I Paid for my Childs Education, Why Can't I Claim it?

The rules surrounding Tuition are complex at best. While the Government allows for transfers of Tuition to Parents, Grandparents and Spouses, they have rules on when and how much can be transfered.

In Addition to these rules, you also need to make sure that you correctly file your child's tax return in order to take advantage of any unused amounts and to ensure that the transfer is done correctly.

If you do not file and transfer correctly, be prepared for a tax bill down the Road.

I Paid for the School, So I am Claiming it!

One of the most common mis-beliefs that we encounter every year is that parents believe that they can claim ALL of the School credits, just because they Paid for it. While Unfortuantly this is not Correct. The Rules surrounding who can claim the school is as follows:

• The Student First -  If the Student is working and thier income is greater that thier normal tax credits the student will be required to Pay Tax. In Situations like this the Student MUST use as many educational credits as possable to reduce thier tax payable to zero. Once the student no longer has to pay tax, then we can look at transfering of Credits
• Amounts that can be transfered - If the Student has more educational credits that they can use, they may be able to transfer some of the leftovers to a Parent, Grandparent or Spouse.
  • These amount are Limited to the FIRST $5,000 that were earned in the year.
  • If you Child has to Use $1,000 of thier credits, Only $4,000 can be transfered, even if they earned more than $5,000 in that year.
  • Amounts Carried over from previous years can not be transfered
  • In order to Transfer, the amounts must be reported on the fed and provincial Schedule 11's
  • The Student must Sign the Back of the T2202A allocating the amount to thier chosen transferee
  • The Student can choose not to transfer and carry forward the amounts for when they can use them.

Should I transfer the unused amounts, or should we save them? Who gets More?

As tuition amounts are non refundable tax crediuts, it does not matter who claims them, they are worth the exact same amount. In Manitoba that amount is 25.8%, or if the full Transfer of $5,000 takes place, the increase in the refund is $1,290 to the transferee.

• Should we make the transfer? - Well, That is the big question and remains the students decision. As the net amounts of tax reduction, or refunds will not change, it would be advisable to take the transfer.
  • As the CRA will not give you interest for waiting. 
  • If you were to takle the transfer of $1,290 and invest it at a rate of 2.5% you would miss out on $32 per year.
  • Better yet, use the Money to pay for next years tuition, textbooks or day to day living expenses.
  • Our professional Advisers will be glad to give you a before and after report showing you how much the transferee benefitted from the transfer

What you do with the Money is up to you, we just feel that you are a better judge of how to spend it than the Government.

Do I need to Save the Reciepts so I can Claim the High

                        Cost of Text Books?

NO. You can not Claim the Costs of Textbooks.

Prior to 2017. when we claimed your tuition costs, we would also also apply for educational credits based on Part time and Full Time enrollment as provided by the school. The amounts that you receive were in lui of textbook costs, student fee's parking and other school expenses.

Unfortunatly in the 2017 Trudeau Budget, the Federal Government eliminated these credits. Fortunately some of the provinces maintained these credits as they understood the value of a higher edudation and chose to maintain the credits received. Here is a list of the provincial credit amounts for 2019:

• FULL TIME Students -For everymonth that you are a full time Student, you are entitled to the following amopunts:
  • MB - $400
  • AB -  $753
  • NL -  $200
  • NS -  $200
  • PE -  $400
  • NT -  $400
  • NU -  $465
  • BC, SK, ON, NB and YT -  The Tuition credits for these provinces have also been eliminated
• PART TIME Students -For everymonth that you are a full time Student, you are entitled to the following amopunts:
  • MB - $120
  • AB -  $226
  • NL -  $60
  • NS -  $60
  • PE -  $120
  • NT -  $120
  • NU -  $140
  • BC, SK, ON, NB and YT -  The Tuition credits for these provinces have also been eliminated

So, don't worry about the receipts, Our Tax professionals have you covered

Well, That Covers the basics. As you can see it gets Complicated, so let us do the worrying for you and book an appointment with one of our

Qualified Tax Professionals today!!!