News Article

Good News for Veterans: Veterans’ Education and Training Benefit

Posted: March 19, 2018 By : Knowledge Bureau Staff
Posted in: Strategic Thinking, Distinguished Mastery, tax preparation, Financial Literacy, Financial Advisor, tax credits, knowledge bureau, income tax act, Evelyn Jacks, tax courses, tax advisor, Canadian Armed Forces, financial education, online education, online campus, Veterans Benefit, tax credit, Reserve Force, Canadian army, Veterans Education and Training Benefit, Caregiver Recognition Benefit, Caregiver Relief Benefit

An important new benefit for veterans takes effect on April 1, 2018, but there is very little information available so far to veterans themselves, their families or advisors. Stay on top of the news about this new benefit to play your part in helping those who have served our country receive all the support to which they are entitled.

Originally announced in the 2017 federal budget, the new Veterans’ Education and Training Benefit is part of the $133.9 million earmarked over six years to help veterans achieve post-military employment and position them to be more competitive in the workforce.

All honourably released veterans of the Canadian Armed Forces Regular Force and Reserve Force are eligible and will have up to ten years following their release date to use the benefit to obtain the college, university or technical education of their choice.

Education and training must lead to the completion of a degree, diploma, certification or designation from an educational institution and be pre-approved by Veterans Affairs Canada (VAC). The benefit can also be used to pursue a master’s degree. After the completion of education, veterans will be able to leverage VAC’s Career Transition Services to help with the job search.

According to the fact sheet on VAC’s website, here are the highlights:

  • Veterans who are honorably discharged will qualify for a $40,000 benefit if they have six years of eligible service and up to $80,000 with twelve years of eligible service.
  • This financial support is available to cover the cost of tuition and fees, books and living expenses.
  • Veterans will not be limited to post-secondary training. If university or college is not their choice, up to $5,000 of the total funding earned would be available for career and personal development courses. This could include small business boot camps, continuing education, etc. 
  • Living expenses, travel, and incidentals will not be covered by the career and personal development funding unless built into the course costs by the institution or organization.
  • The benefit will be paid directly to the veteran.

It’s unclear so far whether this benefit is taxable, open as it is to interpretation by the CRA, depending on whether the employer will benefit from the education and training provided. The short answer appears to be: yes, any payments to veterans out of this program would be taxable to the veterans receiving them. How does this work? The Veterans Education and Training Benefit is taxable under paragraph 6(1)(a) of the Income Tax Act, unless it can be determined that the employer is the primary beneficiary. Because VAC is providing this support for honourably discharged veterans who are no longer employed by the payor, it is unlikely that the employer is the primary beneficiary; therefore, the benefit will likely be taxable in veterans’ hands.

And there is additional good news for veterans in the form of a new Caregiver Recognition Benefit, which replaces the Family Caregiver Relief Benefit (an annual payment that required an initial application and completion of a renewal form each year after that). Effective April 1, 2018, a non-taxable $1,000 monthly benefit will be paid directly to informal caregivers, including family members. This benefit will be indexed annually to keep pace with inflation and is part of the government’s ongoing efforts to enhance and simplify support to veterans, their families and caregivers.

Stay tuned to Knowledge Bureau Report for further news on the taxation of these benefits as more information becomes available.

Additional educational resources: Introduction to Personal Tax Preparation

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