DAVID WILKENFELD, CPA, CA, canadian tax CONSULTANT

What’s Your Tax Issue? – Foreign Tuition Fees

In Canadian Income Tax, Students and Tuition Fees on April 8, 2010 at 4:34 pm

The Tax Issue:

I am currently enrolled in an online Master’s program at a U.S. university. I am taking a part-time course load. My friend tells me I’m out of luck tax-wise because I won’t be able to deduct any tuition fees for an online course. Is she right?

The Answer:

Your friend is right, but for the wrong reason. First of all, let’s look at whether your enrollment qualifies, internet or not. The requirements for attendance at a foreign university are different than for Canadian institutions. In order to claim a tuition credit for a foreign school, you must be in full-time attendance at a university and each course must be at 13 weeks in duration.

In determining whether you are in “full time attendance”, the first thing to determine is whether online attendance is considered attendance at all for tax purposes. Recent jurisprudence has essentially answered the question and the CRA now concedes that attendance over the internet qualifies.

Next, you must be able to show that you are attendance “full time”. In this regard, the CRA has stated that students are ordinarily accepted as being in “full-time attendance” if the university regards them as such. Accordingly, a certificate from a university stating that a student was in full-time attendance in a particular academic year or semester will normally be accepted.

Finally, you must be enrolled in courses that last for 13 weeks.  Some US universities base their schedules on quarters, rather than semesters. If this is your case, then your course may not meet the 13-week criteria and you may not be able to claim any credit.

The fact that your course is an online program is not the problem. It’s the fact that you’re doing a part-time course load. You should also check your schedule to see if you meet the 13 week requirement for each course.

Interestingly, there would be no such restrictions if the school was Canadian. One wonders why there is a difference, especially in the age of the internet.

Finally, you should be aware that you might still be eligible for the education and textbook tax credits, which are separate from the tuition credit and will still provide you with a reduced tax credit for part-time attendance at a designated university. The full-time attendance requirement does not apply, but the 13-week course length does, so again, check your schedule.

For more information on these rules, see CRA Guide RC-192 , which outlines all the law and the forms you and your university will need to claim the credits.

  1. The Federal budget of 2011 proposes to shorten the course duration requirement described above from 13 weeks to 3 weeks, thereby granted access to the tuition tax credit and education amounts to many more students enrolled in full-time programs at foreign universities.

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