2014-0530681E5 examinations

Principal Issues: Whether fees paid by individuals to the XXXXXXXXXX for examinations taken in the XXXXXXXXXX program to become a XXXXXXXXXX qualify as examination fees for the tuition tax credit under paragraph 118.5(1)(d) of the Income Tax Act (the “Act”).

Position: No, the fees do not qualify.

Reasons: A XXXXXXXXXX is not a professional status that is recognized under a federal or provincial statute where that status would allow an individual to practice the profession in Canada.

Author: Shea-Farrow, Nancy
Section: 118.5(1)(d)

XXXXXXXXXX
                                                      2014-053068
                                                      N. Shea-Farrow

December 24, 2015

Dear XXXXXXXXXX:

Re: Examination fees paid to XXXXXXXXXX

We are replying to your letter of April 30, 2014, regarding whether fees paid by individuals to the XXXXXXXXXX for examinations taken in the XXXXXXXXXX program to become a XXXXXXXXXX qualify as examination fees for the tuition tax credit under paragraph 118.5(1)(d) of the Income Tax Act (the “Act”). We apologize for the delay.

Our comments:

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Generally, paragraph 118.5(1)(d) of the Act allows the tuition tax credit to be claimed for fees paid by an individual for an examination taken in the year that is required to obtain a professional status recognized under a federal or provincial statute, or to be licensed or certified as a tradesperson, where that status, licence or certification allows the individual to practice the profession or trade in Canada. The fee must be paid to an educational institution in subparagraph 118.5(1)(a) of the Act, a professional association, a provincial ministry or other similar institution.

In our view, professional status is considered to be recognized under a federal or provincial statute if the statute acknowledges the existence, validity, character or claims of the professional status in question. Thus, generally speaking, the statute must recognize:

i.    the profession;

ii.   that the status of the profession is associated with membership in the professional association; and

iii.  that individuals in that profession are competent to perform a specific act or acts.

Although we were able to find the XXXXXXXXXX program and the XXXXXXXXXX referred to in a federal or provincial statute, we were unable to find a statute that recognizes the profession of a XXXXXXXXXX.  The references to the XXXXXXXXXX or XXXXXXXXXX program that we found appeared to be in the context of an educational achievement that was an option for an individual to hold a position within an organization.

In our view, the examinations appear to be part of an educational program rather than examinations that are required to obtain a professional status that is recognized under a federal or provincial statute and therefore, the fees would not qualify for the credit under subparagraph 118.5(1)(d) of the Act.

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Manager - Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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