One winning claim not a pattern

National Post

2014-03-15



If you're a student getting prepared to file your 2013 tax return, you might already be familiar with the three basic non-refundable credits that most post-secondary students qualify for: the education credit, the textbook credit and the tuition credit.

All three of these credits are non-refundable, meaning they cannot be used to generate a tax refund but can be used to reduce any taxes payable, perhaps on part-time or summer employment income. if a student doesn't have enough income in a particular year to use all these credits, she can transfer up to $5,000 to a spouse, partner or (grand) parent or choose to carry the credits forward to be used in a future tax year.

For most students, the tuition credit is by far the largest of the three credits. it's available for tuition fees paid to a university, college, or other post-secondary educational institution in Canada. tuition fees paid for courses certified by employment and social development Canada to develop or improve skills in an occupation also qualify for the tuition tax credit. if the school is outside of Canada, the tuition may also be eligible for the credit provided the attendance is full-time at a university in a course "leading to a degree."

It was this final requirement that was the subject of a tax case decided late last month involving a student who was enrolled full-time in the Musicians institute ("MI") College of Contemporary Music Audio Engineering program. the MI is a "university outside Canada" for the purposes the tuition tax credit and offers bachelor's degrees, associate's degrees and non-degree programs. the audio engineering program does not lead to a bachelor's degree at the MI but rather leads to a certificate.

On his 2011 tax return, the student claimed a tuition credit of just over $9,000 based on tuition fees and some Audio Engineering equipment which he was required to purchase. the CRA denied his tuition credit on the basis that he was not enrolled in "a course leading to a degree" as required by the tax law, claiming that a "degree" is a bachelor's degree or higher.

One of the student's arguments was that he continued to attend the same program in 2012 and yet the CRA allowed the tuition credits in his 2012 return but denied them in his 2011 return. He argued that the CRA "is obliged to apply the law consistently and therefore such tuition credits for 2011 ought to be granted."

The judge found that just because the CRA allowed the tuition credit in 2012, it "has no bearing on this appeal."