Principal Issues: Is the Residency program offered by the Entity a "qualified educational program" so that the Entity can issue students in the program a form T2202A?
Position: Question of fact, but likely no.
Reasons: To qualify for the ETC, the student must be enrolled at a "designated educational institution" in a "qualifying educational program". Based on the very limited facts provided it is not clear that the Entity meets the definition of "designated educational institution" nor is it clear that students registered in the Residency program are taking courses from the Entity that meet the definition of "qualifying educational program"
XXXXXXXXXX 2008-027960
L. Zannese
(613) 957-2747
July 23, 2008
Dear XXXXXXXXXX :
Re: Question on Qualified Education Program and Form T2202A
This is in response to your letter of April 30, 2008 inquiring whether the XXXXXXXXXX ("Residency") offered by the XXXXXXXXXX ("Entity") is a qualified educational program for purposes of the education tax credit ("ETC") so that a form T2202A should be issued to students registered in the program.
The situation outlined in your letter appears to relate to a factual one, involving specific taxpayers. It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular IC70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office ("TSO") for their views. A list of TSOs is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.
Education Tax Credit
The CRA's general view regarding the ETC is contained in Interpretation Bulletin IT-515R2, "Education Tax Credit", which is also available on the CRA web site at http://www.cra-arc.gc.ca. Generally, the ETC is available in respect of regular and correspondence education programs for students who are enrolled in qualifying or specified educational programs at designated educational institutions.
A designated educational institution is defined in subsection 118.6(1) of the Income Tax Act (the "Act"). An educational institution in Canada is a designated educational institution if it is
(a) a university, college or other educational institution designated by the Lieutenant Governor in Council of a province as a specified educational institution under the Canada Student Loans Act, designated by an appropriate authority under the Canada Student Financial Assistance Act, or designated by the Minister of Higher Education and Science of the Province of Quebec for the purpose of An act respecting financial assistance for students of the Province of Quebec, or
(b) certified by the Minister of Human Resources and Skills Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for, or improve a persons skills in, an occupation.
In order for the Entity to be eligible to issue form T2202A it must be a designated educational institution. Based on the very limited information provided to us, it is not clear to us that the Entity satisfies this requirement.
In addition to the Entity being a designated educational institution, the student must be enrolled in courses offered by the Entity which meet the definition of a qualifying educational program. A qualifying educational program is a program running for at least 3 consecutive weeks that provides that each student taking the program spend at least 10 hours per week on courses or work in the program. Courses the Entity requires or permits students to take at another university or college would not form part of a qualifying educational program offered by the Entity. If the student receives any benefit in respect of a program from a person with whom the student was dealing at arm's length (other than certain forms of financial assistance), the program is not a qualifying educational program.
Where the student is enrolled at a designated educational institution but does not qualify as a full-time student, the student may still qualify for the part-time ETC. To qualify, the student must be enrolled in a specified educational program that provides that each student in the program spend not less than 12 hours in the month on courses in the program. A specified educational program means a program that would be a qualifying educational program if the definition for that term were read without reference to the 10 hours per week.
Based on the very limited information you provided to us, it is not clear to us that the Residency would be a qualifying educational program to the students enrolled in that program.
Tuition Tax Credit
The CRA's general interpretation of the provisions of the Act that apply to the tuition tax credit (TTC) are contained in Interpretation Bulletin IT-516R2, "Tuition Tax Credit". This document is also available on our website at www.cra-arc.gc.ca.
The TTC, as set out in section 118.5 of the Act, is available to students that were, during a calendar year, enrolled at an educational institution in Canada that is:
(i) a university, college or other educational institution providing courses at the post-secondary school level, or
(ii) certified by the Minister of Human Resources and Skills Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for, or improve a person's skills in, an occupation.
Based on the limited information provided to us, it is not clear to us that the Entity is an educational institution described in either paragraph (i) or (ii) above. As such it is unlikely that the fees paid to the Entity by students for registration, examinations or other items would qualify for a TTC.
We trust that these comments will be of assistance.
Yours truly,
Robin Maley
Manager
Non-Profit Organizations and Aboriginal Issues
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch