Universities Outside Canada

Notice to the reader 

This measure has received Royal Assent.

Currently, universities outside Canada which are recognized as qualified donees are required to be both prescribed in Schedule VIII of the Income Tax Regulations and registered by the Minister of National Revenue (registered qualified donees are listed publicly on the Government of Canada’s website).

Budget 2018 proposes to remove the requirement that universities outside Canada be prescribed and included in Schedule VIII of the Income Tax Regulations. As such, universities outside Canada will need only to be registered by the Canada Revenue Agency (CRA) and included in its public list of qualified donees.  The criteria for registration as a university outside Canada have not changed.

 

1. What is the current status of universities outside Canada under the Income Tax Act?

Universities outside Canada, whose student body ordinarily includes students from Canada, can be prescribed under the Income Tax Regulations and as a result registered as qualified donees. As qualified donees, these universities receive tax benefits similar to registered charities, including the ability to issue official donation receipts for gifts they receive.

When supported by official donation receipts, individual taxpayers may claim a credit against taxes payable and corporations may claim a deduction when computing taxable income for the eligible amount of a gift made to a qualified donee.

A list of universities outside Canada that are currently registered as qualified donees can be found on the CRA publicly available list of qualified donees at List of prescribed universities outside Canada.

2. What are the requirements for being prescribed as a university outside Canada?

As stated in the CRA’s administrative guidance RC191, Becoming a Prescribed University, to be prescribed in the Income Tax Regulations, a foreign educational institution must:

  • maintain an academic entrance requirement of at least secondary school matriculation standing;
  • be organized for teaching, study, and research in the higher branches of learning;
  • ordinarily include Canadian students in its student body;
  • have the authority itself to confer degrees of at least the baccalaureate level (bachelor or equivalent) according to the academic standards and statutory definitions of the country the institution is located in. This means that an institution will not qualify if either of the following apply:
    • it confers only associate degrees, diplomas, certificates, or other degrees at a level lower than a bachelor degree or equivalent;
    • it is affiliated to a university but does not have the authority itself to confer degrees at the baccalaureate level or higher.

Further information on the requirements can be found in the information sheet RC191.

3. What changes have been announced in respect of universities outside Canada?

Budget 2018 proposes to repeal the requirement that universities outside Canada be prescribed in Schedule VIII of the Income Tax Regulations. Under this proposed change, although the criteria have not changed, the process to be registered as a qualified donee has been simplified and will only require a decision and registration by the CRA.

For more information please see information sheet RC191.

4. What will happen to universities outside Canada that are already listed in Schedule VIII of the Income Tax Regulations?

Currently, universities outside Canada listed in Schedule VIII are also included on the CRA’s public list of qualified donees. There will be no change to their qualified donees status as a result of this measure. 

5. When are the new rules effective?

The proposed changes will apply as of February 27, 2018.

6. What will happen to universities outside Canada that have already submitted an application to be prescribed under Schedule VIII of the Income Tax Regulations but are currently awaiting a decision?

For applicants that applied to be prescribed under the Income Tax Regulations prior to February 27, 2018, their application will be processed by the CRA under the new application process for qualified donees. No action is required by these applicants. If they meet the requirements, they will receive a letter from the CRA confirming their registration as a qualified donee and be added to the CRA's public list of qualified donees within the coming weeks.

7. Will the CRA administer the proposed changes before the law is enacted?

For universities outside Canada applying for registration as qualified donees, the CRA will apply the new rules on the basis of the proposed legislation. This is the CRA's longstanding administrative practice. It eases both the compliance burden on taxpayers and the administrative burden on the CRA.

With respect to the revocation of the registration of a university outside Canada, the CRA will not apply the proposed changes until after the enacting legislation receives Royal Assent.

8. Where can I get more information on the proposed changes?

The CRA provides the latest information on the proposed changes on Canada.ca. Taxpayers should check online regularly for updated forms, policies, guidelines, questions and answers, and guidance.

In the meantime, please consult the Department of Finance Canada’s Budget 2018 documents for details.

The CRA will update its information sheet RC191 within the coming weeks.

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