Back to School--Are You Up On Your New Tax Bonuses?

Winnipeg, MB.

It's time to think about hitting the books again and as Canadians help their offspring head back to university, here are three important new tax provisions to consider to cash in on new tax savings, according to Evelyn Jacks, President of The Knowledge Bureau and bestselling author of Essential Tax Facts:

The Textbook Tax Credit is a non-refundable tax credit that recognizes the cost of textbooks for post-secondary students. This new credit is available for 2006 and subsequent taxation years. It is calculated based on the number of months of full-time or part-time attendance as certified by the education institution on the student’s T2202A. The amount is $65 per month for full-time attendance and $20 per month for part-time attendance. The credit is, in fact, an increase in the Education Amount but with a different name. The value of the credit is calculated by multiplying by the lowest personal income tax rate for the tax year (15.25% for 2006). All transfer and carryover provisions currently applicable to the Education Amount apply equally to the Textbook Tax Credit.

Scholarship, Fellowship and Bursary Income

Effective for 2006 and subsequent taxation years, if a student is eligible for the Education Tax Credit, all amounts they receive in the year for scholarships, fellowships, and bursaries are excluded from income, if the amounts are received in connection with the individual’s post-secondary studies. Before 2006, the first $3,000 of such income was exempt from income tax.

Public Transit Pass Credit.

Students who use public transit will also be happy to know about a new non-refundable tax credit for the cost of monthly public transit passes and passes of a longer duration (e.g., annual passes). Passes purchased for travel on or after July 1, 2006 are eligible. Public transit will include transit by local bus, streetcar, subway, commuter train, commuter bus and local ferry. The credit may be claimed by the individual or the individual’s spouse or common-law partner in respect of eligible transit costs of the individual, the individual’s spouse or common-law partner, and the individual’s dependent children that are under 19 years of age. Individuals making claims will be required to retain their receipts or passes for verification purposes.

If a transit pass displays the following information, the pass itself will be sufficient to support a claim for the tax credit:

• an indication that it is a monthly (or longer duration) pass;
• the date or period for which the pass is valid;
• the name of the transit authority or organization issuing the pass;
• the amount paid for the pass; and,
• the identity of the rider, either by name or unique identifier.
• No dollar limit has been set for these claims.

No dollar limit has been set for these claims.