Important Taxes in Canada that International Students should know!

Introduction

The various publicly financed health and social services that Canadians around the country enjoy are paid for via a comprehensive taxation system in Canada. In spite of what you may have heard, Canadians pay less in taxes than their American counterparts, according to a report by the Organization for Economic Co-operation and Development. Canada has lower tax rates than France, Germany, New Zealand and the United Kingdom.

Canada’s income tax system

International students in Canada should familiarize themselves with Canada’s tax system in order to ensure that they are aware of their rights and responsibilities. Determine your tax status and pay the relevant taxes each year in accordance with the law is your responsibility.

In most cases, filing a tax return with the Canada Revenue Agency (CRA) is the only way to ascertain your final tax liability to Canada. You must file a tax return each year to report your income and expenses, calculate your federal and provincial or territorial tax, and establish whether you owe any back taxes for the year or are eligible for a refund of the taxes you paid.

Social insurance number or individual tax number

Consult with Service Canada to find out if you are eligible for a social insurance number (SIN). To learn more about the SIN and how to apply, see Social Insurance Number for general information. Visit the Find a Service Canada Office page or call 1-800-622-6232 to locate the nearest Service Canada location.
Fill out Form T1261, Application for a Non-Resident Individual Tax Number (ITN) from the Canada Revenue Agency, if you aren’t eligible for a SIN. In the event that you have a SIN, an Individual Tax Number (ITN), or a Temporary Tax Number (TTN), do not submit this form.
The CRA can be reached at 1-800-959-8281 for further information.
Call 1-800-959-8281 to order forms and materials from the Internal Revenue Service (IRS).

Do you need help determining your residency status?

Complete Form NR74, Determination of Residency Status (Entering Canada), and include it with your income tax return if you are unsure of your residency status in Canada.

See Determining your resident status for additional information on residency.

Residency status

International students studying in Canada are deemed to be one of the following residents for income tax purposes:

A person who lives there (includes students who reside in Canada only part of the year)

resident (includes students who reside in Canada only part of the year)
non-resident
deemed resident
deemed non-resident

Your residency status is based on the residential ties you have with Canada.

What are residential ties?

Connections to the home include:

a place to call home in Canada
moving to Canada with your spouse, common-law partner, or children creates new Canadian social bonds
Other links to the home, such as those with neighbours, may be relevant.
a valid driver’s licence issued by the Government of Canada
With a bank account or credit card from a Canadian province or territory, you have access to health insurance.

Determining your residency status?

As a general rule, if you’ve lived in Canada for less than a year:

While not attending university in Canada, return to your country of origin on a regular basis or spend a significant amount of time in another nation.

It is true that many international students who study or research in Canada end up making Canada their home base for the rest of their lives.

Resident of Canada

For income tax purposes, you are a Canadian resident if you establish a substantial presence in Canada.

Non-resident of Canada

If you have no strong ties to Canada and spend less than 183 days in Canada each year, you are a non-resident for income tax purposes.

Deemed resident of Canada

The following elements must be met for you to be designated a resident of Canada for income tax purposes if you do not have significant residential ties to Canada:

A year in which you spend at least 183 days in Canada is considered a “calendar year.”
According to the conditions of a tax treaty between Canada and your home country, you are not considered a resident of the country.

Deemed non-residents of Canada

Because of a tax treaty, you may be considered to be a non-resident of Canada for tax reasons even though you have established long-term residence in Canada.

When your ties to the other country become so strong that, under the tax treaty, you are considered a resident of that other country, you become a deemed non-resident of Canada.

Same regulations apply to non-Canadians who are judged non-resident

Your tax obligations

Canada’s income tax return filing requirements are based on your resident status:

For newcomers to Canada who arrived throughout the year and have formed long-term links to this country, make sure to comply with the filing requirements.
It’s best to follow the rules for non-residents of Canada when completing your tax returns, as there are no substantial ties to Canada.
In order to file your tax return, you must be deemed to be a resident of Canada.
Rules for non-residents of Canada will also apply to you as a considered non-resident.

Do you have to file a tax return?

