By Stacy Glass and Kathryn Benson, Sr HR Consultants, HR Options
Thinking of a Tuition Assistance Program? The trend for tuition reimbursement is on the rise in Canada and the U.S.. In fact, the majority of the top 50 companies in Canada have some sort of continuing education or scholarship program (http://www.macleans.ca/economy/business/canadas-50-best-employers/). We definitely see these types of programs on the rise as they are seen as a valuable benefit by employees, and show that employers care about the educational growth of their workforce.
In terms of taxation in Canada, so long as the post secondary courses are related to the job the employee is doing for the employer, the tuition assistance is not generally considered a taxable benefit (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/dctn/ttn-eng.html). In the U.S., if the educational assistance exceeds $5250.00 per year (at the time of this publication), it is taxable income and must be reported on the W2.
If your plan will include providing tuition assistance to family members of the employee, different rules apply – see this informative article for more information for Canadian employers: http://www.bdo.ca/en/Library/Services/Tax/pages/Tax-Factors/2010-01/The-CRAs-New-Administrative-Policy-On-Employer-Provided-Tuition-Fees-Scholarships-And-Bursaries.aspx
Lastly, you should definitely enforce a Tuition Assistance Agreement with employees when providing a tuition reimbursement program. For example, consider including how long the employee must remain with your company after completing schooling, and if they leave before that timeline has expired, how will the tuition fees be reimbursed to the company? In Canada, many provinces require a written statement from the employee acknowledging a deduction from their pay check. Also, you will want to consider listing the conditions under which the employees will be eligible to receive the reimbursement (i.e. with management approval, relevancy of the courses to their job, achieving a particular course grade etc.).
Overall, a Tuition Assistance Program can be a cost effective and valuable way to retain employees integral to your organization, if implemented properly.
Stacy is a Senior Human Resources Consultant with HR Options. Stacy has a wide range of human resources experience, including expertise in appropriate hiring practices, employment contract creation and enforcement, addressing employee relations issues with counseling and disciplinary actions, ensuring company policies are legally compliant and consistently upheld to reduce the risk associated with provincial and federal employment law.