Post-secondary education is expensive. Tuition and textbooks 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 help reduce your income tax bill.
What is the 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. Tax credits act like a discount on your overall income tax bill.
The tuition tax credit amount is calculated by multiplying the tuition you paid by the rate of the lowest federal tax bracket, which is 15% for 2022. If you paid $5,000 of eligible tuition fees in the 2022 tax year, for example, you would be entitled to a $750 tax credit. The tuition tax credit is subtracted from the amount of tax you owe.
Some provinces and territories also offer additional tuition tax credits for residents. If you attend post-secondary school in one of these provinces, you can calculate your provincial tax credit by multiplying your eligible tuition fees and the rate of the lowest provincial tax bracket.
Eligibility requirements for the tuition tax credit
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 eligible schools outside of Canada on a full-time basis can also claim 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. 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.
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.
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.
How to claim a tuition tax credit in Canada
To claim the tuition tax credit, you’ll need to obtain 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 provide 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, so 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. But you can still put them to use.
Options for unused tuition tax credits
Don’t worry if you weren’t able to use your entire tuition tax credit. Unused tuition tax credits can be carried forward or transferred to someone else.
Carrying forward your unused tuition tax credits means you can claim them in the following year, so long as you file a tax return and include the amount of tax credits that you’ll carry forward. If you make very little income while you’re attending school, you can carry forward the credits and apply them to the additional income you’ll earn when you graduate.
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, helping them reduce their tax burden, too.
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