Textbook Tax Credit

To provide better tax recognition to post-secondary students for the cost of textbooks, Budget 2006 proposes to introduce a non-refundable textbook tax credit. The tax credit for a taxation year will be calculated by reference to the lowest personal income tax rate for the taxation year (i.e. 15.25 per cent for 2006 and 15.5 per cent for the 2007 and subsequent taxation years). The textbook tax credit will be in addition to the education tax credit. 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 amount; and $20 for each month the student qualifies for the part-time education tax credit amount.
Unused textbook tax credit amounts will be added to unused tuition and education tax credit amounts for the purposes of the carry forward to a future year as well as the transfer of unused amounts to a spouse or common-law partner, parent, or grandparent.
Example
Jennifer, a student attending a full-time program at a Canadian university, is entitled to the education and tuition tax credits in 2007. For 8 months of full-time study, she would claim $3,200 in education amounts ($400 per month x 8 months), in addition to the $4,000 she claims in tuition amounts for that year. She would receive a 15.5% tax credit on these amounts ($7,200), for a tax saving of $1,116. As a result of Budget 2006, she will also qualify for the textbook tax credit of $80.60, calculated as $65 per month x 8 months x 15.5%.
This measure will apply to the 2006 and subsequent taxation years.