Tuition Tax Credit

It’s no secret: The cost of post-secondary education is ballooning. In fact, according to Statistics Canada, the average undergraduate tuition fees for Canadian full-time students in the 2021-2022 academic year were $6,693 per year, up 1.7% in the previous year. And that’s not all—there are other costs associated with post-secondary education, such as textbooks, housing, and transport, that also need to be considered when calculating your total expenses.

As the situation keeps on worsening, more and more students and their families are turning to financial aid options to help cover these costs. One such option is the tuition tax credit, which can provide significant tax savings for eligible individuals. Tuition tax credit is one of several tax credits and deductions available to Canadian taxpayers that can help you save money on your tax bill while offsetting some of the costs of tuition.

What is the Tuition Tax Credit?

The tuition tax credit is a tax credit available to Canadian taxpayers who have paid tuition fees for themselves or their dependents. Now this might seem like a pretty vague answer so let’s dig a little bit deeper and understand how this credit works. The next sections address what you need to do in order to be eligible for the credit and what some of its limitations are, including limits on the amount of eligible tuition fees and on the number of months for which education-related tax credits can be claimed in a tax year.

How do tax credits from tuition work?

Wondering how tax credits from tuition work? It’s quite straightforward: The tuition tax credit is worth 15% of eligible tuition fees paid for the tax year 2022. Now comes the important distinction—the tuition tax credit is exactly that, it’s a tax credit, and it should not be confused with a refund; think of it more like a discount.

How much tax credit can you get from tuition?

Let’s say you paid $6000 in tuition fees last year. Now 15% of $6000, which is $900, will be subtracted from the amount of tax you owe to the Canada Revenue Agency for the 2022 tax year. That brings your taxable income down by $900, you don’t receive $900 as a refund.

This 15% is the Federal Tax Bracket. In addition to the Federal credit, you may also be eligible to receive a provincial credit (depending on the province you live in). Quebec students, for example, may be eligible for 8% non-refundable credit for Quebec tax purposes. Alberta has scrapped their provincial tuition tax credit in their 2020 budget while Ontario phased out their tuition tax credits after 2017.

In order to claim provincial tuition tax credits, you will usually need to attend school in those provinces that offer provincial tuition tax credits. Provincial textbook and tuition credits are not transferable between provinces.

Tuition tax credit eligibility

To be considered eligible to receive tuition tax credit in Canada, you must be at least 16 years of age and meet one of the following criteria:

• You’re a full-time or part-time student enrolled in post-secondary education programs at a designated educational institution in Canada

• You’re a parent or grandparent of a student who has paid eligible tuition fees at a post-secondary education program at a designated educational institution in Canada

• You’re a full-time student at an eligible school outside of Canada

• You’re enrolled in an eligible course at a trade or vocational school to obtain skills for an occupation

• Your total fees exceed an amount of $100

For further information on eligibility criteria, check out the detailed article on the Canada Revenue Agency’s website.

How to Claim Tuition Tax Credits?

You can claim Tuition Tax in a few simple steps:

• Obtain a tuition fee receipt: You must have a receipt from an eligible educational institution in Canada that includes details like the name of the student, the name of the institution, the amount of tuition paid, and the period for which the fees were paid.

• Fill out the form: If you are filing a paper return, complete Schedule 11. Download and fill out the T1-2022 form for Federal Tuition, Education, and Textbook Amounts and Canada Training Credit from the CRA’s website. (This form may be automatically provided to you if you’re attending an eligible school in Canada). If you are filing your taxes electronically, your tax software should automatically calculate the credit for you.

• Complete your tax return: To claim the tuition tax credit, you must include the eligible tuition fees on your income tax return and file your taxes before the deadline.

Education Tax Credits Retained

Got tuition tax credits from the current tax year that were unused or retained? Don’t panic—you can carry them over to the next tax year. Additionally, you also have the option of transferring them over to someone else, such as your common law partner/spouse, parents, or grandparents. You need to designate who would receive these credits. But there’s a catch: You can only opt to transfer up to $5,000 of the current year’s tuition amount, and you can transfer credits only for your current tuition year. The tuition credits retained from the previous year can only be carried forward to you and not transferred to anyone else.

If you choose to transfer your credit to your partner, they will claim the credit for you on lines 30300 or 32600 of their return. If the individual you designated is either one of your parents or grandparents, they can claim the transferred amount on line 32400 of their tax return.