Tips to help lifelong learners save tax

Why read this?

You are:

• getting a post-graduate degree;
• going back to school as an adult; or
• learning a trade.

1. Report scholarships, fellowships and bursaries

Post-secondary scholarships and bursaries are taxable unless your client is enrolled in school full-time. Post-doctoral fellowships are always taxable.

If you aren’t exempt, subtract $500 from your total funding (reported on her T4A: Statement of Pension, Retirement, Annuity and Other Income) and report the difference on Line 130 of your return.

TIP: Scholarship recipients enrolled part-time aren’t taxed on the scholarship portion that’s meant to cover tuition and program materials.

2. Report research grants

Subtract your research expenses from the grant, and report the net amount on Line 104 of the return. Eligible expenses include travel for research and cost of laboratory time and equipment. If you are submitting a paper return, attach a list of expenses.

WARNING: Your expenses can’t exceed your grant amount.

3. Claim tuition, education and textbook amounts

To be eligible, your courses must be taken at a federally accredited post-secondary institution in the tax year.

• To claim any of these amounts, you must receive one of these information slips: T2202A; TL11A; TL11B; TL11C; or TL11D from your school.
• Calculate eligible tuition, education and textbook amounts using Schedule 11: Tuition, Education and Textbook Amounts.

WARNING: Foreign universities don’t issue these forms automatically, so ensure your provide your school with a form to complete, says Morke.

TIP: If don’t have any tax payable, complete and file Schedule 11 anyway so CRA can update your unused credit amounts.

Tuition

Your tuition must exceed $100 to be claimable. Accommodation expenses, student association fees and other miscellaneous school costs aren’t eligible.

• Report tuition on Line 2 of Schedule 11.

Education

a) If you study full-time, claim $400 for every month you’re enrolled (pro-rated for part months) on Line 6 of Schedule 11.

b) If you study part-time, claim $120 a month (pro-rated for part months) on Line 3 of Schedule 11.

WARNING: You can’t claim this amount if you’re receiving a benefit, grant, allowance or tuition reimbursement. Scholarships, wages and student loans don’t affect your eligibility.

Textbook

You may claim textbook costs if you’re eligible for the education amount.

a) If you’re full-time, claim $65 for every month you’re enrolled on Line 7 of Schedule 11.

b) If you’re part-time, claim $20 for every month you’re enrolled on Line 4 of Schedule 11.

• Enter the total of all credits, from Line 17 of Schedule 11, on Line 323 of the return, and keep all supporting documents. If filing a paper return, submit each information slip.

4. Transfer or carry forward tuition, education and textbook amounts

You must use the credits to reduce your own tax to zero before transferring or carrying forward credits, even if someone else pays for your schooling, says CRA.

• Calculate the amount available in the Transfer or Carryforward section of Schedule 11.
• To transfer, record the amount (listed on Line 23 of Schedule 11), and the person claiming it, on the information slip you received from your school. CRA often requests a copy of the information slips to verify the transfer, says Adam Morke, tax specialist at Stern Cohen Accountants in Toronto.

WARNING: Any amounts you carry forward can’t be transferred to other people in a future year.

Sources: Adam Morke, CPA, CA, manager and tax specialist, Stern Cohen Accountants, Toronto, Ont.; CRA; KPMG’s Tax Planning for You and Your Family 2015.