The benefits of tax credits come, at the earliest, in the following spring – after the tuition bills are paid – when the tax return is filed and a refund issued
“In order to derive any benefit from the education tax credits, students and their families must first find the resources to pay for tuition fees, textbooks and living expenses and hope that a portion will be refunded sometime in the future,” says a policy statement from the Canadian Federation of Students. “As a result, education tax credits are most likely to benefit those who already have enough money to afford post-secondary education.”
Other analysts, including the main student groups, complain that tax credits do nothing to reduce the up-front costs of post-secondary education
- Making the tax credits refundable. Currently, the tuition and education/textbook tax credits are non-refundable, meaning that they can’t immediately benefit students (or their parents) who don’t owe any tax. “Making the credits refundable is an easy policy option,” says Neill. “A refundable tax credit can reduce your tax below zero and provide a refund. Lower-income students would get more up-front, and administratively, it’s relatively simple.” She notes that the GST/HST tax credit, for instance, is already refundable.
- Reducing or eliminating tuition and education/textbook tax credits in favour of non-repayable grants. The Canadian Federation of Students says if payday loans KS the money Ottawa spent on tax credits and saving programs like RESPs was instead used for up-front grants, “it would turn every dollar loaned by the Canada Student Loans Program into a non-repayable grant,” thus “greatly reducing” the amount of student debt owed to the federal government. (more…)