Filing Your Return -> Students -> Transfer or carry-forward of unused tuition, education or textbook amounts
Transfer or Carry-Forward of Unused Tuition, Education or Textbook Amounts
Income Tax Act s. 118.8, 118.81, 118.9, 118.91
If you do not have enough income to utilize your total tuition costs, education amount or textbooks amount, these costs still must be reported on the income tax return for the year in which they were incurred. You can either carry forward unused amounts to future years (no limit to carry-forward period), or you can transfer the costs to your spouse, common law partner, or to a parent or grandparent of you or your spouse or common law partner. The maximum amount that can be transferred to a spouse, parent or grandparent is $5,000(note 1), less the costs claimed by the student. This may still result in costs remaining that can be carried forward. The transfer of costs to another person should not be more than can be utilized on their tax return, because they cannot be carried forward by that person. Then any excess costs can still be carried forward by the student.
If you determine that you have failed to claim some tuition, education or textbook amounts in a prior year, you will have to file an adjustment to the tax return for the year in which those costs were incurred.
Note 1: re the maximum amount transferable: $5,000, less the amount being claimed by the student in the year, is the maximum federally and in all provinces and territories except Ontario and Quebec. The Ontario maximum for 2017 is $7,033 (2016 is $6,922), less the amount being claimed by the student in the year.
Once unused costs have been carried forward, they cannot be transferred to anyone in a future year. In future years, the carried forward amounts are claimed by completing both the federal Schedule 11 of the tax return, and the provincial S(11) schedule. Carried forward amounts must be claimed in the first year that tax is payable. Only the amounts required to reduce taxes to zero would be claimed, and any remainder would again be carried forward.
There is a Federal tax credit as well as a provincial or territorial tax credit for tuition, education and textbook amounts. For this reason, to claim these amounts, or to transfer them to another person, you must complete both the Federal Schedule 11 of your tax return, and the provincial S(11) schedule. You must also designate the individual, and specify the federal and provincial amounts that you are transferring to them, on your Form T2202, T2202A, TL11A, TL11B, or TL11C. Quebec uses Schedule T for tuition or examination fees being claimed or carried forward. The unused amounts carried forward on the federal Schedule 11 will often be different from the unused amounts carried forward on the provincial S(11) schedule. When claiming the carried forward amounts in the following year, make sure you use the federal amounts when completing your Federal Schedule 11, and the provincial amounts when completing your provincial S(11) schedule. The federal and provincial (except Quebec) forms are available on the Canada Revenue Agency (CRA) website.
Amounts cannot be transferred to both a parent or grandparent and to a spouse. If part of the tuition, education and textbook amounts are transferred to a parent or grandparent, they will claim this on line 324 of their tax return. Amounts transferred to a spouse will be included on your Schedule 2, and their Schedule 2, and they will claim this amount on line 326 of their tax return.
Tuition Transfers and our Tax Calculator
If someone has transferred tuition to you, you can enter it in the detailed Tax Calculator as if it is your own tuition. However, there is no check as to whether you are exceeding the allowable amount.
Tuition Transfers and Dividend Income
If a student has significant Canadian dividend income (probably an unusual situation), it is possible that no transfer of tuition/education amounts will be allowed, even though the student may not need the entire tax credit. This is because the amount of the tuition/education tax credit used by the student is calculated before the dividend tax credit is deducted. The result may be that the entire tuition/education amount is utilized, but not the entire dividend tax credit. Unfortunately, the unused dividend tax credit cannot be carried forward. If the student has a spouse, in some situations the dividend income can be transferred to the spouse. This would also probably enable a transfer of part of the tuition/education amounts to the spouse.
In Quebec, the situation is a little different if there is a spouse, because unused credits can be transferred to the spouse, including unused dividend tax credits.
Moving to another province
If you moved to another province after carrying forward tuition and education amounts, then you will use the federal unused tuition and education amounts from your notice of assessment as a carry-forward when completing the provincial Schedule 11 for your new province of residence, unless you moved to Ontario, Prince Edward Island, or Quebec.
The above will be done automatically if a software package is used to file your return, using the amounts that you enter as federal and provincial carried forward amounts. If you are using manual forms, the above information is found on the bottom of each provincial Schedule 11 form, except for the Quebec form. The Quebec reference for this is Quebec Taxation Act s. 7126.96.36.199 and 7188.8.131.52.
Tuition claims in year of death
In the year of death, the tuition, education and textbook amounts from the current year or from carried forward amounts may be split between the final tax return and the "rights and things" tax return in order to maximize the tax credit. Unfortunately, it is still possible for a portion of these amounts to not be utilized. Current year tuition and education amounts can be transferred in the year of death, but not carried forward amounts.
See also Tax Information for Students.
Further information on the CRA website:
Revised: September 19, 2017
Copyright © 2002 - 2017 Boat Harbour Investments Ltd. All Rights Reserved See Reproduction of information from TaxTips.ca