The Canada Training Credit (CTC) is a new refundable tax credit designed to ease the financial burden of post-secondary education costs for Canadians. This tax credit is available for eligible tuition and other fees paid for courses taken in 2020 and subsequent taxation years.
If you’re a Canadian student or taking training courses, you may qualify to receive $250 per year, starting in 2019, up to a lifetime limit of $5,000. This credit can help optimize your refund or offset some tuition fees.
In this blog post, we will enlighten you on everything you need to know about the Canada training credit limit, eligibility requirements, how to claim it, and many more.
What is the Canada Training Credit?
The CTC is a new refundable tax credit available for eligible tuition and other fees paid for courses taken in 2020 and subsequent taxation years.
The tax credit covers eligible tuition and fees of other kinds paid for courses taken in 2020 and subsequent taxation years. It is a tax credit designed to help Canadians with tuition, courses, and other training-related expenses.
The CTC, among some other refundable tax credits in Canada, was put in place by Canada’s government to assist in reducing training fee costs. Eligible training fees include:
- Tuition fees.
- Examination fees.
- Ancillary fees/charges (admission fees, exemption fees for certificates, diplomas, or degrees)
If you meet all the eligibility requirements, you can claim the CTC to help reduce the taxes you owe. If your credit is more than the taxes you owe, the Canada Revenue Agency (CRA) will send a refund for the difference.
What Is the Canada Training Credit Limit?
Starting in 2019, you can accumulate $250 each year, up to a maximum of $5,000 in a lifetime, as your Canada Training Credit Limit.
The Canada training credit limit is equal to your last year’s Canada training credit limit, minus any Canada training credit limit you claimed in the previous year, plus the annual $250 accumulated in the previous year.
This credit cannot be used however you like, and you will have access to it when eligible tuition and fees are to be paid.
The amount of Canada training credit you can receive will be lesser than half of the eligible tuition and fees paid in respect of the year and your Canada training credit limit for the taxation year.
The CRA will add your accumulated Canada training credit limit to your Notice of Assessment.
Who Is Eligible for the Canada Training Credit?
To qualify for training credit, you must meet the following eligibility criteria:
- Must be between the age of 25 – 64.
- Must have earned a minimum income of $10,000 up to a maximum of $150,000. Income includes parental and maternity leave benefits as well.
- You must have filed your income tax return for the tax year.
- Your Canada training credit limit for the year must be greater than zero.
- Must have paid eligible Tuition and fees to eligible educational institutions
- Must be a resident of Canada
If you are outside the compulsory age bracket stated above, your credit limit is zero by default. Also, all unused Canada training credits expire when you become 65 years old.
Unlike tuition credits, unused training credits cannot be transferred to your beneficiaries. But you may transfer or carry forward unused and qualified expenses and tuition fees to a common-law partner, dependent individual, or spouse for a credit of the tuition tax type.
How Much Canada Training Credit Can You Get?
Every year, you can claim the annual Canada training credit limit of $250 or 50% of your eligible tuition for the year.
For example, if you accrued $250 worth of Canada training credits and went on to pay $6000 in tuition/fees for the tax year, you may only claim $250 because it is the lower amount between $250 (which is your accrued credit limit) and $3000 (which is half of your tuition or fees).
It is also worth mentioning that the educational institution or school you attended in the year you claim your Canada training credit will give you a T2202 slip which you can then use to file your tax return.
How To Claim Canada Training Credit
You can claim the CTC when you complete your income tax and benefit return.
The CTC claimed on line 45350 of your income tax and benefit return will reduce your tax owing.
You can choose to follow the instructions in your certified tax software or complete Schedule 11, Federal Tuition, Education, and Textbook Amounts and Canada Training Credit, in your income tax package if you file a paper return.
Canada Training Credit vs Tuition Tax Credit
The Canada Training Credit is a refundable tax credit, while the Tuition Tax Credit (TTC) is non-refundable.
Non-refundable tax credits help you reduce your federal tax burden, but they won’t get you a tax refund. On the other hand, refundable tax credits will reduce your tax burden and help you get a tax refund from the government.
Your TTC will only get you a tax refund if your tuition cost is higher than the tax owed.
Post-secondary institutions are expected to issue a form T2202A (the Tuition and Enrolment Certificate) for claiming tax tuition credit. On the form, eligible tuition, fees paid, and enrollment period are specified.
It is impossible to pick the amount of tuition you can claim or the amount you can carry ahead. The Income Tax Act determines the amount of tuition you can claim. On the CRA website, you can check if any unused tuition credits from years past are still valid.
If you need help sorting out your taxes, read our article on Canada’s best free tax software.
Final Thoughts on the Canada Training Credit
The Canada Training Credit provides relief for students and helps them reduce their post-secondary education costs. As the eligible amounts can be close to half of your tuition fees, the CTC could make a huge difference at the end of the day.
As long you have filed your income tax return for the last year and are between 26 and 64 years of age (among other requirements), you should be clear.
Other requirements include being a resident of Canada and having met up the required earning limits. It is also important to check if your educational institution is eligible for the training credit.
FAQs on Canada Training Credit Limit
What is an Eligible Educational Institution?
An eligible educational institution will be:
- A Canadian college, university, or educational institution offering post-secondary-level courses.
- An institution in Canada offering courses for occupational skills (or certified by the Ministry of Employment and Social Development).
Are Online Courses Eligible for Canada Training Credit?
Online courses that can be claimed have to be from eligible educational institutions. These institutions include:
- A post-secondary-level college, university, or educational institution.
- A Canadian institution certified by the Ministry of Employment and Social Development (institutions providing occupational skills).
If your institution falls under any of these categories, it is eligible for the Canada Training Credit.
