Principal Issues: [TaxInterpretations translation] In the course of his office and employment, a taxpayer had to have documents relating to his educational program and diplomas translated in order to have his title recognized by a professional order.
Can he deduct the translation costs paid as an employment expense?
If not an employment expense, can he deduct them in any other capacity, for example as tuition fees?
Position: 1. No. 2. No.
Reasons:
We are of the view that the costs incurred by a taxpayer to have documents relating to the taxpayer’s educational program and diplomas translated for the purpose of qualifying with a professional association are not covered by subparagraph 8(1)(i)(i) or any other provision of section 8.
Based on the information submitted, there is no evidence to suggest that the translation fees would fall within the scope of incidental expenses under subsection 118.5(3), i.e., that they were paid to an institution (university, college or other) in connection with the taxpayer's enrolment in a post-secondary program.
XXXXXXXXXX 2004-008090
Danielle Bouffard
October 27, 2004
Dear Sir,
Subject: Request for technical interpretation - Employment expenses
This is further to your fax of June 10, 2004 regarding the deductibility of certain employment expenses. We have taken into account the information provided during our telephone conversation (XXXXXXXXXX/ Bouffard) on October 4, 2004. We apologize for the delay in responding to your request.
Mr. A came to Canada to practise his profession XXXXXXXXXX as an employee. In order to have his designation recognized in Canada by the College of XXXXXXXXXX, Mr. A had to pay fees for the translation of his education program and degree documents. The fees paid totalled more than XXXXXXXXXX.
Questions
Can Mr. A deduct the translation costs paid as employment expenses? Alternatively, can he deduct them in any other capacity, for example as tuition fees?
Our Comments
As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is the practice of the Canada Revenue Agency (the "CRA") not to issue a written opinion regarding proposed transactions otherwise than by 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 not, however, apply to your particular situation in certain circumstances.
Subsection 8(2) of the Income Tax Act (the "Act") limits the amounts that a taxpayer may claim in computing employment income to those specifically provided for in section 8. Subparagraph 8(l)(i)(i) provides that an employee may deduct amounts paid by the employee in the year as annual professional membership dues the payment of which was necessary to maintain a professional status recognized by statute. We are of the view that the costs incurred by a taxpayer to have documents relating to the taxpayer’s educational program and diplomas translated for the purpose of qualifying with a professional association are not covered by subparagraph 8(1)(i)(i) or any other provision in section 8.
Subsection 118.5(1) generally provides that tuition fees paid by an individual who is enrolled in the year at an educational institution (university, college or other) in Canada that offers courses at a post-secondary school level may qualify for the tuition tax credit if the total of such fees exceeds $100. Subsection 118.5(3) includes, as tuition fees, ancillary fees paid in respect of the individual's enrolment at the institution in a program at a post-secondary school level.
Certain fees are, however, excluded from ancillary fees. Among other things, subparagraph 118.5(3)(c)(iii) excludes fees of any kind to the extent that they are charged for services that are not ordinarily provided at educational institutions in Canada that offer courses at a post-secondary level. Similarly, under paragraph 118. 5(3)(d), if an ancillary fee that would otherwise qualify is required to be paid by a full-time student or a part-time student at an educational institution, and is not required to be paid by all full-time or part-time students at that institution ("non-universal fee"), such fee may be included as an ancillary fee for that student only if the total of the non-universal fees that are paid on account of the student's enrolment does not exceed $250.
Paragraphs 26 and 27 of Interpretation Bulletin IT-516R2, Tuition Tax Credit, also provide some examples of eligible tuition fees. Paragraph 27(f) of that Bulletin states that fees for memberships or dues to professional associations do not qualify as tuition fees for the purposes of section 118.5.
In our view, based on the information submitted, there is nothing that would lead us to conclude that the translation fees would fall within the scope of ancillary fees covered by subsection 118.5(3), i.e., that they would have been paid to an educational institution for Mr. A's enrolment in a program at a post-secondary level. However, even if we assume that such fees may have been incurred for this purpose, it seems unlikely to us that they would qualify as tuition fees, given the exceptions provided for in paragraphs 118.5(3)(c) and (d) described in the preceding paragraph. Consequently, in the situation described, we are of the view that those fees would not be tuition fees eligible for the tuition tax credit under section 118.5.
In conclusion, even though Mr. A incurred expenses in the course of his employment to have his diplomas translated in order to qualify for a professional order, those expenses are not deductible from employment income due to the restriction in subsection 8(2) and are not otherwise deductible under the Act.
These comments are not advance income tax rulings and do not bind the CRA with respect to any particular factual situation.
Best regards,
Ghislaine Landry, CGA
for the Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch