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What happens to tuition and education carry-forward amounts when you move to a different province?

By | Sep-19-2013 | Blog, Students

Students receive generous tax credits, and the federal education amounts are the same regardless of where you live: $400 per month for a full-time student, and $120 per month for part-time study. There is also a full-time textbook amount of $65 per month and a part-time amount of $20 per month. However, the provincial education amounts vary, from a low of $200 and $60 in Newfoundland, Nova Scotia and British Columbia to a high of $684 and $205 in Alberta. With the exception of Yukon, none of the provinces or territories has a textbook amount.

Some provinces also have a more generous basic personal amount than others, with the result that some may have a bigger unused tuition and education amount available to transfer or carry forward. So what happens if you earn tuition and education carryforwards while going to school in one province and then move to a different province?

In most cases, if you accumulate a carryforward of tuition or education amounts in one province and then move to a different province, the provincial carryforward is deemed to be the same as the federal carryforward. This could result in a significant gain or loss, depending on whether the province in which you went to school has a more generous system than the province to which you are moving.

Example 1

Jack spent three years at the University of British Columbia and accumulated $20,000 of unused federal tuition and education amounts and $15,000 of provincial unused amounts. In 2013, he moves to Alberta to work. Because his unused amounts are carried forward from a different province, they are deemed to be $20,000 – the same as his federal carryforward. In addition, the provincial non-refundable tax credit rate is higher in Alberta than BC: 10% instead of 5.06%. Jack’s $20,000 of provincial carry-forward amounts therefore generate a tax saving of $2,000. If he had stayed in BC, his $15,000 of provincial carry-forward amounts would have generated tax savings of only $759.

Example 2

Jill spent three years at the University of Alberta and accumulated $20,000 of unused federal tuition and education amounts and $25,000 of unused provincial amounts. In 2013, she moves to British Columbia to work. Because her unused tuition and education amounts are carried forward from a different province, they are deemed to be only$20,000, the same as her federal carryforward. In addition, the provincial non-refundable tax credit rate is higher in Alberta than BC – 10% instead of 5.06%. Jill’s $20,000 of provincial carry-forward amounts therefore generates a tax saving of only $1,012. If she had stayed in Alberta, her $25,000 of carry-forward amounts would have generated tax savings of $2,500.

However, the rules are different in Ontario, Prince Edward Island and Quebec.

In Ontario, the provincial carryforward is deemed to be the same as the carry-forward amount as calculated in the prior-year province (unless the prior-year province was Quebec, in which case it is deemed to be the same as the federal carryforward). If Jill from the preceding example had moved to Ontario instead of BC, her provincial carry-forward amount would have been $25,000 instead of $20,000. However, because the provincial non-refundable tax credit rate in Ontario is only 5.05%, it would still have generated tax savings of only $1,263.

In Prince Edward Island, the provincial carry-forward amount is the lesser of the federal carry-forward amount and the carry-forward amount as calculated in the prior-year province (unless the prior-year province was Quebec, in which case it is deemed to be the same as the federal carryover).

In the case of Quebec, the unused tuition-fee carryforward is deemed to be the same as that calculated for federal purposes. However, since Quebec does not have an education or textbook amount on its provincial return, it does not allow for a carryforward of unused education amounts from the prior-year province.

 

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