Category: Preparing Canadian Income Tax Returns 1

Interest Tax Credit on Student Loans

Paying for post-secondary education can be expensive, and many students rely on government-backed student loans to help cover tuition and living costs. The good news is that the interest you pay on eligible student loans can help reduce your taxes through a non-refundable tax credit.

Let’s break this down step by step so you understand exactly who can claim it, what qualifies, and how it works.

What Is the Student Loan Interest Tax Credit?

The student loan interest tax credit allows students to claim the interest they paid on certain government-approved student loans as a non-refundable tax credit on their personal tax return.

This means it reduces the amount of federal and provincial tax you owe, but it will not result in a cash refund if you don’t owe any tax.

Which Student Loans Qualify?

Only loans issued under specific federal or provincial legislation qualify for this credit. These include:

• The Canada Student Loans Act
• The Canada Student Financial Assistance Act
• A provincial or territorial equivalent, such as the Ontario Student Assistance Program (OSAP)

If your loan falls under one of these government programs, the interest you pay each year is eligible for the credit.

Important:

• Private loans, lines of credit, or personal loans (even if used for education) do not qualify.
• Loans from family members also do not qualify, even if you are paying them back with interest.

Who Can Claim the Credit?

Only the student who took out the loan can claim the credit — it cannot be transferred to anyone else, including parents or grandparents.

For example:
If a parent is helping their child repay a government student loan, the student still claims the credit because it’s their name on the loan, even if the parent made the payment.

How and When to Claim It

Each year, the financial institution or loan provider will send an official statement (or make it available online) showing the amount of interest paid during the year.

To claim the credit, the student reports that amount as “Interest Paid on Student Loans” on their income tax return (federal line 31900).

There is no maximum limit — you can claim the entire amount of interest paid for the year.

What If You Have No Income This Year?

If the student does not have enough income to benefit from the credit right away, they can carry it forward for up to five years.

That means if you don’t owe any tax this year, you can save the credit and use it in a future year when you do have income.

It’s a good idea to keep track of all interest paid and retain your official statements for at least five years. When you are ready to use the credit, you can claim all unused amounts at once.

Example

Maria finished university in 2024 and paid $350 in interest on her OSAP loan. She didn’t have any taxable income that year because she was still looking for a job.

Instead of losing the credit, Maria carried it forward.
In 2026, when she started working full-time, she claimed the $350 on her tax return to reduce the tax she owed that year.

Key Takeaways

• Only interest on government-approved student loans qualifies.
• Private loans and lines of credit do not qualify.
• Only the student can claim the credit — it cannot be transferred.
• You can carry forward unused credits for up to five years.
• There’s no maximum limit to the amount of interest you can claim.

By claiming the student loan interest tax credit, you can save money on your taxes and make your student debt a little easier to manage. Even if you don’t need it right away, remember to keep your loan interest records — your future self will thank you when it’s time to use those credits.

Tuition Tax Credits and the Changing Landscape (Federal & Provincial)

If you’re a student in Canada — or helping one prepare a tax return — understanding tuition tax credits is important. These credits can help reduce the amount of income tax a student owes, and sometimes they can even be transferred to a parent, grandparent, or spouse.

However, the rules for tuition tax credits have changed a lot over the past several years, especially at the federal level and across different provinces. Let’s walk through what these changes mean and how the current system works.

1. What Is the Tuition Tax Credit?

The tuition tax credit is a non-refundable tax credit that allows students to reduce the amount of federal and provincial income tax they owe based on the eligible tuition fees they paid to an approved educational institution in Canada or abroad.

To qualify, the tuition amount must usually be more than $100 and paid to a recognized post-secondary institution (like a college or university).

This credit is claimed using information from an official tuition receipt, usually the T2202 form, which the school issues each year.

2. Major Federal Changes Starting in 2017

In 2017, the federal government, under Prime Minister Justin Trudeau, made major changes to how students receive tax relief for education. The goal was to give students more financial help while they’re studying, rather than waiting to benefit later through tax credits.

Here’s what changed:

• The Education Amount and Textbook Amount were eliminated starting in 2017.
• The Tuition Amount remained, but it now applies only to the actual tuition paid — not to the number of months a student was in school.

So today, at the federal level, the only remaining education-related credit is the Tuition Tax Credit.

3. What About Past Credits and Carry-Forwards?

If a student had unused credits from previous years — for example, Education or Textbook Amounts from before 2017 — they can still carry them forward and use them in future years.

That means if a student didn’t use those credits when they were first earned, they can still apply them later to reduce taxes owing, as long as the amounts appear on their Notice of Assessment from the Canada Revenue Agency (CRA).

So, even though the credits are gone for new years, old carry-forward amounts are still valid.

4. Provincial Differences — Not All Provinces Followed the Federal Rules

While the federal government simplified its education credits, provinces and territories didn’t all make the same changes.

Here’s a summary of what happened across Canada:

• Ontario: Eliminated the Tuition, Education, and Textbook credits starting in 2017. Ontario students can now only claim carry-forward amounts from previous years.
• Manitoba and Newfoundland and Labrador: Kept their Education Tax Credit and continue to offer it.
• Other provinces have made mixed changes — some eliminated their education credits, while others still maintain a version of them.

In short, the tuition tax credit rules vary depending on where you live, so it’s important to check the provincial Schedule 11 and Form 428 for your province each year to confirm what’s available.

You can also find regularly updated summaries of provincial education credits on trusted tax information websites such as TaxTips.ca or the CRA’s official website.

5. Why These Changes Matter

The idea behind these changes was to shift student support from tax-based relief after graduation to upfront assistance through grants and loans.

In other words, instead of waiting to get a tax break years later, students now have better access to financial help while they’re studying — through programs like:

• The Canada Student Loans Program, and
• The Canada Student Grants Program.

This helps students manage their costs when they need it most — during school — even though it means they may receive smaller tax credits later.

6. Key Takeaways for Students and Tax Preparers

• The federal tuition credit is still available, but education and textbook credits are gone.
• Carry-forward amounts from previous years can still be used.
• Provincial rules differ — Ontario eliminated tuition credits entirely, while others (like Manitoba) kept them.
• Always check the current provincial forms or the CRA website to confirm what’s allowed for your province.

Example

Example:
Sarah was a full-time student at the University of Toronto in 2024 and paid $8,000 in tuition. She can claim the federal tuition tax credit for that amount. However, because she lives in Ontario, she cannot claim a provincial tuition credit, since Ontario eliminated it after 2017.

If Sarah had unused Ontario tuition credits from before 2017, she could still apply those in a future year — but only until they run out.

The tuition tax credit remains one of the most valuable student-related tax benefits in Canada. Even though the federal and provincial systems have evolved, understanding these rules helps you explain to students and parents why their credits may differ depending on where they live — and ensures they don’t miss out on valuable carry-forward amounts they’re still entitled to claim.

Claiming Tuition, Education, and Textbook Credits on Schedule 11

If you’re a student in Canada—or helping one file their first tax return—understanding tuition and education credits is essential. These credits can help reduce the amount of income tax you owe and, if you don’t need them right away, you can carry them forward or even transfer them to a parent or grandparent. Let’s go through how this works step by step.

1. What Is the T2202 Slip?

When you attend a recognized Canadian post-secondary institution, you’ll receive a T2202 – Tuition and Enrolment Certificate (formerly called T2202A).
This slip shows:

• The amount of tuition you paid during the year, and
• The number of months you were enrolled full-time or part-time.

Only eligible tuition fees (usually for courses that count toward a degree, diploma, or certificate) can be claimed. Personal interest courses or small administrative fees don’t qualify.

2. Where Do You Claim It?

The tuition amount from your T2202 slip is entered on Schedule 11, which is part of your income tax return.
Schedule 11 is used to calculate:

• The total tuition, education, and textbook credits you’re entitled to claim for the year, and
• How much of those credits you can actually use this year versus how much you’ll carry forward or transfer.

3. Understanding How Tuition Credits Work

Tuition credits are non-refundable tax credits.
This means they can reduce the tax you owe—but they can’t create or increase a refund by themselves.

For example:

• Suppose a student, Sue, paid $2,500 in tuition and earned $8,500 from a part-time or summer job.
• Her basic personal amount (the income you can earn before paying any federal tax) is higher than her income, so she doesn’t owe any tax.
• Since she doesn’t need her tuition credit to reduce her tax bill, she can either:
  • Carry it forward to use in a future year, or
  • Transfer it to an eligible parent, grandparent, spouse, or common-law partner.

In this example, Sue decides to keep it for herself. That $2,500 becomes a carry-forward amount she can use in a future year when her income is higher.

4. What If You Earn More?

Let’s say the following year Sue earns $14,500 instead.
Now she owes a small amount of tax. Her tuition credit can help reduce that tax to zero.
Only part of the $2,500 tuition amount is needed—whatever remains unused can still be carried forward.

5. Federal vs. Provincial Tuition Credits

It’s important to know that federal and provincial tuition credits are calculated separately.
While the federal government still allows tuition credits, some provinces have eliminated their own tuition, education, and textbook credits.

For example:

• Ontario removed its provincial tuition and education credits after 2017. Students can still use carry-forward amounts from previous years, but no new credits can be earned at the provincial level.
• Nova Scotia, on the other hand, still allows an education amount—for example, $200 for each month of full-time study. This means the provincial tuition calculation will look a bit different from the federal one.

Always check your province’s current rules to see what’s still available.

6. What Happens to Unused Tuition Credits?

If you can’t use all your credits in the current year, you have two options:

Carry Forward

You can carry forward unused tuition amounts to a future year, as long as you remain the same student.
The carried-forward amount will appear automatically on your Notice of Assessment from the CRA after you file.

Transfer

You can transfer up to $5,000 of current-year tuition (not including carry-forward amounts) to a parent, grandparent, spouse, or common-law partner.
You’ll need to fill out the relevant section on your tax return and sign the transfer section of your T2202 slip to authorize it.

7. Key Takeaways for Students

• Always keep your T2202 slip—it’s essential for claiming tuition.
• Claim tuition on Schedule 11 (both federal and provincial versions).
• If your income is low, you likely won’t need the credit this year—carry it forward or transfer it instead.
• Check your province’s rules, as some still offer extra education amounts.
• Tuition credits are non-refundable, so they only help reduce taxes owed—not create refunds.

Example Summary

By understanding how Schedule 11 works and how to use your T2202 slip, you can make sure you (or your student client) get the maximum benefit from tuition and education credits—without missing out on valuable carry-forward or transfer opportunities.

Transferring Tuition, Education, and Textbook Credits to Parents or Grandparents

When a student doesn’t need to use all of their tuition and education credits to reduce their own taxes, they may be able to transfer the unused portion to a family member. This can help the family as a whole pay less tax — but there are very specific rules about who can receive the transfer, how much can be transferred, and how to claim it properly.

Let’s go step-by-step.

1. Who Can Receive the Transfer?

Only a limited group of people can receive a tuition or education credit transfer from a student. These are:

• The student’s spouse or common-law partner
• The student’s parent
• The student’s grandparent

That’s it.
Transfers cannot be made to siblings, aunts, uncles, cousins, or friends.

This is a common mistake new tax preparers see — and it’s an easy one to avoid once you know the rule.

2. What Amount Can Be Transferred?

At the federal level, the maximum amount that can be transferred in any given year is $5,000 of current-year tuition.

Here are the key details:

• Only current-year tuition can be transferred — not carry-forward amounts from previous years.
• The student must first use any portion of their tuition needed to reduce their own taxes to zero.
• Whatever is left (up to $5,000) can be transferred.

For example:
If a student paid $7,000 in tuition this year, but only needed $2,000 of that to reduce their tax bill to zero, they can transfer up to $5,000 of the unused tuition to a parent, grandparent, or spouse.

💡 Important: The $5,000 limit is set at the federal level and hasn’t been indexed for inflation. Some provinces, however, allow slightly different amounts because they adjust for inflation each year. Always check the student’s province of residence to confirm the provincial transfer limit.

3. What About Carry-Forward Amounts?

Any unused tuition that is carried forward from a previous year cannot be transferred — it must stay with the student.

For instance:

• In 2024, a student had $2,500 in tuition they didn’t use and carried it forward.
• In 2025, the student isn’t in school but still has that carry-forward credit.
• The parent or grandparent cannot claim that $2,500 — it’s only available for the student’s future returns when they have income to use it against.

So, only the current year’s unused tuition can be transferred, and only up to $5,000.

4. How Is the Transfer Claimed?

The transfer must be recorded on both the student’s and the recipient’s tax returns.

On the student’s return:

• The student reports their tuition and education amounts on Schedule 11.
• Schedule 11 will show how much tuition was used by the student and how much (if any) is being transferred.
• Both the federal and provincial versions of Schedule 11 must be completed.

On the recipient’s return (parent, grandparent, or spouse):

• The transferred amount is claimed on line 324 of the federal return (and the equivalent provincial line).
• The amount the recipient claims must exactly match what the student shows as transferred on their Schedule 11.

⚖️ The CRA checks that both returns line up — if they don’t, one or both claims may be disallowed.

5. The T2202 Slip Must Be Signed by the Student

This is one of the most overlooked parts of the process.

Even though a parent or grandparent might have paid the student’s tuition, the credit belongs to the student. That means:

• The student decides whether to transfer the credit and to whom.
• The student must sign the T2202 slip (or equivalent document) authorizing the transfer.
• The slip must indicate:
  • Who the credit is being transferred to
  • The amount being transferred (federal and provincial, if different)
  • The student’s signature and date

If the CRA asks for proof later, this signed slip must be available.
Without it, the CRA can deny the transfer and remove the claim from the parent or grandparent’s return.

✅ Tip for new tax preparers: Always keep a signed copy of the T2202 slip in your client’s file before claiming a transfer.

6. Key Takeaways

7. Quick Example

Let’s revisit Sue, a university student:

• Tuition paid: $2,500
• Income: $8,500 (no tax owing)
• Unused tuition: $2,500

Sue doesn’t owe tax, so she can transfer up to $2,500 to her mother.
She records the transfer on her Schedule 11, signs her T2202 slip to authorize the transfer, and her mother claims that amount on line 324 of her tax return.

If next year Sue goes back to school and has carry-forward tuition, only Sue can use it — it cannot be transferred.

8. Final Thoughts

Transferring tuition and education credits is a valuable tax planning tool for families.
As a tax preparer, your role is to:

• Confirm eligibility,
• Make sure the amounts match between both returns, and
• Keep proper documentation (especially the signed T2202 slip).

Once you understand these steps, you’ll be able to confidently help students and parents get the maximum benefit from tuition credit transfers — while staying compliant with CRA rules.

Example: How to Transfer Tuition Credits to a Parent or Grandparent

Now that we understand who can receive a tuition transfer and how much can be transferred, let’s look at a realistic example of how the process works.

This example will help you understand how to determine:

• How much of the student’s tuition can be used personally
• How much can be transferred
• What forms need to be completed
• What documentation is required to finalize the transfer

Step 1: Meet Sue and Cynthia

Let’s imagine a university student named Sue Brown, and her mother, Cynthia.

• Sue’s tuition paid: $2,500
• Sue’s income for the year: $14,500 from a part-time job
• Province of residence: Ontario

Sue received a T2202 – Tuition and Enrolment Certificate from her university showing that she paid $2,500 in eligible tuition fees and was a full-time student.

Step 2: Determine How Much Tuition Sue Can Use Herself

Before any transfer can happen, the student must first use as much of the tuition credit as needed to reduce their own federal tax to zero.

