It’s True, Some Education Credits Have Disappeared

If you are a post-secondary student, or a supporting parent or spouse of one, and are looking for the monthly education amount on the 2017 federal tax return, you may be a bit confused; it’s gone, but not out completely.

Effective January 1, 2017, it’s only the tuition fee credit that can be claimed on the federal tax return, and then only if the total eligible fees paid exceed $100 in the year. That happened in last year’s federal budget, when the finance department removed the monthly education amount of $400 for full-time students and $120 for part-time students, as well as the monthly textbook amount, which was $65 for full-time students and $20 for part-time students in prior years.

However, you will still see a reference to the tuition, education and textbook amounts on Schedule 11 of the federal tax return. That’s because students can continue to carry forward unused amounts of all three components of this credit from prior years.

Provincial Changes.  You may also recall seeing the tuition and education amounts on the calculation of provincial tax credits in previous years. No province ever had the textbook component; but now, some of the provinces have followed the federal system in eliminating the monthly education amount. Here’s how that looks for the 2017 tax filing year:

Education credits will continue for all of 2017 in the following provinces: B.C., Alberta, Manitoba, Nova Scotia, Newfoundland, Prince Edward Island, Northwest Territories and Nunavut.

The following provinces have made recent changes:

• SK – eliminated Tuition and Education credits as of July 1, 2017
• ON – eliminated Tuition and Education credits as of September 5, 2017
• NB – eliminated Tuition and Education credits for all of 2017
• YK – eliminated Education and Textbook credits for all of 2017

Common Definitions. In addition, you should be aware that the tax rules for claiming a “full-time student” and “part-time student” under the eliminated education amount will still be referred to when reporting the following provisions on the federal tax return:

• Scholarship exemptions
• Child care expense eligibility and claims for higher-income spouses
• Eligibility for the Working Income Tax Benefits
• Exemptions from TOSI (Tax on Split Income) rules for minors

Moving Expenses. Students claiming moving expenses may be affected by the rules that exempt scholarship, bursary and fellowship income after 2006, when students also qualified for the education amount. In prior years, moving expenses were deductible against such taxable income; but after 2006, some scholarships became non-taxable, which would mean that students could not claim moving expenses, unless there was taxable income at their place of study.

As these claims are often audited, it’s probably a good idea to review your history of claims for any post-secondary students in your family before completing the 2017 tax return. For students of Knowledge Bureau, the required T2202A forms used to back up your reporting are now available in the Virtual Campus Administration Room.

Additional educational resources: Want to learn more about the process of claiming these credits as a professional tax advisor? Consider taking Knowledge Bureau’s Distinguished Financial Advisor – Tax Services Specialist designation program. Don’t forget to mark your calendar for the CE Summits coming this May 29, 30, 31 to Winnipeg, Calgary and Vancouver respectively, and then to Toronto on June 6. We’ll be discuss the impact of the recent 2018 federal budget on investment, retirement, estate and cross-border planning for families.

Evelyn Jacks is President of Knowledge Bureau and author of the New Essential Tax Facts: How to Make the Right Tax Moves and Be Audit-Proof, Too, available for pre-order now. Order your copy today! Follow Evelyn on twitter @evelynjacks.

©2018 Knowledge Bureau Inc. All Rights Reserved.

Refer a Friend	Research	Calculators	Course Trials