Principal Issues: Has the CRA's current position with respect to the interpretation of the phrase "full-time time attendance at a university outside Canada" for purposes of the tuition tax credit, changed?
Position: Yes, for taxation years after 2006.
Reasons: In light of recent adverse decisions, the CRA has reconsidered its position with respect to the term "full-time attendance at a university outside Canada". For 2007 and subsequent years, students who take courses with a university outside Canada by internet will be allowed a tuition tax credit provided they otherwise satisfy the criteria for the tax credit.
May 9, 2007
HEADQUARTERS HEADQUARTERS Mike Brescacin, Manager Kimberly Duval Tax and Charities Appeals Directorate (613) 599-6054
Attention: Ken Berini 2007-023366
Paragraph 118.5(1)(b) - Internet Attendance at University Outside Canada
Further to our letter to you of April 21, 2006 concerning our interpretation of the phrase "full-time attendance at a university outside Canada" for purposes of the tuition tax credit under paragraph 118.5(1)(b) of the Income Tax Act (the "Act"), we are writing this letter to confirm that we have reconsidered our interpretation of this phrase.
The Act provides that tuition fees for courses taken at a university outside Canada will qualify for the tuition tax credit only if, among other things, the student was in full-time attendance at the university outside Canada. Historically, it has been the view of the Canada Revenue Agency (CRA) that this requirement could not be satisfied by a student taking courses over the internet.
In light of recent jurisprudence, we have reconsidered our interpretation of paragraph 118.5(1)(b), such that a student enrolled at a university outside Canada and taking courses over the internet may be able to claim a tuition tax credit for the related tuition fees, provided that the student is able to demonstrate that their attendance via internet constituted "full-time attendance". (Of course, the other requirements of the tax credit, e.g., fees must be paid for courses no less than 13 consecutive weeks duration, must also be satisfied.)
Consistent with the practice explained in the Index to the CRA Interpretation Bulletins and Technical News, this change in position will apply only to future assessments and reassessments. In other words, the new position applies to tuition fees paid for the 2007 taxation year unless a notice of objection was filed and is still outstanding, or can still be filed for a prior period.
We trust these comments will be of assistance to you. Should you wish to discuss this matter further, please do not hesitate to contact me.
Robin Maley
for Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch