Prescribed Foreign Universities
Arthur Drache, January 31, 2010
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| As most readers are well aware, amongst the list of "qualified donees" for Canadian tax purposes are foreign universities which have been listed in Schedule VIII to the Income Tax act. When a university is listed, donations can be made to it by Canadians which will be treated as though the gifts have been made to a Canadian institution. |
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| The statute only states that the foreign institution must be a "university" and must "ordinarily" have students from Canada. A decade or so ago the procedure to get a foreign institution onto Schedule VIII was almost arcane, surrounded in mystery. The CRA now has a publicatio which explains, in at least broad terms, what must be done and more importantly, whether a foreign institution will qualify. |
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| The first question is whether a foreign institution will be recognized as a university, something which is not always certain from our own experience. |
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| To be considered for prescribed status, a foreign educational institution must meet all of the following conditions: |
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| . it maintains an academic entrance requirement of at least secondary school matriculation standing; |
| . it is organized for teaching, study and research in the higher branches of learning; |
| . it is empowered, in its own right, to confer degrees of at least the baccalaureate level (Bachelor or equivalent), according to academic standards and statutory definitions prevailing in the country in which the university is situated; and |
| . it ordinarily includes Canadian students in the institution's student body. |
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| Note: |
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| An educational institution outside Canada that confers only associate degrees, diplomas, certificates or other degrees at a level less than the bachelor or equivalent, does not qualify. An institution that is affiliated to a university but which does not have the authority to confer degrees, does not qualify. The institution itself must be empowered to confer degrees at the baccalaureate level or higher in order to be recognized as a university outside Canada. |
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| If an educational institution meets the above conditions and wants to get prescribed status, an official or authorized representative of the institution has to send a written request to the CRA that includes the following: |
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| . a printed copy of the educational institution's latest calendar, syllabus and/or catalogue that contains course curriculums (a Web address is insufficient); |
| . a photocopy of documents issued by the appropriate educational authority in the country of residence that confirms that the institution is one of higher learning empowered to confer degrees, in its own right, of at least the baccalaureate level; and |
| . the number of Canadian students that have attended the institution over a minimum ten-year period and a sampling of information such as their names, address, date of birth, Canadian social insurance number (if available), years attended and the type of degree programs. (Over the years, these demands have become sharper and in many cases almost impossible to comply with.) |
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| The educational institution may need to contact the Canadian students to obtain their approval to provide the requested information. However, the CRA will be unable to recommend the institution for prescribed status without this information. |
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| Once the CRA has made an evaluation, it will send a decision in writing to the institution stating whether or not it has been accepted as a prescribed "university outside Canada". If the educational institution's application has been reviewed by the CRA and it is recommended for prescribed status, it does not qualify for purposes of the charitable donations tax credit until it is granted prescribed status by an enactment of the Canadian Parliament. |
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| The CRA recommends educational institutions for prescribed status each year. When Schedule VIII is amended, a notice is posted in the Canada Gazette. When a foreign university is added to Schedule VIII, it is granted prescribed status retroactive to January 1 of the year in which the application was received. |
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| There may be an added bonus from being prescribed which has nothing to do with getting credit for donations. As an educational institution outside Canada that has been recommended by the CRA for prescribed status is recognized by the CRA as a "university outside Canada", students of that institution may be eligible to claim Canadian tuition, education and textbook tax credits if they meet the other general conditions that apply. |
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