Thinking about upgrading your skills? There are plenty of tax incentives to encourage post-secondary education. Taxpayers who attend a qualifying educational institution are eligible to claim a tax credit for tuition fees paid during the year.
In order to claim these tax credits, the taxpayer must have an official tax receipt or form T2202A from the educational institution. Taxpayers who do not have enough income to utilize tax credits from tuition fees, education and textbook amounts can carry forward these unused credits to future years. These tax credits can be transferred to a parent, grandparent or spouse to a maximum of $5,000 per year, less the amount claimed by the taxpayer required to reduce taxable income and any balance remaining will be carried forward by the student.
A taxpayer is also eligible to claim a tax credit for student loan interest as long as the loan was obtained under a qualified program such as the Canada Student Loans Act or the Canada Student Financial Assistance Act. Consult the CRA website or contact a professional for more information. Again if this is not needed as a credit in the year it can be carried forward and used in a future year.
A taxpayer may also be eligible to receive tax-free income from a scholarship, bursary or fellowship when the income is received in connection with a program that qualifies for the education amount tax credit. For programs that are not eligible for the education amount tax credit, only the first $500 of income may be considered tax free.