A loan used for education is not automatically a qualifying student loan for the tax credit. The credit applies to interest paid on loans under the specified federal student or apprentice loan laws and similar provincial or territorial legislation.
An ordinary bank student line of credit does not qualify simply because it paid tuition.
Use the interest statement, not the bank debit
A monthly loan payment can include principal and interest. Only eligible interest actually paid is considered for this credit. Obtain the annual statement from the loan administrator and compare it with your payment history.
For example, $2,400 of total repayments is not a $2,400 interest claim if the statement identifies only $120 of qualifying interest. Some loan components may charge no interest, so do not estimate a percentage from the outstanding balance.
If the government loan was combined or refinanced with another loan, review the exclusion rules before treating the replacement loan's interest as eligible.
Claim it on the borrower's return
The student who is legally responsible for the loan claims the credit. An eligible payment made on the student's behalf by a parent does not move the credit to the parent's return.
Keep the statement in the borrower's file and identify any payment made by someone else so it is neither omitted nor duplicated.
Track unused amounts yourself
The federal credit is non-refundable. If it cannot be used in the payment year, eligible unused interest can be carried forward for up to five years, using the oldest amounts first. The CRA does not maintain this carry-forward ledger for you.
A simple record should show the payment year, eligible interest, amount claimed, remaining amount and last available claim year. Keep it alongside the annual statements and filed returns. This avoids losing an older amount or claiming it again after it has already reduced tax.
Quebec has a separate rule: eligible interest paid since 1998 can remain available for its provincial credit without that five-year cutoff. Complete and file Schedule M to establish the unused balance, even in a year when you do not claim the credit at line 385. Keep separate federal and Quebec balances because the amounts used and remaining can differ.
