OMG UPDATE: Question? Answer.

Updated on Tuesday, February 23

#7535

QUESTION: Calling all the accountants in this forum. If I pay tuition to UW in Canada but receive income from my co-op in the USA, how can I get the tuition tax deduction?

3 comments

  1. You claim residency in Canada (the criteria is linked below). You get a foreign tax credit for tax paid on the US on income earned in the US. You have to report US income earned as foreign employment income (on which you claim the aforementioned tax credit). You claim the tuition deduction as you usually would.

    Test for residency:

    http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

    ReplyDelete
    Replies
    1. To add on to this:
      Under section 36 of the act you can declare yourself a corporation. Then you can capitalize your tuition costs as an intangible asset which is subject to CCA at the rate of 30% in Class 10.1. (maximum of 30,000 + HST Per year). With each year, the corporation will gain some value, offset by the CCA. Then under section 85 and 86 you can use an asset freeze and rollover to issue yourself preferred shares (which will never increase in value). Issue the common shares to a sibling under the age of 18. If you gift them there will be income attribution, and you will not have to pay tax on them.

      Goodluck, if you have any questions contact me. I charge 500 per hour.

      Delete
    2. OP should create an inter vivos trust for his/her children and grandchildren too so they can reap future deductions from the capitalized value of his tuition.

      Delete