Ottawa is helping post-secondary students with the cost of textbooks while eliminating the taxation of scholarships and bursaries.

The 2006 federal budget introduces a “non-refundable” textbook tax credit. That means if the student doesn’t pay any tax, the credit is of no use. There will be no refund.

However, any unused textbook tax credit amounts can be added to unused tuition and education tax credit amounts and carried forward to a future year or transferred to a spouse or common-law partner, parent or grandparent.

The amount on which the textbook tax credit is calculated will be
$65 for each month for which the student qualifies for the full-time education tax credit and $20 for each month the student qualifies for the part-time education tax credit. The measure applies to the 2006 and subsequent taxation years.

The budget also contains a proposal to exempt fully scholarship, fellowship or bursary income from personal income taxes. At present, the first $3,000 of scholarship, fellowship or bursary income received by a taxpayer in a taxation year with respect to post-secondary education or occupational training is not included in income. Students claiming the education tax credit will be eligible for the exemption. That includes programs at the post-secondary level and occupational skill programs certified by the Minister of Human Resources and Social Development as providing skills in an occupation.

This measure will apply to the 2006 and subsequent taxation years.

Meanwhile, Ottawa is planning to improve the Canada Student Loan program. The budget will reduce the amount of expected parental contribution to their children’s post-secondary education.

Consultations on this proposed measure are planned so the change can take effect by August 2007.