University students returning to school this fall face higher tuition, with
average fees increasing at an annual rate of 8.1% since 1991, four times the
average rate of inflation of 1.9% during that period. Not surprisingly, students
often look to the tax system to provide some much needed tax relief to ease
their financial burdens.
Canadian tax law provides two primary credits for students: a tuition credit
for tuition fees paid as well as an education credit based on each month of
attendance at a qualifying educational institution. A tax case decided last
month had to determine what was meant by "attendance" and whether one could
attend university "online" as opposed to in person and still qualify for the
This case may sound familiar as it is very similar to one decided earlier
this year where the judge concluded that "commuting" did not include
"telecommuting" and thus denied a student a tuition credit in respect of tuition
fees paid for a course which she took on the Internet. That case, however, was
unique in that it dealt with part-time tuition fees paid to a U.S. institution,
which are only eligible for the credit if the student "commuted" to the school.
This recent case concerns James Krause, who is enrolled in a Ph.D. program at
Touro University International in California. He took the Touro courses "online"
and did not physically attend any lectures.
The program at Touro is conducted online using live conferences as well as
through CDs and virtual libraries. There are also weekly live online
conferences, chat-lines and conference calls.
Under the Income Tax Act, for a student to claim tuition fees for a Canadian
post-secondary institution, the only condition is that the student must be
"enrolled." If the university is outside Canada, the wording in the Income Tax
Act is more specific -- the student must be in "full-time attendance" at the
So, was Mr. Krause considered to be in full-time attendance at Touro? On the
issue of "full-time," the university regarded him as being in full-time
attendance and indicated as such on the Tuition Fees Certificate signed by
officers of the school. The main issue, therefore, was whether taking all of the
courses electronically amounts to "attendance" in the first instance.
The judge concluded that full-time attendance at a foreign university can
include full-time attendance through the Internet or online. As he wrote,
"[this] view conforms to common sense and to the reality of modern
technology...We must recognize that this is 2004 and that whereas even 25 years
ago to attend university required that one turn up physically at classes,
technology has moved ahead so dramatically that it is entirely possible to
attend lectures by seeing and hearing them on a computer."
This decision should provide some much-needed tax relief to students who have
lot more on their minds than having to worry about how to pay for the cost of