This is a relatively new tax credit introduced by the income tax act in 2019. The intent of this credit is to promote life long learning for individuals.
How much is the Canadian Training Tax Credit?
The training tax credit accumulates at $250 per year up to a maximum of $5,000 in a lifetime. The Canadian Training Credit started accumulating in 2019. When an individual pays a eligible tuition cost, 50% of the amount paid is deducted from that pool.
Example: Jordan is a 35 years old and is a Canadian resident. He started accumulating $250 in training tax credits in 2019.
In 2022 Jordan decides to take a course through correspondence that qualifies for the Canadian Tax Credit. The cost of the course is $1,500. 50% of the cost is an eligible training cost, or $750. His Canadian Training Credit pool is sitting at $1000 in 2022 before he takes the course. He claims $750 in Canadian tax credit on his 2023 income tax return and his limit drops to $250.
Who is eligible for the Canadian Training Tax Credit?
There a several criteria that you must meet in order to qualify to claim the Canadian Tax Credit:
- You file an income tax return for the year
- Your Training Credit limit must be greater than $0
- You are a Canadian resident and be at least the age of 25 and under the age of 65
- Tuition or fees are paid to an eligible institution
What is an eligible education intuition?
An eligible education institution is a post secondary school, typically a university or college. It can also be any organization providing occupational skills that is certified by the Government.
I am 25, will I accumulate the $250 in Canadian Training Credit this year?
If you are 25 as of December 31st, you will accumulate the Canadian Training Credit amount of $250 for that tax year. However, you will not be able to claim the Canadian Training Credit until next year when you are 26. You must also have earned earned an income of more than $10,000 in the year and less than the top of the third tax bracket, which was $147,667 in 2019.
I will turn 65 this tax year and have a Canadian Training Credit balance.
If you turn 65 during the tax year and have a limit greater than $0, you should consider taking a course or training, because at the end of the year these credits will expire.
Can I transfer my credit to someone else?
No, you can not transfer the Canadian Training Credit. This is different from the Tuition Credit, where you can transfer it to a spouse, common law partner, parent, grandparent.
What is the balance of my Canadian Training Credit?
Similar to the RRSP deduction limit or TFSA limit, the Canadian Training Credit will be available on your Notice of Assessment. You will also be able to find the limit on CRA My Account.
Elimination of the Alberta Education & Tuition Tax Credit
In 2019, students could claim the Education and Tuition Tax Credit. For each full time month in school, the student could reduce their tax payable $75. For each part-time month they could reduce their taxes by $23. For the average student who went to school full time for 8 months, this resulted in a tax savings of $600 for the year. Eligible tuition costs increased the tax savings even further.
In the 2019 Alberta budget the Education and Tuition Tax Credits were eliminated. These changes are taking effect in the 2020 tax year. However, the Canadian Training Credit doesn't seem to be a replacement for the Education & Tuition Credit. The Canadian Training Credit is significantly less the the Alberta Education & Tuition Credits. The Canadian Training Credit also doesn't help students under the age of 26, which is a large majority of post secondary students.
For questions about the Canadian Tax Credit, please contact us.