Principal Issues: Are faculty member expenses for a Field School Program conducted overseas included as an additional program fee charged to students considered eligible tuition fees for purposes of Tuition Tax Credit under section 118.5?
Position: Question of fact but likely yes.
Reasons: Costs to make instructor available at overseas site are considered integral to the course and therefore a basic cost of instruction.
XXXXXXXXXX 2010-035420 W. Doiron September 20, 2010
Dear XXXXXXXXXX :
Re: Eligible Tuition Fees
This letter is in response to your email dated January 14, 2010 in which you request whether fees charged in relation to a study-abroad program delivered by XXXXXXXXXX are eligible for the Tuition Tax Credit under section 118.5 of the Income Tax Act. You provided the following details:
- Every year, XXXXXXXXXX sends students on group study-abroad programs.
- The cost of these programs is a fee charged to the student above and beyond regular tuition fees ("Program Fee").
- The study-abroad programs involve an XXXXXXXXXX faculty member accompanying a group of XXXXXXXXXX students to an international destination. The faculty member then teaches the XXXXXXXXXX course overseas.
In your email, you have concluded that most of the Program Fee would likely not be considered eligible tuition fees. However, you have asked whether the faculty member costs (i.e. travel, communication costs, accommodations, per diem, etc.) included in the Program Fee charged to the students would be considered eligible tuition fees for the purposes of the Tuition Tax Credit.
The particular situation outlined in your email appears to relate to a factual one, involving a specific taxpayer. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. We are, however, prepared to offer the following general comments, which may be of assistance.
All statutory references in this letter are references to the provisions of the Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, as amended (the "Act").
General comments
The Income Tax Act does not define the term "tuition fees" for the purposes of the Act. Therefore, the ordinary or common meaning of the term prevails. The Concise Oxford Dictionary defines the word 'tuition' to mean "teaching, instruction, especially as a thing to be paid for". The Canada Revenue Agency ("CRA") has provided a list of eligible tuition fees in paragraph 26 of the Interpretation Bulletin IT-516R2, Tuition Tax Credit, a copy of which is available on the CRA website at http://www.cra.gc.ca. Generally, these fees are considered eligible fees as they relate to the process of instruction whereas the fees described in paragraph 27 of IT-516R2 relate to fees paid for some other goods or services provided by the educational institution and are therefore, not considered eligible tuition fees for purposes of the Tuition Tax Credit under section 118.5.
Based on the limited information provided, it is our view that the portion of the Program Fee relating to the faculty member's expenses would likely be considered eligible tuition fees for the purposes of the Tuition Tax Credit under section 118.5 as they relate to the process of instruction. We agree with your opinion that the portion of the Program Fee for a student's transportation, medical care, board, lodging and other personal costs would not be considered eligible tuition fees.
We trust these comments will be of some assistance.
Yours truly,
Lita Krantz
Assistant Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch