be able to benefit from the tax credit in the current year. While he can choose to carry forward this amount, he can also transfer the unused portion to you, his parent.

Transferring the Tuition, Education and Textbook Amounts

Your child may be eligible to transfer up to $5,000 in a single year, depending upon his income levels. Students can transfer the tuition, education and textbook amounts to their parents, grandparents, spouse or common-law partner.

If you’re a parent claiming the tuition, education and textbook amounts, you must complete Schedule 1. If you’re the spouse or common-law partner of the student, you can claim the amount by completing Schedule 2.

Why Your Child Should Transfer the Tuition, Education and Textbook Amounts

Your child may be wondering why he should transfer the tuition, education and textbook amounts, when it can be carried forward to future years. Although it’s his choice whether to transfer the amount, there are a few good reasons to consider transferring it. The tax deduction can offset the added expense of him living at home as an adult without paying rent while attending college or university. Also, with some students taking longer than four years to graduate from college or university, it could be quite some time before your child gets a full-time job and is able to use the tax deduction. As a parent, you might need it a lot more right now … especially after footing the tuition bill.

About the Author

Sean Cooper is a financial journalist and personal finance expert. His areas of expertise include real estate, mortgages, pensions and retirement. His articles have been featured in major publications, including the Toronto Star, the Globe and Mail, MoneySense and RateSupermarket.ca.