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I'm audited for Tuition / Education Credits

22K views 10 replies 6 participants last post by  Charlie 
#1 ·
Hi, what are you thoughts on my situation?

I worked full-time, and studied part-time for my MBA in the 2011 tax year. For tax purposes the school deemed my studies to be a Full-Time student. Now my work reimbursed 50% of the cost of my tuition (via reimbursement of expenses), and on my tax return, I did NOT include the reimbursed amounts I received in my my income because I only claimed 50% of tuition credits in 2011. (also because my employer did not include the amount of reimbursement in my pay stub).

For tax year 2011, my employer's T4 did not include the reimbursed tuition amounts. For tuition credits, I've only claimed 50%, and 100% in education/textbook credits.

The reason I claimed 100% credits for education/textbook was I thought that is related to the status of the student (part-time vs full-time)

Is the above the right treatment? because the CRA is asking for me to submit my backups.

Many thanks!
 
#3 ·
Write a letter to accompany your T2202a, explaining that you were reimbursed 50% of your tuition by your employer; that difference is probably what set off the review. Tell them you claimed 100% of the education/textbook credits because the T2202a has full-time checked off; do not mention anything about being full or part time. Fax the letter with the T2202a to the number provided on the review request; make sure you write the reference number on each piece of paper you fax (or mail); I also fax the first page of the letter with the package.
 
#4 ·
The credit cannot be claimed at all if your employer paid all or part of the tuition. If you include the employer amount in your taxable income, then you can claim the full credit. There is no provision of proportional credits.

Look at your T4 to see if the tuition was included in your income. If it was, then claim the whole tuition and education credits.

You could submit a T1-ADJ to include the employer paid tuition in your income and claim the full credit.
 
#8 ·
#6 ·
An employer wouldn't be paying for a MBA if it did not relate to the business, so assuming the MBA is benefitting the company it is a valid expense for the company. So the 50% claim of the tax credit is reasonable and furthermore, the OP would not include the employer's contribution towards education in his/her income.
 
#7 ·
The income inclusion is covered by subsection 6 of the Act. That provision could allow for tuition to not be taxable. However, subsection 118.5(1)(a)(iii) deny's the credit unless the tuition was included in income.

118.5(1)(a)(iii) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted, [...] an amount equal to the product obtained when the appropriate percentage for the year is multiplied by the amount of any fees for the individual's tuition paid in respect of the year to the educational institution, [ ... ] except to the extent that those fees are paid on the individual's behalf by the individual's employer and are not included in computing the individual's income,

If the OP does not claim the tuition as income, then he cannot claim the credit.
 
#11 ·
I think there may be some overthinking going on here. I suspect MG's right that this is just a basic check of slips. My cursory reading leads me to think you're OK with what you've done -- you claimed tuition 'to the extent' it was not reimbursed. You claimed the 50% that was not reimbursed. That's my reading and what I would go with. If, technically, that was incorrect and CRA pushed the matter, I would just include the 50% reimbursed in income (doesn't matter that it wasn't on the T4, you can add if as other employ income) and then claim 100%. I doubt it comes to that.

Just submit the slip and note that you've reduced the claim by 50% as you were reimbursed that amount.
 
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