Transferring University Costs to Supporters

Let’s face it, we all appreciated the financial support we got when we were struggling students. For those contributing financially to someone else’s post-secondary education, those kind family sacrifices can bring tax rewards even though the amounts have neither risen nor been indexed recently.

The transfer or tuition, education and textbook amounts work only if the student does not have sufficient income to use the tuition, education, and textbook amounts earned in the current year. In that case, a portion of the amount unused by the student himself or herself may be transferred to a cohabiting spouse or common-law partner.

If the taxpayer (student) does not have a spouse or common-law partner or the person’s spouse or common-law partner is not claiming the taxpayer as a dependant, then the unused amount may be transferred to the taxpayer’s parent or grandparent or to the spouse’s parent or grandparent.

The maximum amount that may be transferred is the lesser of

• the unused tuition, education and textbook amount for the year
• $5,000 minus the student’s claim for the tuition, education, and textbook amounts earned in the current year.

Any amount not claimed by the student in the year and not transferred to a supporting individual may be carried forward to future years. The amount carried forward must be used as soon as possible and claimed before any current year tuition, education and textbook amount. The carried forward amount may not be transferred, but must be used by the student.

Provincial credits. You should also know that the tuition, education, and textbook amounts at the provincial level may not correspond to the federal amounts, so a separate provincial Schedule 11 may be required when you file your tax return. In addition, the unused tuition, education, and textbook amounts carried forward may be different at the federal and provincial level.

Correcting Errors and Omissions. If you made mistakes claiming your entitlements or missed them entirely, know that you can adjust federal returns for a period of 10 years in the past. Provincial adjustments can generally be made for a period of only three years.

Check out the tax advantages of going to school with your DFA-Tax Services Specialist—they can make a big difference to cash-strapped students and their families. Happy studying!

Evelyn Jacks is President of  Knowledge Bureau, a national designated educational institute focused on excellence in financial education for financial advisors and their clients. For information about certificate tax, retirement and investment courses see www. knowledgebureau.com or call 1-866-953-4769.