Chances are that as a student, you're focused more on acing finals or planning a ski trip than filing taxes. You may even believe that as a full-time university student you're exempt from paying taxes.
Yet according to Jack Waterman, principal, tax services, at Grant Thornton LLP, an independent audit, tax and advisory firm, both Canadian and international students who have received any income from scholarships, summer jobs, or grants, should plan to file taxes before April 30. Since the Canadian tax system is based on residency and not citizenship, international students may also be required to file a tax return.
“Even students who have worked part-time may be eligible for a refund,” Waterman says. “Students may also qualify for a federal tax credit and unused tax credits can either be transferred to qualifying relatives or carried forward to future years.”
Here are some tax tips to help you save time and money as you prepare this year's taxes:
1. Claim your tuition credits
Canadian students currently enrolled in a college or university can claim tax credits for tuition fees (any course that costs more than $100) and examination fees for licensing and certification.
Tax credits for tuition are non-refundable. In the event you don't use all of your tuition credits in a given year to reduce your taxes, you can carry forward the unused portion for future years or transfer the unused amount (up to $5,000) to a family member, spouse or common law partner.
“If you carry forward your tax credits for tuition, you'll need to use them in the first year that you pay income tax,” Waterman says. “Some students find tuition tax credits to be useful deductions after they graduate and begin working in a career.”
2. Include your Canada Emergency Student Benefit (CESB)
Did you receive the CESB? The CESB was a financial resource available to post-secondary students as well as recent post-secondary and high school graduates who were unable to find work due to pandemic. Applicants could receive $1,250 for a 4-week period up to a maximum of 16 weeks. Those with a disability or dependents could apply for an extra $750 for a 4-week period.
This benefit was available from May 10 and August 29, 2020, and officially closed for applications on September 30, 2020.
No taxes were deducted from the CESB benefit. Recipients will receive a T4A tax slip for the amount that was received. If you got the benefit, make sure to include this when you file your taxes.
3. Deduct student loan interest
As a student, you can claim a non-refundable tax credit based on the interest you've paid on government student loans. If you don't need the deduction, Waterman says you can carry the tax credit for student loan interest forward for up to five years and claim it on future returns after you've completed your studies.
4. Considerations for International Students
If you're studying in Canada, but it isn't your home country, you may still need to file a tax return based on any earnings received from working as a teaching assistant, tutor, or from taxable scholarships.
“Since the Canadian tax system is based on residency, not citizenship,” explains Laura McLeman, a certified public accountant with Citizen Abroad Tax Advisors in Ontario. “There are four different types of resident and non-resident statuses for Canadian tax purposes: factual and deemed residents and non-residents or deemed non-residents. Since a deemed resident is someone who lives in Canada for 183 days or more each calendar year, international students may fall under this category.”
If you're an international student who isn't sure of their residency status, talk to an expert and do some background research.
5. Think about moving expenses
Have you transferred from one university to another this past year or moved at least 40 kilometres closer to your school? If so, you may be eligible to deduct moving expenses such as transportation and storage costs, temporary living expenses, and incidental costs (utility hook-ups, etc).
6. Budgeting for textbook credits
Before 2017, post-secondary textbook costs were available as federal tax credits. Today, only some provincial textbook tax credits exist for students. Some provincial credits, like the Alberta Family Employment Tax Credit, also benefit families with children under the age of 18 that meet specific criteria. Research to see if you’re eligible for a territorial or provincial textbook tax credit, or other provincial or territorial tax credits based on where you live.
7. Consider child care expenses
If you have children who are minors and need to be cared for while you're attending college, you may be able to claim expenses for their care on your tax return. Make sure you look check if you meet the criteria to deduct child care expenses, such as daycare, etc.
8. Ask for Help
If you're a student who needs help understanding the Canadian tax system, or the specific deductions that apply to you, free tax clinics are offered in March and April across Canada. In addition, free certified software products are available to help you to file your tax return online.
Doing your taxes for the first time can be confusing, don’t be embarrassed to get the help you need!
Want to learn more about taxes as a student? Check out these resources: