Training credits are financial aid provided to students enrolled in post-secondary education. It can be used to pay for tuition, textbooks, and other educational expenses. Canada Training Credit is a refundable tax credit for specific eligible tuition and other fees paid for taking courses in the tax year. You also can accumulate the credits over a period and use them later. The Canada Training Credit Limit Amount is $5,000 maximum in a lifetime.
Basics of the Canada Training Credit Limit Amount
The Canada Training Credit Limit Amount is a federally-managed program that provides 25 years or older post-secondary learners with a tax credit. The credit limit amount has been designed to encourage employees to invest in gaining skills. It also helps corporations indirectly with achieving a better-skilled workforce.
How to qualify for the Canada Training Credit
The Canadian government has laid down specific eligibility requirements for Canada Training Credit. They are:
- You should be a resident of Canada throughout the year
- You should be filing your tax returns
- You have to be at least 26 years old and less than 66 years old
- Your annual working income should be at least $10,100. This includes your maternity and parental benefits
- Your annual income should not exceed $150,473
- Your CTCL (Canadian Training Credit Limit) should be greater than zero for the year. Each year you file your income tax and benefits return, CRA increases your CTCL by $250 up to a maximum of $5,000
- You should have paid tuition or other covered fees to an eligible educational institution in Canada. These institutes also include certain professional exam bodies and occupational and trade bodies.
- The tuition and other fees should be part of the eligible for the training tax credit
- You should file your income tax as well as benefit return for the year you wish to apply
Which tuition fees are eligible for Canada Training Credit Amount?
A course taken during the tax year should have either of the following:
- The course should have been taken at a post-secondary educational institution – a University in Canada, a College, or another educational institution
- The “Ministry of Employment and Social Development Canada” should have certified the educational institution.
Fees that are eligible for the tax credit include:
- Admission Fees
- Library or Laboratory fees
- Exemption fees
- Examination Fees and re-reading charges are included
- Application fees involved at the time of enrollment with the education institution
- Confirmation fees
- Charges for the degree, diploma, or certificate
- Fees for membership or seminars related to the program
- Computer service fees
- Academic fees
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Which fees do not qualify for the Canada Training Credit Amount?
Not all types of fees are eligible for the CTC limit claim. Even as you are enrolled at an eligible educational institution. These include:
- Fees paid by your employer on your behalf
- A parent pays fees as part of the allowance received by the parent on student’s behalf. As the same amount is already excluded from the parent’s income
- Fees that you, as a student, are entitled to receive a reimbursement from the federal or provincial government. Such fees may be paid as part of upskilling programs like the second career program.
- As a student, you are entitled to receive federal or provincial government fees as reimbursement. Such may be through programs meant to assist athletes.
What if you enroll at an institute outside Canada?
Even if you are enrolled at an educational institution outside Canada, you can still claim the CTC limit amount. But you are required to comply with the following conditions:
- You must be enrolled in full-time attendance at a university outside Canada
- Your education at the university should at least be a bachelor’s or equivalent level
- If you head to the United States, your course level should be at least post-secondary school level, and the tuition fee should be more than $100.
How to claim your Canada Training Credit
You may consult your accountant or use online tax return software. The CTC claim amount can be entered in line 45350 of your tax return.
If you want to find your available CTC limit, you need to head to the CRA My Account website. Your limit would be available in your latest Notice of Assessment received from the CRA.
When preparing your tax return, find the keyword “training” to claim the credit. This can be done through the search box, and you will land on the “Tuition and Education Amount” part of your tax return. Head to federal and provincial Sch. 11 in the Documents area to review your calculation.
How to calculate your Canada Training Credit Limit Amount
From 2019, the CTCL accumulates $250 each year for eligible learners and goes up to a maximum of $5,000. As you file your taxes, you can enter the eligible claim amount. The same gets deducted from your taxable income. You will receive a refund if your tax credit amount exceeds the tax owing.
Formula to calculate your CTC amount is as follows:
CTC limit available from 2019 up to the previous year + current year accumulation of $250 – CTC claimed during the previous year.
Assuming that in 2022, you plan to take a skill upgrade course at an eligible educational institution. Let’s say your fee (eligible fee) is $2,000. From 2019 to 2021, you accumulated $250 every year. Now, as per the formula, your CTCL amount will be:
$750 + $250 – $0 = $1,000
Although the eligible amount will be $1000, it will be subject to two additional conditions laid out by CRA. The amount will be less than:
- Half of your tuition fee paid during the tax year
- Your Canada Training Credit Limit for the tax year
Once you use up all of your CTC limits in 2022, an additional $250 will start accumulating each year from 2023 till you turn 65. As you turn 66 years, the limit will become unavailable to you.
The 3 main benefits of Canada Training Credit
The Canada Training Credit is a program that provides training and education opportunities to Canadians and tax relief. The Canada Training Credit is a program that provides training and education opportunities to Canadians and tax relief. The three main benefits of the Canada Training Credit are:
- It provides an opportunity for Canadians to invest in their future
- It allows employers to have a skilled workforce
- It provides tax relief for Canadian taxpayers