The good news: In this instance, the Ministry of Advanced Education (AVED) has been responsive and quick to fix one problem. However, the question remains: How many fixes will it take before AVED responds to the fact that the combined tuition fees and grant application process has been a mistake for ABE students? Perhaps AVED is getting closer to understanding who ABE students really are: not the students they originally thought, but rather low-income adult students who need to be screened in rather than screened out (the income threshold of $23,600 is too low to be effective) – literacy level students, students with disabilities, and other second chance adult learners and workers who are trying to get a basic education so they can improve their chances in life.
The bad news:
1) The fix (see FPSE memo below) just adds another layer to the paper trail around getting low-income students funded.
2) The tax still represents a reduction in benefit to students.
Clarity and some official communication from Revenue Canada on whether ABE students can claim their tuition fees against their taxes.
Memo, FPSE-BC, April 13, 2016:
We’ve got some updated information since our news release last week regarding the Adult Upgrading Grant being counted as taxable income.
What we’re told is that the Ministry is amending the AUG income policy in anticipation of potential income tax and future AUG eligibility implications. Institutions may deduct the amount of a student’s previous year’s AUG award from their line 150 income solely for the purposes of determining current year AUG eligibility. The student would be required to provide proof of their previous year’s AUG award in the form of their T4A. This policy will be effective immediately and retroactive to the beginning of 2016/17.
Additionally, we’ve been told (second-hand source) that CRA will allow ABE students to claim the Education Amount and tuition credits on their income taxes. A couple of income tax professionals who happen to have a daughter in ABE at VCC contacted CRA directly to ask the question and were told the credits are allowable. We recommend sharing this information with your members and getting the info to students (though they should probably contact CRA to confirm).
Does the AUG being taxable affect other income-threshold benefits? What about the child tax credit? MSP premiums? Other?
If you hear anything more about these issues, please keep us in the loop.
Dr. George A. Davison
President, Federation of Post-Secondary Educators of B.C.
President, National Union of the Canadian Association of University Teachers
400-550 West 6th Ave.,
Vancouver, B.C. V5Z 1A1
Office phone: 604-873-8988