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

Introduction

The purpose of a Chapter History page is to highlight any amendments to the information contained in a chapter of an income tax folio, including amendments to the information originally contained in an interpretation bulletin that has been cancelled and replaced with a folio chapter. It outlines amendments that have been made as a result of legislative changes and proposed legislative changes, precedential court decisions, as well as new or revised interpretations of the Canada Revenue Agency (CRA).

Except as otherwise noted, all statutory references herein are references to provisions of the Income Tax Act, R.S.C., 1985, c.1 (5th Supp.), as amended and all references to a Regulation are to the Income Tax Regulations, C.R.C., c. 945, as amended.

Update October 9, 2020

The Summary has been updated to include a reference to "2016 and prior tax years" in the last sentence of the third paragraph, which discusses the transfer of the education and textbook tax credits. The Summary has also been updated to remove the reference to the Video Series – Canadian students and income tax, in the second sentence of the fourth paragraph, as these videos are no longer available on the CRA website.

¶1.4.1 has been inserted to separately number the existing content that comprised the second paragraph in ¶1.4.

¶1.6 has been updated to refer to line number 32300 in the link for tuition, education, and textbook amounts. Line 32300 was line 323 before the 2019 tax year.

¶1.32 has been amended in several respects:

• To note that for 2019 and later tax years,
  • Form T2202 replaces form T2202A (the title of the form is unchanged).
  • Form TL11B, Tuition and Enrolment Certificate – Flying School or Club, has been eliminated.
• For institutions in Canada, points have been added to reflect that for 2016 and prior tax years, Forms T2202A and TL11B are the appropriate forms to substantiate education and textbook credits earned by a student in the year or to designate the transfer of those credits. For the 2017 and 2018 tax years, they are also the appropriate forms to substantiate that an individual meets the definition of qualifying student.
• For institutions outside Canada, a point has been added to reflect that for 2016 and prior tax years, where a deemed resident of Canada earns education and textbook tax credits or designates a transfer of those credits, Form T2202A or Form TL11A must be completed.

Update December 12, 2018

The chapter title of Income Tax Folio S1-F2-C1 has been changed to reflect the definition of qualifying student being applicable for 2017 and subsequent tax years. The chapter was formerly entitled Education and Textbook Tax Credits.

¶1.7 and 1.8.5 have been revised to reflect a legislative amendment to paragraph 118.6(3)(b) made by S.C. 2017, c. 33, s. 45(1), which permits nurse practitioners to certify that an individual has in the year a mental or physical impairment the effects of which on the individual are such that the individual cannot reasonably be expected to be enrolled as a full-time student while so impaired. This amendment applies to certifications made after September 7, 2017.

¶1.8.3, 1.10, 1.11, and 1.18 have been revised to reflect a legislative amendment to the definitions of qualifying student and qualifying education program in subsection 118.6(1), made by S.C. 2017, c.20, s.19 (formerly Bill C-44), applicable to the 2017 and subsequent tax years, which extends the eligibility criteria to an individual enrolled in a university, college or other educational institution in Canada for occupational skills courses that are not at the postsecondary level.

The title of ¶1.10 and 1.11 has been changed from “Institutions certified by the Minister of ESDC” to “Obtain skills for an occupation” to reflect the noted amendments to the definitions of qualifying student and qualifying educational program in subsection 118.6(1).

¶1.19 has been has been changed to reflect the CRA’s general acceptance of the Tax Court of Canada decision in Kandasamy et al v The Queen, 2014 TCC 47.

¶1.32 has been updated to reflect the revisions to the title of forms T2202A, TL11A, TL11B, TL11C, and TL11D, which were revised to reflect the elimination of the federal education and textbook tax credits, effective for the 2017 and subsequent tax years.

Minor changes have been made to improve readability:

• The section “The formula” was renamed to “The education and textbook tax credits formula”;
• ¶1.18 was separated into two paragraphs (1.18 and 1.18.1); and;
• General revisions were made to ¶1.20 and 1.21.

Update April 26, 2017

The French version of the Chapter has been amended to remove the references to a “bourse d’entretien”. Although the English version of the Act uses two separate expressions for “scholarship” and “bursary”, the French version of the Act uses the general expression “bourse d’études” to describe both concepts. The change has been made to ensure that the French version of the Chapter reflects the wording of the legislation.

Incidental revisions have been made throughout the Chapter to reflect the repeal of the education and textbook tax credits and the addition of the definition of qualifying student made by S.C. 2016, c.7, s.15 to s.24 (formerly Bill C-15) effective for the 2017 and subsequent tax years. The Chapter continues to reflect a student’s eligibility to claim, transfer, or carry-forward education and textbook tax credits for tax years prior to 2017. In addition, the Chapter describes the provisions of subsection 118.6(1) that will remain for tax years after 2016.

