What to do with unused tuition, education or textbook amounts part 2

What to do with tuition transfers and dividend income

The amount of the tuition or education tax credit used by the student is calculated before the dividend tax credit is deducted. Because of this, it is possible that no transfer of tuition or education amount will be allowed if a student has significant Canadian dividend income, even though the student may not need the entire tax credit. When calculating the tuition or education tax credit, the result may be that the entire tuition or education amount is utilized, but not the entire dividend tax credit. And any unused dividend tax credit cannot be carried forward.

If the student has a spouse, the dividend income can be transferred to the spouse in some situations which would enable a transfer of the tuition or education amounts to the spouse.

It is a little different in Quebec where unused tax credits can be transferred to the spouse including unused dividend tax credits.

Moving to another province with carried forward tuition and education amounts

You will use the federal unused tuition and education amounts from your notice of assessment as a carry-forward when completing the provincial Schedule 11 for your new province of residence if you moved to another province after carrying forward tuition and education amounts. This does not apply when you move to Ontario, Prince Edward Island or Quebec. Please check www.taxtips.ca for more information on this.

Tuition claims in year of death

The tuition, education and textbook amounts from the current year or from carried forward amounts may be split between the final tax return and the “rights and things” tax return in the year of death to be able to maximize the tax credit. But please take note that current year tuition and education amounts can be transferred in the year of death but not carried forward.

Source: “Transfer or Carry-forward of Unused Tuition, Education or Textbook Amounts” www.taxtips.ca

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