17 May 2002 External T.I. 2002-0126705 - TUITION FEES - INTERNSHIP

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues:

Whether an internship fee charged to students registered in the XXXXXXXXXX program qualifies as a tuition fee?

Position TAKEN:

YES.

Reasons FOR POSITION TAKEN:

Fee is required as part of the instruction

XXXXXXXXXX 2002-012670
C. Tremblay, CMA
May 17, 2002

Dear XXXXXXXXXX:

Re: Internship Fee

This is in response to your letter of February 27, 2002, requesting our opinion on whether an internship fee charged to the students registered in the XXXXXXXXXX program is an eligible fee that qualifies for the tuition credit as described under subsection 118.5(1) of the Income Tax Act (the "Act").

You indicated in your letter that to become XXXXXXXXXX, a person must complete both an accredited undergraduate degree program (or equivalent) and documented competencies defined by XXXXXXXXXX, usually as an accredited internship program. Services provided by the University XXXXXXXXXX for the fee include:

XXXXXXXXXX.

Our Comments:

Since the Act does not define the term "tuition fees" for the purposes of the Act, the ordinary or common meaning prevails. The Concise Oxford Dictionary reports the meaning of tuition as "teaching, instruction, especially as a thing to be paid for". The term "tuition" is generally considered to refer to instruction. Where a portion of the fees to be charged in respect of courses are determined by reference to the costs of developing courses, this would not, in and by itself, prevent the fees from being regarded as being tuition.

Generally, eligible tuition fees are described in paragraph 26 of the Interpretation Bulletin IT-516R2 and relate primarily to the process of instruction whereas the fees described in paragraph 27 of IT-516R2 relate to some other goods or services provided by the educational institution and are not considered eligible tuition fees.

In our view, where the fees relate only to a placement fee charged in order to allow the student to receive employment during a semester while gaining experience in a particular field, the fee is not to be considered tuition, however, where the fee pertains to instruction and is a requirement of an academic program, the fee would be eligible to be included in the tuition fee. Accordingly, based on the above description of the services provided, in our view, the internship fee is an eligible tuition fee.

While we trust that our comments are of assistance to you, we would caution that they do not constitute an advance income tax ruling and are, accordingly, not binding upon the Canada Customs and Revenue Agency with respect to any particular transaction.

We trust our comments will be of assistance to you.

Yours truly,

Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch