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Published March 3, 2022

How Does the Tuition Tax Credit Work?

Canada's tuition tax credit helps to reduce the income tax bill of eligible post-secondary students.

Attending a post-secondary institution can be quite difficult to afford. Expenses like tuition and textbooks certainly aren’t cheap, and many students have little or no income during the school year. Fortunately, the Canadian government recognizes this imbalance and provides students with tuition tax credits, which, if you’re eligible, can greatly reduce your tax bill.

» MORE: Common tax credits and how you can claim them

What is tuition tax credit?

If you attend a qualifying post-secondary institution, you’re likely eligible for a tax credit based on the amount of tuition you pay. The federal tuition tax credit applies to your federal income tax, and some provinces and territories offer additional tuition tax credits for residents.

The actual tuition tax credit is calculated by multiplying the tuition you paid by the federal and provincial or territorial tax rate that applies to you. For a simple example, let’s say your federal tax rate percentage is 15% and you paid $5,000 of eligible tuition fees in the 2021 tax year. Since 5,000 x 0.15 = 750, you would be entitled to a $750 tax credit.

The tuition tax credit is discounted from the amount of tax you owe, and may even cover it completely. If that happens you might not have to pay any income tax for that tax year.

» MORE: See what tax bracket you’re in

Tuition tax credit eligibility requirements

In most cases, students who are 16 years of age or older at the end of the year, and are enrolled at a post-secondary education institution in Canada, will qualify for a tuition tax credit.

The tuition tax credit typically applies to both part-time and full-time students. Students attending schools outside of Canada on a full-time basis are also eligible for the credit.

It’s also possible to receive the tuition tax credit for courses that aren’t at the post-secondary school level, as long as you’re at least 16 years old and you’re enrolled in order to obtain skills for an occupation. For example, tuition paid to a trade or vocational school would qualify.

The only other eligibility requirement is that the amount you paid to attend the educational institution must be more than $100.

» MORE: What is the GST/HST tax credit?

What’s excluded from the tuition tax credit?

While most education you seek after high school will qualify for tuition tax credits, there are some exceptions. For example, if you need to take an upgrade course to prepare for your post-secondary institution, it wouldn’t qualify.

It also depends on who actually pays the tuition. If your educational fees were reimbursed by your employer or your parent’s employer, those costs won’t qualify for the tax credit. Tuition is paid by a federal, provincial, or territorial job training program and not reported as income is also excluded.

However, if you received a scholarship, fellowship, bursary, or prize, the scholarship exemption does allow you to claim a tuition tax credit. That means that if you win a scholarship from your employer to pay for your education costs, you would qualify for the credit. However, if your employer instead simply paid your fees to take the course, you would not qualify.

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How to claim the tuition tax credit

To claim the tuition tax credit, you’ll need one of the following forms from your school, and include it when filing your taxes:

  • Form T2202, Tuition and Enrollment Certificate.
  • Form TL11A, Tuition and Enrollment Certificate – University Outside Canada.
  • Form TL11C, Tuition and Enrollment Certificate – Commuter to the United States.
  • Form TL11D, Tuition Fees Certificate – Educational Institutions Outside Canada for a Deemed Resident of Canada.

If your educational institution is in Canada, it will usually automatically generate Form T2202. However, if you’re attending a school outside of Canada, there’s a good chance you’ll need to request the appropriate form from the registrar or financial aid office.

Note that the tuition tax credit is non-refundable, which means that if your credit amount is greater than the amount of tax you owe, you will not be paid the excess in the form of a tax refund. Instead, you get to keep your unused tuition tax credits for future use.

What happens to my unused tuition tax credits?

Unused tuition tax credits can be carried forward or transferred to someone else. First, you’ll need to claim your current year’s tuition and any unused credits from previous years on your tax return. Once you’ve applied the credits to your own tax owing, you can choose save them for next year or give them to someone else.

Carrying forward your unused tuition tax credits means that you can claim them in the following year. You’ll still need to file a tax return and include the amount of tax credits that you’ll carry forward on Schedule 11. Carrying forward is especially useful since it means you can make the most of your tuition tax credits, even if you make very little income while you’re in school. You can carry forward the credits and apply them to the additional income you’ll earn when you finish school.

Transferring tuition tax credits works a little differently. You can choose to transfer up to $5,000 of the current year’s tuition amount, minus the amount you claimed yourself, to:

  • Your spouse or common-law partner.
  • Your parent or grandparent.
  • Your spouse’s or common-law partner’s parent or grandparent.

The person who receives your tuition tax credit transfer must claim it on their own tax return. This helps them reduce their own tax burden.

About the Author

Barry Choi
Barry Choi

Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.

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