Deductions and credits | Raymond Chabot Grant Thornton (2023)

Tuition Tax Credit

Tuition fees for students enrolled in full-time or part-time post-secondary education¹based in Canada and, in some cases, outside Canada², and vocational skills courses that do not take place at the post-secondary school level are eligible for a non-refundable tax
credit of 15%, provided the total exceeds $100 per location³. In Quebec, the $100 threshold applies to total expenses and the credit rate is 8%⁴. In New Brunswick, the credit is calculated at 9.40%.

Tuition fees include entrance fees, use of library or laboratory facilities, issuance of a certificate or diploma and related costs charged to all students, with the exception of payments to a student association.

Exam fees required for obtaining professional status, certification or license that allows the individual to practice a profession or trade within Canada are also eligible for the credit.

Tuition eligible for the credit does not include the amount claimed for the Canada education credit.

Canada education credit

An individual may claim a refundable Canada training credit equal to the lesser of the following amounts:

• The Canadian education credit limit for the previous year;⁵;
• Half of the eligible tuition is paid for the year⁶.

Accordingly, persons who are at least 25 years old and less than 65 years old and have a minimum annual employment income⁷from $10,000, to a maximum of $155,625 in 2022⁸, can collect $250 per year (up to $5,000 for life) in a fictitious Canadian training account since 2019
credit limit account. Any unused balance will expire at the end of the year in which the person reaches the age of 65.

Example:In 2024, Michelle enrolls in a training program and pays $1,500 in eligible tuition. Michelle has accumulated $250 in each of the years from 2019 through 2023, so her 2023 Canadian training credit limit is $1,250.

Michelle can therefore claim $750 as a Canada education credit for the 2024 tax year, whichever is less than 50% of the eligible tuition paid and the limit for the year. Her unused 2024 Training Credit Limit balance is $500 and if she meets all eligibility requirements in that year, she will accumulate an additional $250 and her 2025 Canadian Training Credit Limit will therefore be $750.

Ontario Vocational Training Tax Credit Formation

For the years 2021 and 2022 only, an individual resident residing in Ontario on December 31 may apply for the Ontario Job Training Tax Credit, provided the individual has a Canadian training credit limit greater than zero for that year. This refundable credit is 50% of the eligible training costs incurred during the year, up to a maximum of $2,000 per year.

Credit for interest paid on student loans

A taxpayer can claim a non-refundable tax credit on the interest paid during the year on a student loan granted under a federal or provincial program. In Ontario and New Brunswick, this credit also applies to interest paid on Canadian student loans.

Before renegotiating a student loan, keep in mind that you cannot claim a credit for interest paid on a loan other than a loan made under a federal or state program, nor a student loan that has been merged with another type of loan.

Transfer and transfer of credits

Students must first declare the tuition fee discount and the interest discount on any student loans in their own tax return. They can then transfer or transfer the unused portion of those credits as follows:

1Or at a professional school if the student is at least 16 years old.2A student must be enrolled in a post-secondary study program outside of Canada for a minimum of three consecutive weeks. There is no minimum length of study program taken at any institution in Canada.3No credit in Ontario and New Brunswick.4A transitional arrangement applies to certain tuition fees paid before March 28, 2013 and carried over to the next year.5The amount is stated on the tax bill each year.6In general, eligible tuition and education costs are the same as for the tuition tax credit, with the exception of costs paid to a branch outside of Canada.7Including income from an office or employment, certain business income, the taxable portion of student earnings and research grants, the tax-exempt portion of income of status Indians and emergency service volunteers, and maternity and parental benefits.8Indexed annually.9The costs that qualify are the same as those that qualify for the Canada training credit.10Including New Brunswick. It is still possible to carry over the balances for unused tax credits for education and textbooks indefinitely, despite the abolition of these credits since 201711Possible under the Spouse Transfer Mechanism for Non-Refundable Tax Credits (See Section II).12Also applies in Ontario and New Brunswick.

To maximize tax credit carryover, reduce your net income as a student by maximizing allowable deductions, such as the moving expense deduction, and transferring only the amount deducted by your parent.

Tax Credits for Children in Post-Secondary Studies – Quebec

Minor child

A person supporting a student under the age of 18 may claim a non-refundable tax credit for the student if the student is enrolled in vocational or post-secondary education. The 2022 credit is 15% of $3,101 per term with a maximum of two terms per year and is reduced by the student's income, excluding scholarships. To be entitled to it, the taxpayer must support the student, who normally also has to live with him/her during the year. The dependent student can be the child, grandchild, brother, sister, nephew or niece of the supporting person or his/her spouse.

Adult child – Transfer mechanism for the recognized parental contribution

A full-time adult student at an accredited institution may transfer the unused portion of his/her 2022 base tax credit up to $11,081 ($7,980 if only one semester is completed in the year) to his/her father or mother, or allocate it between the two. There is a $2,284 surcharge for single-parent households that do not have minor children. The transferable amount is reduced by the income of the child, excluding scholarships.

Tax credit for recent graduates working in a region

A recent graduate who finds employment in an eligible region within 24 months of graduation may be eligible for a tax credit (see section V).

Moving costs

Expenses incurred for moving from one place to another in Canada or elsewhere to be at least 40 kilometers closer to an educational institution where the student will be taking full-time post-secondary courses are deductible. These expenses are only deductible from the amounts included in income from taxable scholarships, fellowships and research grants. For Québec purposes, they can only be deducted from research grants. The non-deducted moving expenses can be carried forward to the following year.

Relocation costs incurred to change residence in connection with a job, including a summer job, are deductible if the conditions are met as described inSection Vare satisfied. However, the deduction may not exceed the net income from work.

Retain your receipts for relocation expenses (travel expenses by air or otherwise, meals, temporary lodging) to claim a deduction for such expenses or use the simplified method.

Childcare costs

See Section II.