TUITION CREDITS ARE PRIMARILY FOR POST- SECONDARY EDUCATION

A recent Tax Court of Canada case saw a taxpayer attempting to claim a tuition tax credit for private piano lessons. The taxpayer argued that the private instructors constituted an “education institution.” The Tax Court of Canada noted that the tuition tax credit was clearly intended to make post secondary education more accessible to students by offering them a tax credit. The Court proceeded to, not surprisingly, reject the taxpayers' tuition tax credit.

There seems to be a fascination with the tuition tax credit. The Court has reigned in requests for credits that are clearly outside of the realm of the credits original intention. It is a credit that is limited to reducing income by 15% of the full tuition credit. It is not a “dollar for dollar” credit as some seem to believe. For example if you pay $1000 in tuition you can reduce total tax payable by $150. While there are limits on transfers, many taxpayers are unaware that they are able to transfer some tuition tax credits to their spouse. If the spouse is in the highest tax brackets this could lead to significant savings. For questions on the tuition tax credits, please do not hesitate to e-mail the head of our personal tax department at naim@taxperts.on.ca.