Canada welcomes a large number of international students each year with over 336,000 across Canada in 2014 alone! Canada offers high quality education and is known for beautiful places as well as being a safe and open-minded country.
If you are an international student in Canada, you may have to file a Canadian income tax return. You also may have to pay Canadian income tax on earnings from teaching and/or research assistantships, other employment, and investment and business income. Generally, students also have to report income they receive from outside of Canada.
The Canadian tax system is based on residency not citizenship, meaning you’ll have to determine your residency status before filing your tax return.
Resident or Non-Resident
A resident of Canada is someone who has established residential ties to the country.
A non-resident would classify as anyone without such ties, and who resides in Canada for less than 183 days of the year.
Deemed Resident or Deemed Non-Resident
A deemed resident is someone who doesn't have significant residential ties in Canada, but stays there for 183 days or more during a calendar year. Deemed residents also shouldn't be considered residents of their home country under the terms of any tax treaty between Canada and that country. Residents and deemed residents are both responsible for paying Canadian taxes.
If you establish significant residential ties with Canada and are considered a resident of another country with which Canada has a tax treaty, you might be counted a deemed non-resident of Canada for tax purposes. Both non-resident and deemed non-residents are required to pay tax on income you receive from Canadian sources and these taxes are dependent on the type of income you receive.
This income could include investment earnings from employment, interest or dividends or taxable scholarships. If you want to learn a bit more – read our blog post that explains about residency status in Canada and how to determine yours.
Filing your tax return
Once you know your status, then it’s time for the fun part – to file your tax return! If you are an international student with Canadian source income or are considered a resident, then you can claim tuition credits and are eligible for benefits such as the harmonised sales tax credit.
If you are new to Canada and are filing your taxes for the first year, be sure to indicate the date you first arrived. As a result you will be entitled to a proportion of credits for the overall tax year, as you were not resident for the full year and therefore not entitled to the full allotment of credits.”
If you are a non-resident or a deemed non-resident and you do not have any Canadian source income, then you are not required to file a Canadian tax return.
So what do you need to file?
- Determine residency status
- SIN (social insurance) or ITN(individual tax) number
- T2202A – Tuition fees paid for the tax year
- T4 – Employment income and deductions
- T4A – Scholarships and bursaries
- Receipts for expenses (see below)
You may be eligible to deduct certain expenses from your tax payments. Moving expenses such as transportation and storage of personal effects, travel, and temporary accommodation may be considered eligible deductions.
Save your receipts for the cost of relocating to Canada. However, you can’t deduct moving expenses if your only income at the new location is scholarship, fellowship, or bursary income that is entirely exempt from tax under the current legislation. You may also deduct childcare expenses, Registered Retirement Savings Plan (RRSP) contributions, and union dues.