The cost of post-secondary education represents a financial burden to many Canadian students and their families. Tuition itself comprises a big portion of a student’s costs, and qualifying students can claim the tuition tax credit to offset part of the expense of college or university.
Eligibility for Tuition Credit
Generally, any student over the age of 16 who is enrolled in post-secondary level courses at an accredited institution in Canada can claim the tuition credit. Students continuing education after high school are typically eligible. Schools outside Canada qualify if the time abroad is full-time study lasting at least three weeks.
If a student’s employer pays or reimburses tuition, the student is not eligible to claim the credit unless the employer includes the tuition amount in the student’s earnings. This is also true if an employer pays tuition to a parent on a student’s behalf.
An eligible course load must be post-secondary in nature or a trades school can qualify as well. For example, if a student attends university, but takes high school equivalency courses to prepare for later post-secondary courses, the student may not be eligible to claim tuition on the equivalency courses.
Calculating and Claiming Tuition Tax Credits
As a non-refundable credit, if the tuition amount is greater than the tax owed, the non-refundable credit can only be used to reduce or eliminate the student’s federal/provincial tax bill but won’t generate a refund. If you aren’t able to use the full amount of the credit, any unused credits can be carried forward to a future tax year, or transferred to a spouse/common-law partner or parent/grandparent.
The credit is calculated by adding together all eligible tuition fees, then multiplying the amount by the lowest federal tax rate percentage for the current tax. For instance, as the 2017 federal tax rate is 15 per cent, a student paying tuition fees of $2,000 would be eligible for a tax credit of $300.
Tuition Credit Documents
Colleges, universities and other accredited education institutions issue form T2202A to certify that a student took eligible courses of suitable duration to qualify for the tuition tax credit.
A student who is entitled to the disability credit and is enrolled in a qualifying educational program on a part-time basis is entitled to receive the credit as though he/she were a full-time student by submitting a certified letter from a medical practitioner about the student’s mental and physical impairment. Only the student completes Schedule 11, which calculates tuition.
Education and textbook tax credits have been eliminated effective from January 1st 2017 but you can still carry forward unclaimed credits from previous years.
Transferring Unused Credit Amounts
Unused tuition credits calculated on Schedule 11 can be transferred to qualifying relatives. Spouses and common-law partners, parents and grandparents — including those of your spouse or partner — can be designated for all or part of the transferred amount.
The student must designate the individual receiving the transfer and the amount of the transfer. This can be done with forms T2202A, TL11A, TL11B or TL11C. Parents and grandparents are not allowed as transfer recipients if your spouse or partner claims an amount for you on lines 303 or 326 on her return.
If parents or grandparents are eligible for the transfer, decide which parent or grandparent will claim the transferred amount on line 324 of their tax return. Enter transfers from student to spouse in field 360 of Schedule 2, which calculates the amounts eligible for transfer between spouses. Please note that you can only transfer current year tuition (up to $5K). Prior year’s tuition can only be carried forward.
2017 Changes to the Textbook and Education Amount
On January 1, 2017, both the education and textbooks credits were eliminated at the federal level. If you’re a post-secondary student or have unused education/textbook credits, check out this article for more information.