TUITION ASSISTANCE FOR ADULT BASIC EDUCATION (T4A BOX 196)
What is it?
Box 196 of the T4A is used to report amounts paid by an organization toward the cost of an individual’s adult basic education course. The payment may have been made directly to the educational institution or reimbursed to the individual.
More particularly, CRA says that box 196 is for reporting
"the amount of funding or other financial assistance you [ie the issuer of the T4A] paid on behalf of the individual for tuition fees for the individual’s adult basic education training provided under a program established under the authority of the Department of Employment and Social Development Act (such as the Canada Job Grant program) using code 196 and code 105."
How CRA requires it to be reported:
The financial assistance is taxable under s.56(1)(r) of the Income Tax Act.
The CRA requires issuers to report the amount in both Box 196 and Box 105.
By including it in Box 105, the income is reported on Line 13010 of the T1 (taxable scholarships, fellowships, bursaries), rather than on Line 13000 as generic “other income.” This classification reflects the fact that the assistance is similar in nature to a bursary.
Deduction available:
Although the assistance is included in total income, the individual is entitled to a deduction for the full amount, claimed on Line 25600.
CRA Tax Folio S1-F2-C3, para. 3.82 confirms that the deduction is available only where the amount is included in income.
This is based on s.110(1)(g) of the Income Tax Act, which provides the deduction mechanism.
As a result, when the return is properly prepared, the assistance appears as both income and a deduction, producing no net effect on taxable income.
Entering into UFile:
In UFile, the amount from Box 196 can be entered directly.
For Box 105, however, there is no dedicated option for “adult basic education fees.” None of the available selections will correctly report the entire amount on both Lines 13010 and 25600.
The best that can be done is to use the “Box 105 – part-time program scholarships” option. This ensures that any amount above $500 is included as income and then offset by a deduction.
At present, UFile needs to update its software to handle this correctly.