Changes to Education Provisions Explained

By Evelyn Jacks

The March 4, 2010 Federal Budget delivered two provisions of interest to students and their supporting individuals, explained below. Taxpayers and their advisors will want to discuss them this tax season:

Students are affected, too. There are two provisions of interest to students and their supporting individuals in this budget:

• Scholarship Exemptions: Where students receive a scholarship, fellowship, or bursary in connection with a part-time program, the scholarship exemption will be limited to the amount of the tuition paid for the program plus the cost of program-related materials, starting in 2010. This limitation will not, however, apply to students who are entitled to the Disability Tax Credit. In addition:
  • Programs that are research-based and qualifying for the education amount, and leading to a degree or diploma will qualify for the exemption.
  • Post doctoral fellowships will be fully taxable.
• Education Amount: The budget clarifies that a post-secondary program that consists principally of research will be eligible for the Education Amount (and a scholarship exemption) only if it leads to a college or CEGEP diploma, or a bachelor, masters or doctoral degree (or an equivalent degree). Post-doctoral fellowships will not be eligible.