The Summary has been updated to add a paragraph discussing the elimination of the education and textbook tax credits as well as a paragraph confirming the status of the tuition tax credit.

The Summary has also been updated to reflect a change proposed in Budget 2017 regarding eligibility as a qualifying student.

¶1.1.1 has been added to introduce details about the repeal of subsections 118.6(2) and 118.6(2.1) and how this affects other provisions in the Act.

¶1.2.1 has been added to discuss the impact of the repeal of the education and textbook tax credits on a student’s ability to carry forward or transfer such credits.

¶1.3 has been updated to reflect that a qualifying student may be required to provide the Minister with proof of enrollment in a designated educational institution. This requirement is also reflected in an addition to ¶1.32.

¶1.5 has been updated to add a reference to subsection 118.6(1).

The Example at ¶1.6 has been updated to refer to the 2016 tax year to limit the Example’s application.

¶1.8.1 to 1.8.5 have been added to describe the new definition for a qualifying student in subsection 118.6(1) for tax years after 2016. Cross-references to these paragraphs have been added as needed in the Chapter.

¶1.9(c.1) and (d.1) have been added to reflect that a designated educational institution outside Canada refers to a qualifying student for years after 2016. Cross-references to these paragraphs have been added as needed in the Chapter.

¶1.13(c) has been updated to reflect the new address to which enquiries should be sent for consideration as a university outside Canada

¶1.19 has been updated to confirm that post-doctoral fellows do not meet the requirements of the definition of the term qualifying student.

¶1.35 is added to clarify that obtaining an authorized certificate does not ensure that a student will be considered to be a qualifying student.
 

Update March 4, 2017

The Summary section of this Chapter is revised to refer to and reflect the publication of Income Tax Folio S1-F3-C4, Moving Expenses, which replaced and cancelled Interpretation Bulletin IT-178R3, Moving Expenses.

Update June 21, 2016

¶1.6 has been revised to remove references to a specific tax year so the information is more broad-based.

Update November 24, 2015

Minor changes have been made to improve the usability of the income tax folios:

• the Summary section has been moved to the top of each folio chapter to be more immediately visible and helpful to readers;
• the Application and Reference sections have been moved to the end of the Chapter which is more appropriate for administrative content of this nature.  However, these sections now appear in the Table of contents for easy access;
• the statement that folios are only available in electronic format has been moved to the end of the Application section; and
• the words “as promulgated under the Act” in connection with the Income Tax Regulations have been removed from the Application section, in the interest of using plain language.

Update August 11, 2015

¶1.13(a) of the English version has been revised to update the name of the destination page where readers can find contact information for provincial and territorial student financial aid offices.

Update March 11, 2014

¶1.32 has been updated to remove the reference to Form T2202, which was cancelled. The content of Form T2202 is now reflected in a revised Form T2202A.

Update February 5, 2014

Throughout the Chapter, the references to the Minister or Department of Human Resources and Skills Development Canada (HRSDC) have been changed to the Department of Employment and Social Development, to reflect the legislative amendments made by S.C. 2013, c. 40 (formerly Bill C-4), s. 237 and 238.

Update October 30, 2013

Throughout the French version of the Chapter and its Chapter History, general revisions have been made to improve readability. The following changes have also been made to the Chapter.

¶1.9 has been updated at item a) to reflect the amendment to subparagraph (a)(i) of the definition of designated educational institution in subsection 118.6(1), amended by 2013, c. 34, s.252. The amendment applies to the 1998 and subsequent tax years.

Update March 28, 2013

General

Income Tax Folio S1-F2-C1, Education and Textbook Tax Credits, replaces and cancels Interpretation Bulletin IT–515R2, Education Tax Credit concerning a student's eligibility to claim, transfer, or carry-forward an education tax credit.

In addition to consolidating the content of the former interpretation bulletin, general revisions have been made to improve readability. Any substantive technical and interpretive changes to the information outlined in the former interpretation bulletin are described below.

Legislative and other changes

Throughout the chapter, the references to the Minister or Department of Human Resources Development Canada have been changed to Human Resources and Skills Development Canada (HRSDC). These references are made in connection with the certification of an educational institution in Canada which provides courses, other than courses designed for university credit, that furnish a person with skills for, or improve a person’s skills in, an occupation. Throughout the chapter, all references to spouse have also been changed to spouse and common-law partner based on the 2000 same-sex partner bill. The chapter has been updated throughout to reflect the new textbook tax credit, legislated effective for 2006 and subsequent years.

¶1.1 (formerly included in ¶1 of IT-515R2) has been revised to include a comment with respect to part-time students enrolled in a specified educational program for purposes of claiming an education tax credit pursuant to subsection 118.6(2).

¶1.2 (formerly included in ¶3 of IT-515R2) has been revised to refer the reader to Income Tax Folio S1‑F2‑C2, Tuition Tax Credit for a discussion of either the carry-forward of the unused tuition, education and textbook tax credits to future tax years to be used by the student under section 118.61, or the transfer of these credits to the student’s spouse or common-law partner, parent or grandparent under sections 118.8 and 118.9.