In Sue’s case:

• With $14,500 of income, she owes some tax.
• When she applies her tuition credit, she uses $1,370.50 of her tuition amount to bring her federal tax down to zero.
• That leaves $1,129.50 of unused tuition.

This unused amount can either be carried forward for Sue to use in the future or transferred to an eligible family member (like her mother).

Step 3: Sue Decides to Transfer the Unused Amount

Sue decides to transfer the remaining $1,129.50 of her tuition credit to her mother, Cynthia.

On her Schedule 11 (Federal), Sue would:

• Report her total tuition amount of $2,500,
• Show that she used $1,370.50 herself, and
• Indicate that $1,129.50 is being transferred to her mother.

After this, Sue has no carry-forward remaining for this year, because she’s used part of her tuition and transferred the rest.

Step 4: How Cynthia (the Parent) Claims the Transfer

Cynthia, the parent receiving the transfer, reports it on her own tax return.

On her federal return, she claims the transferred tuition amount of $1,129.50 on line 32400 (Federal Schedule 1 – Tuition amount transferred from a child or grandchild).

This credit reduces Cynthia’s federal tax owing.

Step 5: Important — The T2202 Slip Must Be Signed

The transfer isn’t official until the student signs off on it.

Sue must fill out and sign the bottom section of her T2202 slip, authorizing the transfer.

Here’s what she needs to include:

• The name of the person receiving the transfer (e.g., “I designate my mother, Cynthia Brown”)
• The amount transferred (in this case, $1,129.50 federally)
• The province of residence (important if there are provincial credits, see below)
• Her signature, Social Insurance Number (SIN), and date

This signed slip must be kept on file.
If the CRA later requests proof, this form is what confirms that the student agreed to transfer the credit.

⚠️ Note for new tax preparers:
Never claim a tuition transfer on the parent’s or grandparent’s return unless you have the signed T2202 slip from the student. The CRA may disallow the credit if this documentation is missing.

Step 6: Provincial Transfers (If Applicable)

Provincial rules vary.

In Ontario, there are no new provincial tuition or education credits (they were eliminated a few years ago). This means that while Sue can transfer her federal tuition credit to her mother, no provincial transfer applies in this case.

However, if Sue lived in Nova Scotia, for example, the province still allows an education amount. In that case:

• Sue would have a provincial tuition and education credit to transfer.
• On her Nova Scotia Schedule 11, she might transfer an additional $406.50 provincially.
• Cynthia would then claim both the federal and provincial transfers on her return.

So, it’s important to always check both levels (federal and provincial) when handling tuition transfers.

Step 7: What If Sue’s Income Were Higher?

Let’s say Sue earned $20,500 instead of $14,500.
Now she owes more in taxes, and she uses the entire $2,500 of tuition credits herself to bring her tax down to zero.

In this situation:

• There’s no unused tuition left, so no transfer can be made to Cynthia.
• Even if Cynthia paid Sue’s tuition, the student must claim first.

The student always has first priority to use the credit, regardless of who paid the tuition.
This rule prevents disputes and ensures fairness — the credit legally belongs to the student.

Step 8: Quick Recap

Step 9: Key Takeaways for Tax Preparers

1. Student first: Always calculate how much of the tuition credit the student needs before transferring any remainder.
2. Transfer limit: Only current-year tuition, up to $5,000, can be transferred.
3. Carry-forward rule: Carry-forward amounts can never be transferred.
4. Documentation: The signed T2202 slip is mandatory — keep it in the client’s file.
5. Matching returns: The student’s transfer amount on Schedule 11 must exactly match the parent’s claim on line 32400.
6. Provincial awareness: Always check whether a provincial transfer applies (rules differ by province).

Final Word

Transferring tuition credits may sound simple, but as a tax preparer, your job is to make sure every step is properly documented and compliant.
Always double-check:

• The student’s income level,
• The transfer limit,
• And the signed authorization.

Once you’ve done that, you’ll be able to confidently help parents and students maximize their tax savings — without risking a CRA adjustment later.