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.
Principal Issues: Two questions are posed:
(1) Is a course taken in connection with one's job eligible for the education tax credit?
(2) In such a situation, if one's employer partially reimburses the individual for the course, can a prorated part of the education tax credit be taken?
Position: (1) Yes
(2) No
Reasons: (1) The March 2004 budget eliminated the exclusion for courses taken while an individual is employed and the course is taken in connection with that employment.
(2) The definition of "qualifying educational program" excludes programs for which any sort of allowance, benefit, grant or reimbursement is provided by an arm's length person. Partial reimbursement would fall into this description and disqualify the course or program.
XXXXXXXXXX 2007-022701
Renée Shields
March 14, 2007 (613) 948-5273
Dear XXXXXXXXXX:
Re: Education Tax Credit
This is in response to your electronic correspondence of March 12, 2007 inquiring about your eligibility for the education tax credit.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advance Income Tax Rulings." Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office, a list of which is available on the "Contact Us" page of the Canada Revenue Agency ("CRA") website at http://www.cra-arc.gc.ca. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.
You have asked whether a course that relates to an individual's job is eligible for the education tax credit. For years prior to 2004, the former definition of "qualifying educational program" in the Income Tax Act excluded any program taken by a student:
(a) during a period for which the student received income from an office or employment, and
(b) in connection with, or as part of the duties of, that office or employment.
However, the federal budget of March 2004 removed this exclusion and the change is applicable to the 2004 and subsequent tax years. This means that provided all other requirements are met, a course or program taken by an individual in connection with his or her employment is eligible for the education tax credit.
You have also asked whether a person who receives a partial reimbursement of the cost of such a course from his or her employer is eligible for a prorated education tax credit. The definition of "qualifying educational program" provides that it does not include a program if the student receives, from an arm's length person (such as an employer), any allowance, benefit, grant or reimbursement of expenses other than such things as a scholarship, a Canada student loan or certain government financial assistance paid pursuant to an agreement with Human Resources and Skills Development Canada. This means that any amount of assistance from an employer would be considered to be an allowance or reimbursement and would disqualify the course from eligibility for the education tax credit.
I trust this information is helpful.
Yours truly,
Mickey Sarazin, CA
Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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