Tuition tax credit

What qualifies

Generally, fees qualify when they are paid to a post-secondary institution in Canada, or to an institution certified by Employment and Social Development Canada for a person aged 16 or older who is building or improving skills in an occupation. Fees paid to certain institutions outside Canada can also qualify in defined situations.

The fees you paid to each institution must be more than $100 for that institution’s certificate to count. Eligible fees include items such as admission, examination, certificate or diploma charges and mandatory computer service fees. Fees an employer paid or reimbursed generally cannot be claimed unless the amount was included in your income.

The slip and the claim

Your school provides a Form T2202, or one of the foreign equivalents, or an official tax receipt. You report the amounts on Schedule 11 with your return. Keep the slip with your records in case the CRA asks.

The federal education and textbook amounts were eliminated in 2017, so the federal credit now applies to tuition. Whether a province or territory still allows education or textbook amounts is a separate question that the provincial schedule answers.

Using, transferring and carrying forward

You must first use your tuition to reduce your own tax. Only the unused part can be transferred, up to $5,000 of the current year’s federal tuition amount, minus what you used. It can go to your spouse or common-law partner, or to a parent or grandparent of you or your spouse. The student designates the person on the back of the T2202 and the recipient claims it on line 32400.

Anything not used or transferred is carried forward, and you claim it in the first year you owe tax. You must file a return every year to keep it alive, even with no income, because a missed year can mean the amount is lost. Once you carry an amount forward, you cannot transfer it later.

An illustration

A student in Hamilton has $6,000 of eligible tuition and only $2,000 of income, so most of the credit would go unused. The student claims what is needed on Schedule 11, designates a parent for up to the remaining transferable amount, and carries the balance forward. The figures are round and illustrative only.

What to discuss with your accountant

Ask whether a transfer helps more than carrying the amount forward, particularly if you expect higher income soon. Bring every T2202, any official receipts, last year’s notice of assessment showing carry-forward balances, and details of fees an employer or program reimbursed.