Three kinds of school, three filing packages
The structure decides everything downstream, so the filing engagement starts with a question most schools were asked only once, years ago, at incorporation:
| Structure | Income tax | Annual filings | The recurring trap |
|---|---|---|---|
| For-profit corporation | About 12.2% combined on the first $500,000 | T2 | Prepaid tuition taxed in the wrong year |
| Non-profit corporation | Exempt under 149(1)(l) | T2, plus T1044 once thresholds are met | Assuming exemption means no filings |
| Registered charity | Exempt | T3010 within six months of year end | Receipting more than the rules allow |
The T1044 catches non-profit schools off guard. It is required once investment income passes $10,000 in a year or total assets passed $200,000 at the end of the prior year. And once it has been required a single time, it is required every year after, forever. A school with a building on the balance sheet crosses the asset line without trying, and the penalty clock runs whether anyone noticed or not.
The exemption itself is a fact pattern, not a certificate. Paragraph 149(1)(l) asks that the school be operated other than for profit with no income available to members, and a non-profit that stockpiles surplus well beyond its needs invites CRA to argue the pattern fails. Where a school is genuinely saving for something, a building fund or a bursary endowment, we make the purpose explicit in the minutes and the statements, so the surplus reads as a plan rather than a profit.
A T2 that mirrors the school year
Tuition received in advance is income when it arrives under paragraph 12(1)(a); the deferral in your books does not carry to the T2 by itself. What carries it is the paragraph 20(1)(m) reserve for teaching still undelivered at year end, supported by the same recognition schedule the bookkeeping runs on. A June 30 year end shrinks that reserve to almost nothing; a December year end makes it the largest number on the return. Either works, but the reserve must be built, papered and consistent from year to year, and we prepare it that way inside Corporate Tax Filing.
Deadlines follow the school calendar too. With a June 30 year end, an owner-managed school claiming the small-business deduction pays its balance by the end of September and files by the end of December, with instalments in between once tax owing passes $3,000. Cash is easy in October and tight in July, so we set the instalment schedule against the school's real cash curve rather than the CRA's default one.
The receipts a school issues are a filing season of their own
Faith-based schools live under the most audited rule in this niche: tuition at a religious school can be receipted as a donation only for the qualifying portion, computed the way CRA's circular IC75-23 prescribes, with the cost of the secular education carved out before anything is receipted. Issuing receipts for the whole fee is the fastest route to a charity audit, and school receipting is a pattern CRA specifically reviews. We compute the portion, document the method and keep it consistent, so every receipt issued in December survives a question asked in March.
Two more receipts matter to your families. The before- and after-care portion of fees should be receipted separately so parents can claim it as a child care expense on line 21400 of their own returns; folded into one tuition line, that claim is lost. And where a child's placement comes with the medical certification that a program is required for their condition, tuition may qualify as a medical expense on the family's return; it is a narrow, documented route, and we flag it when the facts genuinely support it.
Bursaries paid as money take T4A slips in box 105 above $500. They are tax-free in the hands of an elementary or secondary student, but still reported by the school that paid them.
Filed from working papers that survive a second look
School files get re-read: the 20(1)(m) reserve support, receipting math at faith-based schools, rent paid to a founder's building company, and T4s that must reconcile to a payroll spread across two calendars. We file from working papers built for that second look, and when a letter arrives, CRA Audit & Review Support answers it from the same papers, which is why most letters end at the first reply. For owner-operated GTA schools we also file the owner's T1 through Personal Tax Filing, so salary, dividends and instalments tell one story across both returns.
Source: CRA — Form T1044, Non-Profit Organization Information Return.
