A tax credit available to students and their eligible family members!
Post-secondary education costs in Canada can have a significant impact on the finances of students and their families. In order to help ease off this financial burden, the government provides relief in the form of a non-refundable tax credit known as tuition, education, and textbook amounts (hereafter referred to as tuition credit). Note: A non-refundable tax credit can reduce the tax payable amount to zero but cannot create a tax refund, whereas a refundable credit can create a refund.
In order to qualify for the tuition tax credit:
- The student must be over 16 years of age at the end of the year
- The amount for tuition must be more than $100, and paid towards courses at an accredited post-secondary institution in Canada
Since tuition tax credit is non-refundable it provides very little, if any tax benefit to students. This is because most students while pursuing post-secondary education tend to have low income and are likely to pay no tax even without claiming the tuition tax credit.
Nonetheless, in order to make use of the tuition tax credit, the student can either transfer it to a parent, grandparent, spouse or common-law partner, or carry forward the unused amount indefinitely. The maximum amount that can be transferred is $5,000 minus the amount of current year tuition claimed on the student’s tax return. In addition, amounts carried forward from previous years must be used by the student before the current year’s amounts, and any carried-forward amounts that are not completely used by the student in the current year can only be claimed by the student in a subsequent year and cannot be transferred.
For professional advice contact Alpha Accountzy, Accounting & Tax Solutions.
