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Heading Back to School - What You Need to Know

So you have decided to go back to school but what does this mean when it comes to your tax return? If you take a course at the post-secondary level or the course develops or improves skills in an occupation and the educational institution has been certified by Human Resources and Skills Development Canada (HRSDC), you can claim the cost of your tuition as a tax credit on your personal tax return for the year you took the course. As such, if you paid for a course in 2007 but did not take the classes until 2008, you will be able to claim the tuition fees for 2008 not 2007.

Not all fees can be claimed. You must have been paid at least $100 to each educational institution whose fees you claim.

The second part of the tuition credit is the additional credits available depending on whether or not you are attending school on a part-time or full-time basis. If you attend school full time, you will receive an additional credit of $400 per month for every month you were enrolled. If you attended only part-time you can claim $120 per month unless you could attend only part-time because you had a disability. If that was your situation you can claim the full time credit. It is important to note that you can claim only one education amount for each month you attended school be that the full-time amount or the part-time amount.

In addition, there is a new text book credit of $20 per month for part-time students and $65 per month for full time students. To obtain this credit you do not require receipts for the text books purchased but you will need a T2202, T2202A or a TL11A

A final new credit available to all persons who use public transportation is the public transit pass credit which is available to monthly transit users. For this claim receipts must be available for inspection by CRA so be sure to keep those fare cards!

Despite this new government generosity (??), you cannot claim the following expenses:

  • students' association fees;
  • medical care;
  • parking;
  • meals and lodging;
  • goods of a lasting value that you will keep, such as a computer, microscope, uniform, or an academic gown;
  • initiation or entrance fees to a professional organization; and
  • If the fees were paid or reimbursed by your employer, or an employer of one of your parents, you can claim them only if the payment or reimbursement was included in your or your parent's income.

The student must claim their tuition and education amount first on their own return, even if someone else paid your fees. However, you may be able to transfer part or the entire unused amount to your spouse or common-law partner or to your or your spouse or common-law partner's parent or grandparent. The transfer credit cannot exceed $5,000 and thus any excess will then be carried forward by the student for use in a future year.

The area of tuition fee claims and education credit claims is frequently reviewed by the Canada Revenue Agency and thus proper documentation from the school should be obtained prior to making a claim. In addition, there are benefits to how much or little of the credits are transferred from the student so be sure to contact your professional tax accountant to ensure you obtain maximum benefit if you are making this claim.

About the Author

This article was written by Gabrielle Loren -- a partner with Loren & Company, CGA's located in North Vancouver, BC and can be reached at gabrielle@loren.bc.ca, at 604-904-3807 or check out their website at www.loren.bc.ca

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previous page: Dispelling The Myth of the Dreaded Audit
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