As students across Canada gear up for another academic year, taxes are probably the last thing on your mind, but being prepared will mean savings in the future.
Post-secondary expenses can quickly add up, however, there’s a silver lining for students (and their supportive families).
Enter, the Tuition Tax Credit.
RHN Chartered Professional Accountants can help you take advantage of this often-overlooked credit. Let’s break down what it is and how it works.
What is the Tuition Tax Credit?
The Tuition Tax Credit is a non-refundable tax credit available to students who have paid eligible tuition fees to a qualifying post-secondary institution in Canada or, in some cases, abroad.
The non-refundable tax credit is available to post-secondary students and means that if you pay for tuition and other educational costs you can let the Canada Revenue Agency (CRA) know when you’re filing your taxes, and they’ll lower your tax bill, either now or in the future.
Who Qualifies for the Tuition Tax Credit?
If you’re a post-secondary student in Canada, you’re probably eligible for the tuition tax credit.
To be eligible, the student must be enrolled in a qualifying educational program at a recognized post-secondary institution, including universities, colleges, and technical schools. You have to be over the age of 16 and be studying either full-time or part-time. Costs for the institution must also be at least $100. Any unused tuition up to $5,000 may be transferred to a parent, grandparent, spouse, or common-law to utilize the tax credit.
What Expenses Can Be Claimed?
The Tuition Tax Credit primarily applies to tuition fees, but it also includes certain ancillary fees that are mandatory for enrollment, such as student association fees, and library and lab fees.
Unfortunately, not all your costs can be claimed—some things you can’t claim on your taxes include transportation and parking, extracurricular activities, housing, textbooks and some classes such as high school upgrade courses.
Don’t forget to track your expenses, such as tuition payments, to simplify the process. At the end of each year, the post-secondary institution will provide a form called the T2202 Tuition and Enrollment Certificate.
At RHN Chartered Professional Accountants, we’re here to help you make the most of every tax benefit available to you.
If you have any questions about the Tuition Tax Credit or need assistance with your tax planning, don’t hesitate to reach out to our team of experts.
This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation. Please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.
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