As an international student in Canada, you're immersed in a world of new experiences. One of the essential tasks you'll face is filing your Canadian income taxes.
While it might seem daunting initially, understanding the Canadian tax system can benefit you in various ways, from potential refunds to being in compliance with the law.
In this guide, we'll break down the essential aspects of filing taxes in Canada for international students.
Let's dive in!
1. Why Should International Students File Taxes in Canada?
Even if you've earned no income, it's beneficial to file a tax return because:
To Claim a Refund: If you've had any job in Canada, your employer would have deducted taxes from your pay.
If you've overpaid, you can get a refund.
To Build RRSP Deduction Limit: The Registered Retirement Savings Plan (RRSP) allows you to save for retirement. Even if you plan to leave Canada after your studies, filing taxes can create RRSP room that you might use if you return.
To Claim Tax Credits: The Canadian tax system offers various credits, like the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit, the Climate Action Incentive (CAI), the Ontario Trillium Benefit (OTB) and the Canada Child Benefit (CCB) that you might be eligible for.
2. Determining Your Residency Status
Before filing taxes, determine your residency status, as it affects your tax obligations:
Resident: Typically, international students are considered residents for tax purposes if they have established significant residential ties in Canada (e.g., renting an apartment or having a Canadian bank account).
Non-resident: If you're in Canada briefly and don’t establish significant ties.
Part-year resident: If you've been a resident and non-resident in the same year.
Deemed resident/non-resident: In specific situations, even if you don’t have residential ties, the CRA might deem you a resident or non-resident.
When in doubt, consult the Canada Revenue Agency (CRA) or a tax professional.
3. Income You Must Report & Deductions to Consider
Types of Income:
As a resident, you must report your worldwide income to the CRA.
This includes:
Employment income from Canada and abroad
Employment Income
Canada Pension Plan Benefits
Employment Insurance Benefits
Worker’s Compensation Benefits
Old Age Security Pension
Pension Income
ODSP/Social Assistance Income
Universal Child Care Benefit
RRSP Income – HBP/LLP Repayment
Business/Professional or Commission Income
Partnership Income/Losses
Rental Income
Foreign Income
Capital Gains
Investment income (interest, dividends)
Scholarships, fellowships, bursaries, and research grants can be tax-free if related to your study program.
Types of Deductions:
Union Dues
Charitable/Political Donations
RRSP Contributions
Tuition Slips
Scholarships/Bursaries
Student Loan Interest
Medical Expenses
Child Care Expenses
Allowable Employment Expenses
Allowable Moving Expense
Capital Losses
Carry Forwards
4. Documents You Need
Ensure you have the following:
T2202 (Education and Textbook Amounts Certificate): Provided by your educational institution showing tuition paid.
T4 (Statement of Remuneration Paid): From your employer if you worked.
T5 (Statement of Investment Income): If you've earned income from investments.
5. Available Deductions and Credits
Several deductions and credits can reduce your tax payable:
Tuition Tax Credit: Claim the tuition fee paid at a recognized institution.
Education and Textbook Amounts: Monthly education amounts can be claimed if you're a full-time or part-time student.
Public Transit Passes: If you've used public transit, you might be eligible for a credit.
Remember to carry forward unused amounts. If you don’t owe any taxes this year, you can use these credits in future years when you earn more income.
6. Filing Your Tax Return
Options include:
Efiling - EFILE is an automated service that allows approved tax preparation service providers and discounters to send individual income tax return information to the Canada Revenue Agency (CRA) directly from EFILE–certified tax preparation software. Taxpayers may take their tax slips and supporting documents to a registered tax preparer and for a fee, the tax preparer will prepare their return and send it to us electronically using EFILE
Online Filing: Use NETFILE-certified tax software. Many offer free versions for students.
Paper Filing: Download the tax package from the CRA website, fill it out, and mail it.
7. Deadlines
Typically, the deadline is April 30th for the previous tax year. If self-employed, you have until June 15th, but any owed income tax is still due by April 30th.
8. Receiving Your Notice of Assessment (NOA)
Once the CRA processes your return, they'll send an NOA. Review it to ensure all details are correct.
9. Seeking Help
There are numerous resources for students:
Tax Clinics: Many universities and colleges offer free tax clinics for students.
CRA Resources: The CRA website has guides, videos, and other resources.
Professional Help: Consider hiring a tax professional, especially if your situation is complex.
Final Thoughts
While the process may seem intricate, filing taxes in Canada is a rite of passage. As you navigate this journey, remember that the experience not only ensures you comply with Canadian law but also paves the way for potential financial benefits.
For comprehensive advice tailored to your situation, always consult with a tax professional.
We have a seamless step-by-step process to help you get started with WPF Tax.
Happy filing!
Lisa Evelyn - CEO & Founder
WPF Accounting & Taxation Services