2019-0801361E5 Tuition expenses

Principal Issues: Whether various fees paid by medical students are eligible for the tuition tax credit.

Position: Likely not.

Reasons: In most cases the fees are not paid to an educational institution. Application fees to attend a medical school in which the medical student subsequently enrolls may be eligible.

Author: Brennan, Christopher
Section: 118.5

XXXXXXXXXX                                                                        2019-080136
                                                                                                C. Brennan
September 10, 2019

Dear XXXXXXXXXX:

Re: Tuition expenses

This is in reply to your email of March 16, 2019, in which you asked whether various amounts paid by medical students are eligible for the tuition tax credit.

Specifically, you have asked whether the following amounts would be eligible for the tuition tax credit:

*     medical residency program matching fees (matching fees);
*     registration fees paid to use an application portal (registration fees);
*     medical residency application fees paid to the medical schools (application fees);
*     Basic Life Support (BLS) certification fees;
*     travel expenses for interviews for medical school and medical residency programs;
*     resume translation expenses;
*     personal attribute test fees, and;
*     language test fees.

This technical interpretation provides general comments about the provisions of the Income Tax 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 70-6R9, Advance Income Tax Rulings and Technical Interpretations.

An individual must meet the requirements of subsection 118.5(1) of the Act to qualify for the tuition tax credit. Our views on the tuition tax credit are discussed in Income Tax Folio S1-F2-C2, Tuition Tax Credit (“Tuition Folio”).

As indicated in paragraph 2.3 of the Tuition Folio, pursuant to paragraph 118.5(1)(a) of the Income Tax Act (“Act”), 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 (in accordance with subsection 118.5(1.1)). 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 (subparagraph 118.5(1)(a)(i)); or

b)    certified by the Minister of Employment and Social Development (ESD) 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 (subparagraph 118.5(1)(a)(ii)).

It is our understanding that the amounts paid by medical students for the matching fees, registration fees, BLS certification fees, translation costs and travel costs are not paid to an educational institution as described in paragraph 118.5(1)(a). Therefore it is our view amounts paid for these costs would not be eligible for the tuition tax credit.

Paragraph 2.34 of the Tuition Folio explains that tuition for purpose of the tuition tax credit includes application fees that relate to a program offered by the institution, but only if the student subsequently enrols in the institution.  Therefore, the amounts paid for the application fee, to the medical school in which the medical student subsequently enrolls, may be eligible for the tuition tax credit.

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.

It is our understanding that the results from the personal attribute test and the language test are to be used by certain medical schools to assess medical students for positions in their medical residency program. Furthermore, the fees paid by the medical students for the personal attribute test and the language test fees are not paid to an educational institution in subparagraph 118.5(1)(a) of the Act, a professional association, a provincial ministry or other similar institution. Therefore, it is our view that the fees paid by the medical students for the personal attribute test and the language test would not be eligible for the tuition tax credit.

For 2019 and subsequent tax years, section 122.91 of the Act allows an individual, that meets certain conditions, to accumulate $250 per year, to a maximum of $5,000 over their lifetime, to their Canada training credit limit, which will be used in calculating the Canada training credit, a new refundable tax credit that will be available for 2020 and future years. The amount of the Canada training credit that can be claimed in a tax year will be the amount equal to the individual’s Canada training credit limit for the year or 50% of their eligible tuition fees paid to an educational institution in Canada, whichever is less. Amongst other criteria, the tuition and fees must be otherwise eligible for the tuition tax credit.

Outside of the tuition tax credit in section 118.5 and the Canada training credit in section 122.91, there are no other provisions of the Act that would allow a deduction or a credit for a student incurring the costs outlined in this request.

Yours truly,

Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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