If you (or someone you know) graduated since January 2007 from a post- secondary institute recognized by CRA, you should listen up. The Manitoba government has some money for you, if you decide to stay and work in Manitoba.
The Manitoba Tuition Fee Income Tax Rebate adds an incentive for graduates to stay in, or move from other provinces to, Manitoba.
A tax credit that will reduce Manitoba tax otherwise payable is available to all such grads, once they have Manitoba tax to pay. The credit is spread over a minimum of six years, and more if needed to receive the maximum.
The cash back can total up to 60% of total tuition paid to get your degree, diploma or certificate since January 1, 2004. The maximum total credit is $25,000 which assumes you paid $41,667 or more tuition. It does not matter where you paid the tuition fees (as long as they were eligible for the federal tuition tax credit), or whether you attended full time or part time.
The maximum annual credit is 10% of your total tuition paid. To get back the maximum 60% of total tuition, you must be paying enough Manitoba tax so that you can absorb the credit. If you are not paying enough tax in Manitoba, you can delay your application for up to 10 years and you have 20 years after initial application to collect tax rebates.
Remember, a non-refundable credit reduces your Manitoba tax owing. If you are not paying any tax in a given year, you won’t get any money back.
Let’s look at an example.
Sarah graduated in 2008, and her total tuition payable to a recognized post-secondary institute was $20,000. She started to work late in 2008 and her tax return said she owed $600 in Manitoba income tax for 2008. (Ignore federal tax – it is not relevant.)
In 2008, Sarah’s maximum tuition rebate was the lesser of:
1) 10% of total tuition ($2,000)
2) Annual program maximum of $2,500
3) Sarah’s MB tax payable ($600)
So, she was able to wipe out her Manitoba tax payable for 2008, saving her $600.
In 2009, year two, she got a great job and will be liable for Manitoba tax of $3,000. The maximum which applies to her in year two is $2,000, that being 10% of her original tuition amount. So, she will receive a refund of $2,000 of her $3,000 in Manitoba tax that would otherwise have been payable for 2009.
After filing 2009’s return, she will still have a potential $9,400 of rebate left for future years, subject to the annual limits outlined above. (Her tuition was $20,000, so 60% of this, or $12,000, is the maximum rebate available. She has received $2,600 over the first two years, leaving $9,400.)
The first year you apply (which should be the first year you are paying Manitoba tax), you use CRA form T1005 and report your total amount of tuition. You may be asked to supply your T2202A forms (proof of tuition) from previous tax returns, and proof of graduation.
You then have up to 20 years to claim rebates, totalling up to 60% of tuition to maximum rebates of $25,000.
If you paid Manitoba tax in 2007 or 2008 and did not make a claim, you can still write to CRA and include the T1005 claim form. You might save time by sending a copy of the T2200A and copy of your proof of graduation. They may ask for the originals. I was told last year by the helpful people at the Manitoba tax assistance office that CRA audited all the 2007 claims. Don’t let that deter you from making a legitimate claim.
If you need more info you can call 204-948-2115 or 800-782-0771, or go online to www.gov.mb.ca/tuitionrebate/index.html
As if you needed still another reason to stay in the best province in Canada!
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This information is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.