Principal Issues: [TaxInterpretations translation] Is a post-doctoral fellow entitled to the education tax credit under subsection 118.6(2) in respect of the fellowship?
Position: No
Reasons: The fellow is not a student and is not enrolled in a qualifying educational program or in a specified educational program.
XXXXXXXXXX 2007-023655 Michel Lambert CA, M.Fisc July 3, 2007
Dear Madam,
Subject: Postdoctoral Fellows
Education tax credit
This is in response to your email of May 17, 2007, asking whether postdoctoral fellows at the University of XXXXXXXXXX ("the University") are eligible for the education tax credit in respect of their fellowship.
Unless otherwise indicated, all statutory references herein are to provisions of the Income Tax Act (the "Act").
As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is our practice not to issue written opinions on proposed transactions otherwise than by way of advance rulings. Furthermore, when it comes to determining whether a completed transaction has received appropriate tax treatment, that determination is made first by our Tax Services Offices as a result of their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments that we hope may be helpful to you. These comments may, however, under certain circumstances, not apply to your particular situation.
The University's postdoctoral program
A postdoctoral fellow must be admitted and registered at the University. However, they are not registered as undergraduate or graduate students. No tuition fees are charged.
The duration of the fellowship is usually two years and must not be less than six months.
The postdoctoral fellow must be accepted by a professor who undertakes to take responsibility for the fellow and to offer a full-time internship aimed at acquiring more specialized or complementary research expertise.
The postdoctoral fellow must have held a PhD for fewer than five years or have successfully defended the thesis before a panel.
The postdoctoral fellow undertakes, inter alia, to carry out research.
The professor in charge undertakes, in particular, to provide the postdoctoral fellow with supervisory conditions favouring a fruitful collaboration in the conduct of a joint research project. The professor also undertakes to establish scientific exchanges enabling the postdoctoral fellow to prepare a scientific career in research.
On the recommendation of the faculty and the professor responsible, the University issues a certificate to the postdoctoral fellow who has completed the fellowship. This attestation, in the form of a letter, specifies the nature, location, department, faculty, duration of the postdoctoral fellowship and the name of the professor responsible for the fellowship.
The education tax credit
Section 118.6(2), which provides an education tax credit, reads in part as follows:
There may be deducted in computing an individual’s tax payable under this Part for a taxation year the amount determined by the formula
A × B
where
A
is the appropriate percentage for the year; and
B
is the total of the products obtained when
(a) $400 is multiplied by the number of months in the year during which the individual is enrolled in a qualifying educational program as a full-time student at a designated educational institution, and
(b) $120 is multiplied by the number of months in the year (other than months described in paragraph (a)), each of which is a month during which the individual is enrolled at a designated educational institution 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, […]
According to the wording of subsection 118.6(2), the education tax credit is for a student.
In addition, to be eligible for the education tax credit, the individual must be enrolled in a qualifying educational program or a specified educational program as defined in subsection 118.6(1). Those two programs refer to requirements that a student must meet in order to conclude that the student is enrolled in one of those two educational programs.
Thus, to be eligible for the education tax credit, we are of the view that the individual must be a student and enrolled in an educational program.
The concept of a student
The Act does not define the term "student". In our view, the modern approach to statutory interpretation must be applied to interpret the word "student" in section 118.6. In Her Majesty the Queen v. Imperial Oil Limited, [2006] 2 S.C.R. 447, 2006 SCC 46, the Supreme Court of Canada reiterated its position in Canada Trustco Mortgage v. Canada, [2005] 2 S.C.R. 601, 2005 SCC 54, that the modern approach to statutory interpretation applies to the interpretation of taxing statutes. The Court then quoted the following at paragraph 28:
It has been long established as a matter of statutory interpretation that “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: see 65302 British Columbia Ltd. v. Canada, [1999] 3 S.C.R. 804, at para. 50. The interpretation of a statutory provision must be made according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole. When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of the words plays a lesser role. The relative effects of ordinary meaning, context and purpose on the interpretive process may vary, but in all cases the court must seek to read the provisions of an Act as a harmonious whole. [para. 10]
According to the University's postdoctoral program, a postdoctoral fellow pursues a full-time fellowship with the aim of acquiring more specialized or complementary research expertise.
Considering the facts and the rule of interpretation just stated, we are of the view that postdoctoral fellows do not satisfy the requirements of subsection 118.6(2) and, consequently, cannot benefit from the education tax credit provided in subsection 118.6(2).
As stated in Information Circular 70-6R5, this opinion is not an advance income tax ruling and is not binding.
Best regards,
Manager
Financial Sector and Exempt Entities Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.