Tuition Fees, Education & Textbook Tax Credits
What is the tuition tax credit?
The tuition fees you pay during medical school or your residency program are not deductible, but may be eligible for a tax credit known as the tuition tax credit.
What conditions must be met with the tuition tax credit?
The conditions include:
- attending a post-secondary institution in Canada
- paying more than $100 in total tuition for the year. The tuition must also have not been paid on your behalf or reimbursed. As well, an amount equivalent to your tuition fees cannot have been included as part of your parent’s income.
Your university will provide you with a tax form called the T2202A which will let you know what you have paid in tuition.
What other fees can qualify for the tuition tax credit?
Other qualifying fees could include:
- application (except CaRMS application registration fees)
- use of library or laboratory facilities
- examinations (including re-reading)
- mandatory computer service fees
- certain academic fees
- advanced trauma life support (ATLS) courses
- certain preparation courses for the Licentiate of the Medical Council of Canada (LMCC)
What is the education tax credit?
In addition to the tuition tax credit, you may be eligible to claim an education tax credit.
Full-time medical students can generally claim a federal education tax credit of $400 per month, while part-time students can claim $120 per month.
As a resident enrolled in an education program, am I eligible for the education tax credit?
Yes, assuming no part of your education costs are paid by or reimbursed by your employer.
Are there any situations where I can’t claim the education tax credit?
Generally, you cannot claim the education tax credit if you:
- received a grant or were reimbursed for the cost of your courses from your employer or another person whom you do not deal with at arm’s length (such as someone related to you), excluding award money received.
- received a benefit as part of a program, such as free meals and lodging
- received an allowance for a program such as a training allowance
What is the textbook tax credit?
You may also be able to claim a textbook tax credit.
The amount you can claim depends on whether you were a full or part-time student and the number of months you were a student for.
Full-time students can claim a credit equal to 15% of $65 for each month you were a student. For part-time students, the amount is 15% of $20 for each month you were a student.
If there are any leftover credits, can they be transferred to somebody else?
If you do not have to use your entire tuition, education or textbook credits to reduce your tax to zero, the remaining credits can be transferred to an eligible person, such as a spouse, common-law partner or parent.
The maximum amount of credits that can be transferred is $5,000, which would work out to a federal tax credit of $750.
How do I transfer the credits?
To do this, you will need to complete tax form T2202A. The person you are giving the credits to should keep a copy of the signed form. The form does not need to be filed with the return but must be available if requested by Canada Revenue Agency (CRA).
Can I carry forward any unused tuition, education and textbook tax credits?
Yes, you can carry forward unused tuition, education and textbook tax credits indefinitely. Any amount not used in the current year and not transferred to an eligible person will get carried forward.
However, once you are earning sufficient income to use the unused credits, they must be applied to reduce taxes payable.
Part of the process of becoming a doctor involves taking different exams. The expenses incurred for these may qualify for a tax credit.
Here is a list of some of the common exams and whether you will be able to receive a tax credit for the fees you pay for the exams:
- LMCC (Licentiate of the Medical Council of Canada): the application and exam fees are eligible for a tuition tax credit. As well, certain additional fees such as for changing the test centre or late fees are eligible up to a maximum expense of $250. You can access the eligible receipts by logging on to your account with the Medical Council of Canada (MCC). Be sure to print them off as MCC will not provide a printed copy to you. Receipts are made available by February 1 of each year.
- United States Medical Licensing Exam: these exam fees have not traditionally been allowed by Canada Revenue Agency (CRA).
- FRCPC (Fellow of the Royal College of Physicians of Canada): the exam fees and certain additional fees are eligible for the tuition tax credit and receipts will be issued to those paying fees.
- FRCSC (Fellow of the Royal College of Surgeons of Canada): the exam fees and certain additional fees are eligible for the tuition tax credit and receipts will be issued to those paying fees.
- CCFP (Certification in the College of Family Physicians): the exam fees and certain additional fees are eligible for the tuition tax credit.
You may also be interested in finding out more about the tuition tax credit.
Interest on Student Loans
All students may claim a 15% tax credit on payments of the interest portion of their loans that are with the Canada Student Loans or provincial student loans programs, such as a loan through the Nova Scotia Student Loan program.
Can I get the tax credit on interest paid on bank loans or lines of credit?
What supporting documentation do I need to claim interest on student loans?
Early in the year, the financial institution handling your loan(s) will mail you a statement of the actual interest paid on the loan(s) for the previous year. On Line 319 of Schedule 1 of your tax return, you will fill in this amount. Be sure to attach this statement or receipt to your tax return.
Is there a limit or maximum to the amount of interest I can claim for the credit?
Can I transfer unused interest tax credits to somebody else?
Unused interest tax credits may not be transferred to a spouse, common-law partner or parent. However, you can carry forward unused interest tax credits for up to five years.
Graduate Tax Credits & Rebates
To entice recent graduates from universities to live and work in Nova Scotia, the provincial government has a program which reduces Nova Scotia income tax by up to $15,000 over six years at a maximum of $2,500 per year. The program is called the Graduate Retention Rebate.
This program was cancelled effective December 31, 2013.
New Brunswick has a program called the New Brunswick Tuition Rebate and it reduces New Brunswick income tax by up to $20,000 over five years at a maximum of $4,000 per year.
Prince Edward Island:
Prince Edward Island has a Medical Residency Interest Relief Program which will provide you with financial assistance if you’re completing a residency program. You are eligible if you are an Islander in a medical residency program and have a P.E.I. student loan. The provincial government will make interest payments on the provincial portion of your loan to keep your loan in good standing while you are completing your residency program.
Your Flaim Wolsey Hall advisor can provide you with additional information on taking advantage of the above tax incentives for graduates.