¶1.4 (formerly included in ¶2 of IT-515R2) has been updated to reflect the current lowest tax rate percentage of 15%. In addition, ¶1.4 now reflects the appropriate current monthly education amounts for full-time and part-time study as $400 and $120 respectively. References to the proposed legislative amendments of March 6, 1996 formerly noted in this paragraph have been deleted. The monthly textbook amounts of $65 for full-time study and $20 for part-time study have also been noted.

¶1.6 has been added to demonstrate how the education and textbook tax credits are calculated and claimed on a student’s income tax return.

¶1.7 (formerly included in ¶2 of IT-515R2) and new ¶1.8 expand on the discussion of the availability of the full-time education and textbook tax credits for students with a mental or physical impairment as a result of various amendments to subsection 118.6(3).

¶1.9 (formerly included in ¶8 of IT-515R2) has been updated at item (a) to reflect the proposed amendment to subparagraph (a)(i) of the definition of designated educational institution in subsection 118.6(1), applicable to the 1998 and subsequent taxation years. This amendment is consequential to the change in the name of the Quebec statute under which financial assistance is provided to students as well as the change in the name of the responsible Quebec ministry.

¶1.9 has also been updated at item (c) to reflect the amendment to paragraph (b) of the definition of designated educational institution in subsection 118.6(1). This provision was amended by 2011, c. 24, s. 30(1), applicable to tuition fees paid for the 2011 and subsequent tax years.

¶1.10 and 1.11 have been added to explain CRA’s position regarding the meaning of enrolled in the program to obtain skills for an occupation and occupation and English or French second language training at an HRSDC-certified institution for the purposes of the education and textbook tax credits.

¶1.12 has been added to provide references to other CRA publications relevant to students attending universities outside Canada.

¶1.13 (formerly included in ¶9 of IT-515R2) has been updated to provide appropriate contact information for educational institutions with enquires concerning their qualification as a designated educational institution within the meaning of subsection 118.6(1).

¶1.16 has been added to explain the requirement of three consecutive weeks and to mention the availability of the part-time education tax credit.

¶1.18 (formerly included in ¶12 of IT-515R2) has been expanded to address educational upgrading courses in the context of the meaning of post-secondary school level.

¶1.19 has been added to explain the amendment to the definition of qualifying educational program to exclude a program consisting primarily of research if it does not lead to a bachelor, masters, or doctoral or equivalent degree, as amended by 2011, c. 24, s. 30(2), applicable to the 2010 and subsequent tax years.

Former ¶13 has been removed as the examples are no longer necessary.

¶1.20 (formerly included in ¶14 of IT-515R2) has been revised at item (b) to reflect the amendment to the definition of qualifying educational program in subsection 118.6(1), amended by 2005, c. 19, s. 25(1), to update the name of An Act respecting financial assistance for education expenses of the Province of Quebec. Item (c) has been added to address subparagraph (a)(iii) of the definition of qualifying educational program in subsection 118.6(1), which was added by 2002, c. 9, s. 36(1), applicable to the 2002 and subsequent taxation years. Item (c) identifies certain benefits that will not result in individuals being disqualified from claiming the education tax credit as a result of a benefit received from an arm’s-length party in connection with the program.

¶1.21 (formerly included in ¶14 of IT-515R2) has been revised to provide further clarity regarding an individual’s entitlement to claim the education tax credit when in receipt of certain benefits.

¶1.22 (formerly included in ¶16 of IT-515R2) has been expanded to provide an example relevant to the discussion.

¶1.24 has been added to define the term specified educational program which was added to subsection 118.6(1) by 1999, c. 22, s. 37(2) and identifies educational programs that qualify for the part-time education tax credit for years after 1997.

¶1.25 to 1.27 (formerly included in ¶5 to 7 of IT-515R2) have been expanded to include information regarding eligibility for the part-time education tax credit.

¶1.28 has been added to highlight the CRA’s administrative position with respect to individuals taking two or more part-time courses in the same program of study where the combined hours spent on the courses or work in the program equal at least 10 hours per week.

¶1.29 has been added to explain the revision to the definition of qualifying educational program, as amended by 2005, c. 19, s. 25(1). Pursuant to this amendment, programs taken by students in connection with, or as part of, their duties of an office or employment are not excluded from the definition of a qualifying educational program for 2004 and subsequent tax years. Former ¶17, 21, and 22 of IT-515R2 have been removed as a result of this change in legislation. Former ¶18 and 19 of IT-515R2 have been moved to ¶1.30 and 1.31.

¶1.32 (formerly included in ¶4 of IT-515R2) lists all relevant forms that are accepted by the Minister for purposes of claiming the education and textbook amounts.