Principal Issues: Can a college or other educational institution qualify as a "university outside Canada" for purposes of the education tax credit?
Position: Yes
Reasons: The CRA accepts that an educational institution recognized by an accrediting body that is nationally accepted in that country as being an educational institution that confers degrees at least at the bachelor or equivalent level is a "university outside Canada" for purposes of the ETC. The CRA also accepts educational institutions listed on Schedule VIII of the Income Tax Regulations.
2008-028825 XXXXXXXXXX L. Zannese (613) 957-2747 August 28, 2008
Dear XXXXXXXXXX :
Re: Education Tax Credit and Meaning of "University outside Canada"
This is in response to your email correspondence of July 28, 2008, inquiring as to whether a student who plans to attend a State College in the United States will be eligible to claim the Education Tax Credit ("ETC") as provided by subsection 118.6(2) of the Income Tax Act. We also acknowledge our telephone conversation with you of August 21, 2008 (Zannese/XXXXXXXXXX ).
The situation outlined in your letter appears to relate to a factual one, involving a specific taxpayer. 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 70-6R5, "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.
The CRA's general views regarding the ETC are contained in Interpretation Bulletin IT-515R2, "Education Tax Credit"("IT-515R2"), which is available on our website at www.cra-arc.gc.ca.
Whether a particular student qualifies for the ETC depends on all the facts of the student's specific situation and cannot be determined based only on the name of the school and a general description of the program in which the student will be enrolled. To qualify for the ETC, a student must be enrolled at a designated educational institution in either a qualifying or specified educational program. It is not possible to determine in advance whether any particular course will be a qualifying or specified educational program, as this determination is made on a student by student basis. Many factors must be taken into account including the amount of time spent on courses or work in the program, the duration of the course or program and whether any benefit, other than those specifically allowed, has been received by the student.
For a student enrolled in a program at an educational institution outside Canada, a "designated educational institution" is a "university outside Canada" at which the individual was "enrolled in a course of not less than 13 weeks duration, leading to a degree". You have asked us to confirm that a "university outside Canada", for purposes of the ETC, may include a college, or other educational institution that is not specifically referred to as a "university."
IT-515R2 discusses the meaning of a "designated educational institution" in paragraph 8. With respect to a "university outside Canada", IT-515R2 directs readers to the discussion of this topic in Interpretation Bulletin IT-516R2, "Tuition Tax Credit"("IT-516R2"). IT-516R2 states in paragraph 5 that:
An educational institution located in a country outside Canada is presumed to qualify for purposes of paragraph 118.5(1)(b) if it is recognized by an accrediting body (that is nationally accepted in that country) as being an educational institution which confers degrees at least at the bachelor or equivalent level (see 9(a) below). For example, an institution listed in the current edition of Accredited Institutions of Postsecondary Education published by the American Council on Education and indicated in that publication as being an institution granting degrees at the "B" level (bachelor's degree or equivalent), "M" level (master's degree or equivalent), "D" level (doctoral degree) or "P" level (first professional degree such as J.D, M.D. or M. Div) will be regarded as a university that qualifies under paragraph 118.5(1) (b). Also, an institution listed in Schedule VIII of the Income Tax Regulations is recognized as satisfying the requirements of paragraph 118.5(1) (b).
We confirm that the criteria set out in paragraph 5 of IT-516R2 apply for purposes of both the tuition tax credit and the ETC. Consequently, a State College may be a "university outside Canada" for purposes of the ETC if it meets the criteria described above.
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