Tuition grant for persons with a Disability Tax Credit certificate
Private member’s bill C-255 proposes amending the Income Tax Act and the Canada Student Financial Assistance Act so that students enrolled in a designated post-secondary educational institution with a Disability Tax Credit (DTC) certificate will receive a grant equal to their annual tuition fees. It is assumed that the bill will be effective August 1, 2022, the start of the 2022-23 loan year.
The PBO estimates the proposed tuition grant for persons with a Disability Tax Credit certificate will generate a 5-year total cost of $402 million. This includes a gross cost of $591 million and a cost recovery of $189 million.
This private member’s bill proposes amending the Income Tax Act and the Canada Student Financial Assistance Act so that students enrolled in a designated post-secondary educational institution with a Disability Tax Credit (DTC) certificate will receive a grant equal to their annual tuition fees. It is assumed that the bill will be effective August 1, 2022, the start of the 2022-23 loan year.
- Estimates are presented on an accruals basis as would appear in the budget and public accounts.
- Positive numbers subtract from the budgetary balance, negative numbers contribute to the budget balance.
- Totals may not add due to rounding.
The cost of the proposed bill was determined by multiplying the estimated number of students with a Disability Tax Credit (DTC) certificate by the average tuition fees in 2018-19. The total cost was adjusted based on potential savings resulting from the effective decrease in Canada Student Loans issued, and the consequential decrease in the amount of the Tuition Tax Credit claimed by individuals receiving the proposed grant.
The number of post-secondary students with a DTC certificate was estimated based on the prevalence of DTC certificate holders in the general population, adjusted for an assumed lower take-up of the program.[^1] These proportions were then applied to the number of domestic students that were enrolled in postsecondary institutions in 2018-19, by age.[^2] This number was grown based on PBO’s projection of post-secondary enrolment.
Average tuition fees of full-time students and part-time students receiving the Canada Student Grant for Students with Permanent Disabilities (CSG-PD) from 2014-15 to 2018-19 were assumed to be representative of the student population with a DTC certificate.[^3] The weighted-average tuition fees of full-time and part-time students receiving the CSG-PD was used and projected forward using the historical relationship between the tuition fees of those receiving the CSG-PD and on PBO’s projection of tuition fees.
The PBO Student Financial Assistance Model was used to estimate the net expense of the Canada Student Financial Assistance Program under current policy parameters and the impact of the proposed grant.
The stock of unused Tuition Tax Credits was projected prior to the proposed policy, using the stock of unused credits in 2013, as well as the number of persons claiming both the DTC and the Tuition Tax Credit and their Tuition Tax Credit amounts. This was grown based on PBO’s projection of enrolment and tuition fees. To estimate anticipated savings from the consequential decrease in the amount of the Tuition Tax Credit claimed, the stock was gradually depleted based on Finance Canada’s expenditure estimates of previously eliminated education credits (Education Tax Credit and the Textbook Tax Credit; eliminated on January 1, 2017).
The main source of uncertainty for this estimate is the number of students who may be eligible for the DTC and not claiming the credit due to low tax payable and accessibility barriers[^4].
A behavioural response for enrolment was incorporated, however there is uncertainty surrounding its magnitude related to the prevalence of DTC certificates amongst the student population differing than that of the general population.[^5] Additionally, the actual take-up rate of the tuition grant could differ than the one assumed.