Blog: Ontario Tuition and Education Credits Abolished and Replaced by the Ontario Student Grant Starting in 2017

May 11th, 2016 crédit pour impot

The 2016 Ontario Budget proposes to bring major changes to the financial support available for students pursuing postsecondary studies in Ontario.  Presently, the financial support for Ontario students is available through different programs and tax measures including Ontario’s tuition tax credit and education tax credit.  The tuition tax credit is calculated on the basis of eligible tuition and ancillary fees, as well as fees for certain examinations. The education tax credit provides financial help in the form of set amounts in recognition of non-tuition expenses for each month                                                                                   of postsecondary studies.

To the extent that the student cannot fully utilize the amount of the tuition and education tax credits, the balance can be carried forward to be used in future taxation years or transferred to a designated individual such as a parent, grandparent, spouse or common-law partner.

Proposed Changes

The Budget proposes to abolish Ontario’s tuition and education tax credits as well as other forms of financial support currently available in Ontario (for example, the 30% Off Ontario Tuition Grant, the Ontario Student Opportunity Grant, the Ontario Access Grants and other grants offered by the Ontario Student Assistance Program (“OSAP”)).  Starting with the 2017-18 school year, these credits and grants will be replaced by a single measure – the Ontario Student Grant (“OSG”).

The Ontario government expects that the OSG will make the average tuition fee free for students with financial needs (i.e. families with income of $50,000 or lower) and will reduce the cost of tuition for middle-class families.  Under the new OSG, there will be no reduction in assistance when compared to what Ontario students currently receive via the 30% Off Ontario Tuition Grant.

Furthermore, the access to financial support via interest-free and low-cost loans will be improved for students from middle and upper-income families by reducing the expected parental contributions.  More specifically, the maximum OSAP debt level will be capped at $10,000 per year for higher-income families.[1]

Transitional Measures

Students can claim the Ontario tuition tax credit for eligible fees paid in respect of studies up to September 4, 2017 and the education tax credit for months of study before September 2017.  In addition, students resident in Ontario on December 31, 2017 who have unused tuition and education tax credits available for carry-forward can claim them in future years.  However, students who move to Ontario after December 31, 2017 may not claim for Ontario tax purposes any accumulated tuition and education tax credits from another province.

 

[1] The Ontario government plans to provide additional details about the new OSG later in the year.

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