Tax Tip: Tax Credits Available to Fund Education

Tuition funding is expensive, but there is tax relief. In our final of three reports on education funding, learn how the tax system shares in the cost with parents and students when it comes to funding a post-secondary education.

Tuition Tax Credits: Tuition in excess of $100 paid for a course of studies at a post-secondary level will be eligible for the tuition fee amount, a non-refundable tax credit. For study before 2017, students may also be eligible for a full-time or part-time education and textbook amount (see below). Any unused education and textbook amounts at the end of 2016 may be carried forward to be claimed in future years, but no new education and textbook amounts can be earned after 2016.

Education and Textbook Credits: Depending on how you structure your course work plan, you may also qualify to claim the education and textbook amount. Please note that the tax credits regulations change at the beginning of January 2017. Complete your study programs as follows to be eligible for this credit:

• Full-time student: 10 hours per week for at least three consecutive weeks
• Part-time student: 12 hours per month

Student-loan Interest Write-offs: Students who accumulate interest on student loans may claim a non-refundable credit for the interest paid in the current year, plus any interest paid in the prior five years that has not yet been claimed. The credit is 15% of the interest paid. However, where the loan comes from is important: it must be covered under one of the following pieces of legislation and cannot be combined with any other loans:

• the Canada Student Loans Act
• the Canada Student Financial Assistance Act
• the Apprentice Loans Act
• similar provincial or territorial government laws

Special rules for medical professionals: Eligible family doctors, residents in family medicine, nurses, and nurse practitioners who work in under-served rural or remote communities may apply for forgiveness of their federal student loans. Nurses and nurse practitioners working in rural Saskatchewan may be eligible for forgiveness of their Saskatchewan student loans.

Employer-paid tuition: Employers may deduct the cost of tuition as a business expense if the programs are of benefit to the employer’s business. In that case, tuition paid for employees will not be a taxable benefit and the student will not be eligible to claim the tuition tax credit.

Next time:  Tax Breaks on Knowledge Bureau Courses.

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