Income Tax Information

Income from Scholarships and Awards

Starting with the 2006 taxation year, scholarship, bursary and fellowship income is fully exempt from tax when the income is received in connection with a program for which the student will get an education tax credit. The income is not reported on the tax return.

If you are not eligible to claim the education amount, then only the first $500 of awards is tax free. Amounts received in excess of $500 are reported on line 130 of your tax return.

Prior to 2006, if you were eligible to claim the education amount (see below), then the first $3,000 of scholarships, fellowships, bursaries, study grants and artists' project grants were not taxable. Your T4A slips reported the total scholarships or awards. You totalled the T4A slips, then reported this total less $3,000 (or zero if your awards total less than $3,000) on the tax return.

Moving expenses

If you have moved at least 40km to attend a post-secondary educational institution full time, then moving expenses may be deducted, but only from taxable scholarship or award income received in the year (most is now not taxable). Moving expenses are a deduction from income, not a tax credit, so they save taxes at your marginal tax rate. For more information on moving expenses related to students, see this topic in the CRA pamphlet P105 Students and Income Tax Pamphlet.

Student loan interest

A non-refundable tax credit for student loan interest can only be claimed by the student, even if it was paid by another person. Unused interest amounts can be carried forward for 5 years.

In order for the interest to be eligible, the loan must have been obtained under

  • The Canada Student Loans Act,
  • The Canada Student Financial Assistance Act, or
  • A similar provincial or territorial government law for post-secondary education

If an eligible loan is refinanced, it will lose its eligibility for the tax credit, unless the refinancing is done under the above-mentioned legislation.

There are both federal and provincial non-refundable tax credits for student loan interest. The tax credit is calculated by multiplying the lowest federal/provincial/territorial tax rate by the amount of the loan interest, except in Québec, where the rate of 20% is used.

Tuition, education, and textbook tax credits

The tax credits for tuition, education amounts and textbooks are non-refundable tax credits.

To claim the tax credit for tuition fees, you must have received from the educational institution either an official tax receipt or a completed form T2202A, Tuition, Education and Textbook Amounts Certificate. If you paid less than $100 for the year to any particular educational institution, that amount is not claimable. Otherwise, the total tuition fees paid in the year are claimable. The costs of books, room and board, or student association fees cannot be claimed. If the fees were paid by your employer or the employer of one of your parents, then the costs are not deductible unless the reimbursed amount is included in your income or your parent's income. Private school tuition fees for elementary and secondary students are generally not tax deductible.

The education amount tax credit can be claimed for each whole or part month in which you were enrolled in a qualifying program at a designated educational institution. The educational institution must provide either for T2202 Education and Textbook Amounts Certificate, or for T2202A Tuition, Education and Textbook Amounts Certificate. The amount that can be claimed is $400 per month for full time enrolment, or $120 per month for part time enrolment.

If you attended only part time and are eligible for the disability tax credit (see Disability Amount Tax Credit), then you can claim $400 per month. If you attended only part time because of a disability which would qualify you for the disability tax credit except that it is not severe and prolonged, then you can claim $400 per month. In this case an authorized person must complete part 3 of form T2202, or give you a signed letter certifying your impairment.

Starting with the 2004 taxation year, if a person takes a qualifying educational program in connection with their employment, this qualifies for the education tax credit providing that no part of the cost of the education is reimbursed by the employer.

The textbooks tax credit is an additional tax credit starting in 2006, similar to the education tax credit, for textbooks. This non-refundable tax credit is based on $65/month for full-time attendance or $20/month for part-time attendance.

Transfer or carry-forward of tuition, education and textbook amounts

If you do not have enough income to utilize your total tuition costs, education amount or textbooks amount, you can either carry forward these amounts to future years (no limit to carry-forward period), or you can transfer the costs to your spouse, common law partner, or to a parent or grandparent of you or your spouse or common law partner. The maximum amount that can be transferred to a parent or grandparent is $5,000 less the costs claimed by the student. This may still result in costs remaining that can be carried forward. The transfer of costs to another person should not be more than can be utilized on their tax return. Then any excess costs can still be carried forward. To transfer costs to another person, Schedule 11 of your tax return must be completed.

Once unused costs have been carried forward, they cannot be transferred to anyone in a future year.

If you moved to another province after carrying forward tuition and education amounts, then you will use the federal unused tuition and education amounts as a carry-forward when completing the provincial Schedule 11 for your new province of residence.

Further information on the CRA website:

Courses outside Canada
i.    Tuition tax credit for courses outside Canada

In some cases a tuition tax credit may be claimed for courses taken outside Canada. The following criteria must be satisfied in order to claim the credit:

  • full-time attendance at a university outside Canada in a course leading to a degree (not just a diploma).
  • the university must be recognized by a nationally accepted accrediting body of its country. The institutions in Schedule VIII of the Income Tax Act Regulations are qualifying institutions. To obtain a current list, contact a CRA Tax Services Office.
  • the course must not be less than 13 consecutive weeks in duration.
  • fees paid by the student's employer, or by the employer of a parent of the student, may not be claimed unless those fees have been included in the income of the student or the student's parent.

When the courses taken outside Canada have been completed online, the tuition tax credit may still be claimed if the courses have a duration of at least 13 weeks. See the Tax Court of Canada cases McGrath v. The Queen, November 2006 and Valente v. The Queen, March 2006.

When the courses taken outside Canada have been taken by correspondence, the tuition tax credit may not be claimed. However, the education credit for part-time enrollment may still be claimed, because the criteria includes enrolment, not physical attendance. See Tax Court of Canada case Cleveland v. The Queen, October 2003.

The educational institution will provide form TL11A - Tuition, education and textbook amounts certificate - university outside Canada, or form TL11C - Tuition, education and textbook amounts certificate - commuter to the United States.  For more information, see the Canada Revenue web page regarding eligible tuition fees.

There have been Tax Court Cases which denied the tuition credit for courses which did not meet the 13 week duration criteria.  See Tax Court of Canada cases Fayle v. The Queen, January 2005, and Ali v. The Queen,, November 2004.

ii.    Education tax credit for courses outside Canada

When courses are taken outside Canada, an education tax credit may be claimed according to the guidelines in Tuition costs and education amount above. A designated educational institution includes:

  • a university outside Canada at which the individual was enrolled in a course, of not less than 13 consecutive weeks duration, leading to a degree, or
  • if the individual resided throughout the year in Canada near the US border, a university, college or other educational institution in the US providing courses at a post-secondary school level, to which the individual commuted.

To qualify for the part-time education tax credit, the individual must be enrolled at a designated educational institution in a program of not less than 3 consecutive weeks duration, that provides that each student in the program spend not less than 12 hours in the month on courses in the program.