Claiming The Tuition Fee Amount & Canada Training Credit

Evelyn Jacks

Most people know that the tax system allows for a non-refundable tax credit on the T1 known as the Tuition Fee Amount. But, you need to have taxes payable for it to work to your advantage.  If you don’t the claim may be transferred from the student to the supporting individual – a parent, a spouse or a grandparent. But there is a maximum limited:  only $5000 can be transferred and unfortunately this amount is not indexed to inflation.  It’s a tax reform change that is long overdue as the cost of education has increased over the years.

Another option:  if there is no supporting individual, or the student would prefer to save the amount to reduce taxes when earning income later, the unused tuition amounts may be carried forward to future years.

The claim must be supported by keeping form T2202 Tuition and Enrolment Certificate on hand in case CRA wants to see it.

New Educational Institute Criteria.  Generally speaking the tuition fee credit is claimable when post-secondary education is taken at a qualifying post-secondary institution. 

However, for tuition fees paid after 2016 to acquire occupational skills courses taken at a university, college or other post-secondary educational institution will be eligible for the Tuition Tax Credit, even if the courses are not at a post-secondary level, so long as the student is over 16 at the end of the tax year.

Adjusting Prior Filed Returns. The claim for tuition fee amounts has also been impacted by a series of changes over the years so that if you need to adjust prior filed returns to recover a missed claim or correct an error or omission, which you can do from Tax Year 2014 forward.  Here’s what you need to know:

Education & Textbook Amount.  The Federal Education & Textbook Amount was eliminated in 2017, leaving only the Tuition Fee Credit on the Federal T1.  However, several provinces have retained the Education Amount.  This includes  Manitoba, Nunavut, Northwest Territories, Nova Scotia, Newfoundland and Labrador, and PEI.  Be sure to take this into account when making your claims for the tuition amount.

Bottom Line:  Catch up your tax filings to maximize the claim for the tuition, education and textbook amounts, especially if there is an opportunity to transfer these amounts to a supporting individual.

Claiming the Canada Training Credit

The Federal Budget of 2019 introduced the Canada Training Credit (CTC) a notional amount which springs into action to reduce tuition costs when the personal tax return is filed.  It’s a refundable tax credit and it reduces tuition fee amounts otherwise claimable in the year it is claimed.   A 2019 tax return had to be filed to get the first credit for the CTC in 2020, so if that filing was missed, it’s important to catch up.  Here’s a short history lesson on the CTC:

The Backdrop.  Starting with the 2020 tax return, most taxpayers between the ages of 26 and 65, therefore, began earning an entitlement to the Canada Training Credit of $250 per year up to a lifetime maximum of $5000.  

The Claim.  In order to claim this refundable tax credit, the taxpayer has to file a tax return, have eligible tuition fees for the year and meet certain income requirements: a minimum working income and a maximum net income threshold in the prior year which is the amount at which the 29% tax bracket starts.

The Qualifying Income Criteria.  Here’s the qualifying income criteria in chart form:

*of the prior year

The Bottom Line:  The CTC can help to pay for post-secondary education, including education with Knowledge Bureau.  Check out how this works to reduce the costs of your tuition in a significant way:

See calculation below:

Tuition Fees = $3990

plus GST (5%) = $4189.50

CTC Calculation =
Lesser of 50% of Tuition = $2094.75 or $1250 (eligible per tax filings)

CTC Claim $1250 (Note
- if no taxes payable, this $1250 CTC is fully refundable when you file your
tax return)

Plus Claim a Tuition Amount for the Remaining Fees:

Tuition Credit $2939.50
($4189.50 less CTC claimed $1250 -T2202 required)

Tax benefit $705.48
($2939.50 x 24% - varies with province of residence)

Total Tax benefit (Tuition amount plus CTC) = $1955.48

Net cost of tuition $4189.50 - $1955.48 = $2234.02

RWM™ and MFA-P™ Programs

Tuition Fees = $1795

plus GST (5%) = $1884.75

CTC Calculation =
Lesser of 50% of Tuition = $942.38 or $1250 (eligible per tax filings)

CTC Claim $942.38 (Note
- if no taxes payable, this CTC is fully refundable when you file your
tax return)

Plus Claim a Tuition Amount for the Remaining Fees:

Tuition Credit $942.37
($1884.75 less CTC claimed $942.38 -T2202 required)

Tax benefit $226.17
($942.37 x 24% - varies with province of residence)

Total Tax benefit (Tuition amount plus CTC) = $1168.55

Net cost of tuition $1884.75 - $1168.55 = $716.20