2016-0659941E5 Coaching costs as tuition fees

Principal Issues: Does the expense paid to a coach for a University music course qualify as tuition expense under 118.5(1)?

Position: Question of fact-not likely in this case.

Reasons: legislation

Author: Robertson, George
Section: 118.5(1); 118.5(3)

XXXXXXXXXX                                                                                                                         2016-065994
                                                                                                                                                 George A Robertson, CPA CMA
                                                                                                                                                 (905) 721-5196
December 26, 2016

Dear: XXXXXXXXXX

Re:   Tuition Tax Credit

This is in response to your correspondence of May 3, 2016, regarding whether an amount paid for the services of a XXXXXXXXXX coach are eligible for the tuition tax credit under section 118.5 of the Income Tax Act (the “Act”).

You have informed us that you are full-time student in a XXXXXXXXXX (the “Program”) at XXXXXXXXXX (the “University”). Each student in the Program is required and expected to enlist XXXXXXXXXX coach which the student pays directly. We understand the XXXXXXXXXX and coach may be one in the same and may be on a list preapproved for the Program. These coaching and XXXXXXXXXX fees are in addition to the tuition fees paid to the University for the Program.

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 70-6R7, Advance Income Tax Rulings and Technical Interpretations.

A student who is enrolled at an educational institution in Canada may be eligible to claim a tuition tax credit for eligible tuition fees paid in respect of the year to that educational institution, as long as the total of such fees exceeds $100 and certain other criteria are met. Specifically, an educational institution in Canada whose tuition fees may be eligible for the tuition tax credit is an educational institution in Canada that is:

a) a university, college or other educational institution providing courses at a post‑secondary school level; or

b) certified by the Minister of Employment and Social Development to be an educational institution providing courses (other than courses designed for university credit) that furnish a person with skills for, or improve a person’s skills in, an occupation.

In the situation you described, it appears that the coaching and XXXXXXXXXX fees are being paid directly to an individual, not to the educational institution. Accordingly, the amount paid for those fees would not qualify as eligible tuition fees for the tuition tax credit.

Income Tax Folio S1-F2-C2, Tuition Tax Credit, provides additional information about the tuition tax credit.  This folio is available on the Canada Revenue Agency website at www.cra-arc.gc.ca.  Paragraphs 2.34-2.37 of the Folio explain in further detail which fees are eligible as tuition, including certain ancillary fees and charges imposed by an educational institution. However, for these fees to qualify, they must be paid to the educational institution.

We trust that these 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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