All the Numbers

The tuition credit

From the All the Numbers wiki · Tax

Tuition paid to a university, college or other eligible institution earns a non-refundable federal credit. It lowers federal income tax, to nil at most, but is never paid out as cash.

The rules

  • The credit is the lowest federal rate times eligible fees. For 2026 that is 14%. The separate education and textbook amounts ended in 2017.[1]
  • Fees count only above $100. Fees paid to one institution count only if they exceed $100 for the year.[2]
  • The student uses it first. The credit is applied against the student's own federal tax after their other personal credits, such as the basic personal amount.
  • Unused credit carries forward. What the student cannot use, and does not transfer, is carried to later years with no expiry, and is used after the personal credits.[3]
  • Part of the current year's credit can be transferred. The student can designate some of it to a spouse or a parent or grandparent. The most that can be transferred is the credit on $5,000 of fees (at 14%, $700) less what the student used, and only the current year's credit moves, never the carryforward.[4]

What the engine does

The engine can take a person's tuition by year and any credit brought forward. It applies the credit, carries the unused part forward, and passes the transferable part to the one person the student names. It does not allow a chain, where the recipient is themselves a student transferring onward. Ontario's own tuition credit ended for study after September 2017, so there is no provincial credit and no provincial carryforward. See age, spouse and caregiver credits for the other personal credits.

What the planner does

The planner does not ask for tuition, a carryforward or a transfer, so a plan from the planner has no tuition credit. A student's tax in the projection is higher than it would be with the credit. A child's tuition paid from a registered education savings plan is taxed to the student as it is withdrawn, and the planner does not offset that with a tuition credit.

See also

  • Age, spouse and caregiver credits · Some credits depend on who you are or who you support. The age amount starts at 65 and shrinks with income; the spouse amount is the basic personal amount less your partner's income. The planner applies the age amount but not the spouse or caregiver credits.
  • Income tax brackets and your marginal rate · Federal and Ontario tax are each charged in slices of income at rising rates, then reduced by credits, with an Ontario surtax and health premium on top. The marginal rate is what the next dollar costs; the average rate is total tax over income.
  • RESPs and the education grant · Contributions attract a 20% government grant, up to $500 a year, and $7,200 for a child's lifetime, up to a $50,000 contribution limit. Growth and grants come out taxed in the student's hands, at a rate that is usually near zero.
  • Taking money out of an RESP · Your own contributions come back tax-free. The grant and growth leave as education payments taxed to the student. If no one studies, growth is taxed to you with an extra 20%, and the grants are repaid. The planner pays contributions first.
  • The Lifelong Learning Plan · Up to $10,000 a year and $20,000 in total can come out of an RRSP, untaxed, to pay for full-time study, and is repaid over ten years. A missed repayment is added to income. The planner does not offer it.

References

  1. ↑ITA 118.5(1)(a); 248(1) "appropriate percentage" · Federal tuition credit: the "appropriate percentage" (the lowest federal rate, 14% for 2026) of eligible tuition fees; education and textbook amounts ended 2017 · See the source · effective 2017-01-01
  2. ↑ITA 118.5(1)(a)(ii.1)/(b)–(c) ("if those fees exceed $100") · Tuition fees to an institution count only if they exceed $100 for the year · $100 · effective 1997-01-01
  3. ↑ITA 118.61(1)–(2) · Unused tuition credit carries forward indefinitely and is used after the personal credits (118.61(1) C) · See the source · effective 1997-01-01
  4. ↑ITA 118.81(a) D = $5,000; 118.8; 118.9 · Tuition transferred to a spouse or (grand)parent: the lesser of 15% × $5,000 minus the part the student used, and the amount designated; only the current year's credit, never carryforwards · $5,000 · effective 2017-01-01