The most common post-secondary nonrefundable tax credits that apply to students are interest paid on student loans, the tuition, education and textbook amounts, the public transit amount, and the Canada employment amount.
Interest on Student Loans
To be eligible for the credit, interest must, in fact, have been paid. The interest must be on a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a law of the province or territory, which governs the granting of financial assistance to students at the post-secondary level. Personal or family loans will not qualify. Credits that are not needed to offset income taxes are available for carry forward for up to five years.
You can only claim interest you have not previously claimed and you cannot claim interest that relates to a judgment obtained after you failed to pay back a student loan.
Tuition, Education, and Textbook Amount
You can claim the education credit of $400 for full time and $120 part time for each whole or partial month in which you were enrolled in a qualifying education program. Disabled part – timers can receive the full credit of $400.
In addition to obtaining a tax credit for tuition fees paid, this tax credit also covers mandatory fees such as student services, library and lab charges, athletics, certain ancillary fees, computer services, exams, certificates and diplomas. Post-secondary students can claim a textbook tax credit of $65 per month for fulltime and $20 per month for part-time studies.
In the 2016 Federal budget, the education and textbook tax credits will be eliminated after 2016. Increases in Canada Student Grants commencing for the 2016-2017 academic year were proposed in the budget.
The student has the option of transferring the tuition, education, and textbook amount to a parent, spouse, common law partner or grandparent if it is not fully absorbed on his or her income tax return. If the student carries them forward, the transferability will be lost. The amount that can be transferred is limited to a maximum amount of $5,000 (or $850 in tax credits) per year.
Please refer to the current edition of the Canada Revenue Agency guide “P105—Students and Income Tax” for more details.