Michelle attended a Canadian University on a full-time basis for eight months
in 2014. Her only income for that year was $14,000 of
employment income earned during the summer. She paid tuition fees of
$7,000 in that year.
Required:
Determine the amount of tuition, education and textbook credit available to Michelle.
What options are available with respect to the unused education credits?
To determine the amount of tuition, education, and textbook credit available to Michelle, we need to calculate the eligible amount of tuition fees and the applicable tax credit rate. Here's how you can do it step by step:
1. Calculate the eligible amount of tuition fees:
- In Canada, only tuition fees paid to a qualifying educational institution can be claimed for tax credits.
- Confirm if the university Michelle attended is a qualifying educational institution.
- Deduct any reimbursements or scholarships received for the tuition fees.
- In this case, Michelle paid $7,000 in tuition fees, so we can assume the full amount is eligible.
2. Determine the applicable tax credit rate:
- In Canada, the federal tuition tax credit is 15% of eligible tuition fees.
- Some provinces or territories also offer their own tuition tax credits, which may vary.
Now, let's calculate the amount of tuition, education, and textbook credit available to Michelle:
1. Federal Tuition Tax Credit:
- Multiply the eligible amount of tuition fees ($7,000) by the federal tax credit rate (15%).
- The federal tuition tax credit for Michelle would be $7,000 * 0.15 = $1,050.
2. Provincial Tuition Tax Credits:
- Check the provincial or territorial tax rules where Michelle resides or attended university to determine if provincial tuition tax credits are available.
- If available, calculate the applicable rate and multiply it by the eligible tuition fees.
- Let's assume Michelle resides in Ontario, where the provincial tax credit rate is 5%.
- The provincial tuition tax credit for Michelle would be $7,000 * 0.05 = $350.
3. Education and Textbook Tax Credit:
- In Canada, the education and textbook tax credits have been discontinued for 2017 and subsequent years.
- However, if Michelle had unused education and textbook credits carried forward from previous years, they may still be available to her.
- The specific options regarding unused education credits would depend on the tax laws applicable to the tax year in question.
To summarize, Michelle would have a federal tuition tax credit of $1,050 and a provincial tuition tax credit of $350, based on the given information. As for the unused education and textbook credits, you would need to review the tax laws and regulations applicable to the relevant tax year to determine the available options.