More tax help for lifelong learners

Why read this?

Your clients are:

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

What to do

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.

TIP

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

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

2. Report research grants

› Subtract your client’s 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 your client is submitting a paper return, attach a list of expenses.

• Your client’s expenses can’t exceed her grant amount.
• Foreign universities don’t issue these forms automatically, so ensure your client provides her school with a form to complete, says Adam Morke, tax specialist at Stern Cohen Accountants in Toronto.
• If your client’s employer is funding her education, she can claim the fees only if the funding is included in her income (see “When an employer pays tuition”).
• Your client can’t claim this amount if she’s receiving a benefit, grant, allowance or tuition reimbursement. Scholarships, wages and student loans don’t affect her eligibility.

3. Claim tuition, education and textbook amounts

TIP

If your client has no tax payable, complete and file Schedule 11 anyway so CRA can update her unused credit amounts.

For your client to be eligible, her courses must be taken at a federally accredited post-secondary institution within that tax year.

• › To claim any of these amounts, your client’s school must send her one of the folllowing information slips: T2202A, TL11A, TL11B, TL11C or TL11D.
• › Calculate eligible tuition, education and textbook amounts using Schedule 11: Tuition, Education and Textbook Amounts.

Tuition

Your client’s 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

• If your client studies full-time, claim $400 for every month she’s enrolled (pro-rated for part months) on Line 6 of Schedule 11.
• If she studies part-time, claim $120 a month (pro-rated for part months) on Line 3 of Schedule 11.

Textbook

Your client may claim textbook costs if she’s eligible for the education amount.

• If your client is full-time, claim $65 for every month she’s enrolled on Line 7 of Schedule 11.
• If your client is part-time, claim $20 for every month she’s 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.

Transfer or carry forward tuition, education and textbook amounts

Your client must use the credits to reduce her own tax to zero before transferring or carrying forward credits, even if someone else pays for her 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 your client received from her school. CRA often requests a copy of the information slips to verify the transfer, says Adam Morke, tax specialist at Stern Cohen Accountants.

Amounts your client carries forward can’t be transferred to other people in a future year.

When an employer pays tuition

If your client’s employer or ex-employer is paying, or has paid, for school, it affects your client’s taxable income, says Adam Morke, tax specialist at Stern Cohen Accountants.

For instance, if your client is laid off and her employer gave her money for continuing education, CRA considers it income, says Morke. “They’re giving you almost a severance that would have otherwise been taxable,” he explains.

Other situations are less clear. If your client is still working and her employer pays for her tuition, it may or may not be taxable. “If you’re doing the course primarily for the benefit of your employer, it’s not taxable,” he explains. “If it doesn’t fall within that criteria, then it would be taxable.” He recommends talking to an accountant to be sure.