Are tax breaks available for private school tuition?
Tax strategies and benefits for private school families
While there are no explicit private school tax deductions or tax credits, there are a number of ways that parents at private schools can indirectly reduce their taxes.
Tax deductions and credits related to private school tuition
- Charity: Parents at private schools offering both academic and religious education (e.g. Christian schools, Catholic schools, Jewish schools) may be able to claim a tax credit for tuition, as a charitable contribution. While the amount you can claim varies from one province to another, it can be significant. Some schools are registered as charities or are associated with registered charitable organizations that offer tax breaks. Check with your prospective school to see whether fees are segregated and if tax receipts are issued for these purposes.
- Medical: Private school can be a tax write-off when it is medical necessity for a child. If a school's facilities, equipment or personnel are required due to the student's special needs, parents may be able to claim tuition fees as a medical expense tax credit. You'll need a doctor supporting your claim in writing.
- Child care: A portion of private school fees that relate to child care services for students under age 16 may be deductible as a child care expense. The deduction amount is based on that portion of the day that involves supervision and is not related to academic instruction (such as in a preschool), such as lunchtime supervision.
Note that scholarships and bursaries offered by private schools are tax exempt. For more information on reducing your tuition expenses through financial aid and scholarships, view our free guide.
You can also attend information seminars on financial aid, including scholarships and tax breaks, at any of the Private School Expos every fall. These one day events are a must for any parent or student considering an alternative education.
Gifts made to help cover tuition
Often, grandparents or relatives wishing to contribute to a child’s private school tuition will make an outright gift of cash. In Canada, there is no “gift tax,” and so the amount will not have to be included in the recipient’s income. However, under so-called “attribution rules,” any income earned from that gift will be attributed back to the donor for tax purposes.
However, there are exceptions to this rule. Alan Rowell, a tax specialist at The Accounting Place in Stoney Creek, Ontario, says that capital gains realized on property transferred to children under 18 are not attributable back to the source. So large gifts of capital property to a minor may, for example, be invested in the student’s name in a “corporate-class” type of investment (usually mutual funds), where any disposition of units is treated as a capital gain, and is thus taxed at the student’s lower rate. Certain kinds of trust arrangements may also mitigate the effects of attribution rules, but these require expert legal and financial help.
Generic, family-based tax credits and deductions
Parents making the investment in private school for their children should be sure to take advantage, wherever possible, of various broad family tax benefits that may be available through the federal and provincial governments. These are not directly related to sending your child to private school, but should still be considered.
Federal tax benefits
- Canada child tax benefit: These tax-free monthly payments may be supplemented by provincial or territorial child benefit payments and may be enhanced by the National Child Benefit Supplement. The benefit is not automatic and must be applied for.
- Universal child care benefit: A $100 monthly payment for each child under the age of six is made to the lower income spouse. The benefit is made available through application only.
- Child disability benefit: The amount of dependent on family income.
- Children’s fitness tax credit: A maximum $500 tax credit for each child under 16 enrolled in an eligible fitness program.
- Transit pass tax credit: You may claim the cost of monthly transit passes for dependent children commuting to and from school.
- GST/HST credit: Applied automatically to dependent children who have been registered for the Canada Child Tax Benefit. This may be supplemented by provincial sales tax credits.
Provincial/territorial family tax benefits
- Northwest Territories Child Benefit
- Yukon Child Benefit
- Nunavut Child Benefit
- British Columbia Family Bonus
- Alberta Family Employment Tax Credit
- Ontario Child Benefit
- Quebec Child Assistance Payment
- Nova Scotia Child Benefit
- New Brunswick Child Tax Benefit
- Newfoundland and Labrador Child Benefit
*With the exception of Quebec, all benefits programs are administered by the federal government and you do not need to apply for them separately from the Canada Child Tax Benefit. For details, see the Canada Revenue Agency publication T4114 – Canada Child Benefits.