If you owe taxes or want a refund, you must file a tax return.
In order to file your taxes in Canada, you must list all of your worldwide income. This is your total income for the year, both domestically and internationally.
If you don’t live in Canada, you usually just have to disclose income that comes from sources within Canada, such as your job.
In some cases, even if you have no income or tax obligations, you may be able to receive payments or credits from the government of Canada. You must file an income tax return in order to collect any rewards or credits.
See Do you have to file a return for further information.
A second Quebec tax return may be required if you resided in the province on December 31. Contact Revenu Quebec for additional information.

Filing due date

Your tax return must be filed by April 30 of the year following the year for which it is being filed, unless an exception applies in your case. As long as there is an outstanding balance on your tax return at the time of filing, you will be penalised and subject to interest charges by the Canada Revenue Agency (CRA).

What are tuition, education, and textbook amounts?

Students can lower their taxable income by claiming tax credits for things like tuition, books, and other educational expenses. Tax-free, you may still be able to spend some or all of the money you spent for school and textbooks in a subsequent year.

Filing a tax return and an executed Schedule 11 are both prerequisites for making a claim. Fill out and attach the appropriate provincial or territorial schedule as well, if applicable (S11).

Please consult Guide T4058, Non-Residents and Income Tax for further information.

Goods and services tax/harmonized sales tax (GST/HST) credit

Most goods and services sold or provided in Canada are subject to the GST. The HST is a combination of the GST and the provincial sales tax in some provinces. Depending on their income, the GST/HST credit can help some people and families offset all or part of the GST or HST they pay.

If you are taxed as a resident of Canada, you may be eligible for the GST/HST credit once you arrive in the country. Upon your arrival in Canada, if you meet the requirements, you can claim the GST/HST credit on your income tax return. See the GST/HST Credit Application for Individuals Who Become Residents of Canada, Form RC151, for further information.

Call 1-800-387-1193 for more information on the GST/HST credit and equivalent provincial credits.

Where do you send your tax return?

As an international student, you should send your tax return each year to:

Tax centres- location of tax centres for each countries
Country of residence	Tax centre
Denmark France Netherlands United Kingdom USA	Winnipeg Tax Centre PO Box 14001, Station Main Winnipeg MB R3C 3M3 CANADA
All other countries	Sudbury Tax Centre 1050 Notre Dame Avenue Sudbury ON P3A 5C2 CANADA

Expenses

Tuition, medical expenditures, student loan interest, and charitable contributions are the most frequent non-refundable tax credits available to students.

Depending on your circumstances, you may be able to deduct some costs from your taxable income. Deductions for moving expenses such as transporting and storing personal belongings, airfare and temporary lodging are permissible.

Be sure to keep all of your moving expenses in Canada’s receipts for future reference. However, if your only source of income in your new location is a scholarship, fellowship, or bursary, you cannot deduct your relocation expenses. In Canada, these costs, together with the ones associated with the move, can be deducted from your taxable income.

To claim expenditures, you must preserve proof of them for six years after the tax office issues a Notice of Assessment.

FAQs

What are the eligible moving expenses I can claim?

Moving expenses that can be claimed include the following:

Costs associated with shipping and storing
Expenses incurred while travelling
Maximum 15-day living expenses for short-term stays away from home
The price of breaking your lease in your old place
Moving costs that include the following:
- - – altering your mailing address on official paperwork;
  - replacement of driving licences and non-commercial vehicle permits (not including the insurance)
Connection and termination of utility services
You may be liable for the cost of maintaining your former house while it is vacant (up to $5,000) after you have moved and reasonable efforts were made to sell the property. Here’s what you get:
- - – a desire to learn more;
  - Taxes on land and buildings
insurance prices and costs
Heating and utility costs are included in this figure.
Sell-off costs, such as advertising, notary or legal fees, real estate commission, and mortgage penalty if paid off before maturity, are all included in these costs..
Your new home purchase costs if you or your spouse/common law partner have to sell your old one as a result of your relocation.

Do I have to file a tax return in Canada?

In Canada, if you meet the following criteria:

Taxes must be paid for the current fiscal year.
The Canada Revenue Agency has asked you to submit a tax return.
As a couple, you made the decision to divide your pension income for the tax year.
During the tax year, you received working income benefit advance payments.
In the course of the tax year, you sold or realised a taxable capital gain on any of the following: real estate, your primary residence, or stock (for example, if a mutual fund or trust attributed income to you, or you are reporting a capital gains reserve you claimed on your tax return).
You’ll have to pay back any old-age or employment benefits you received.
You still owe money from the Home Buyers’ Plan and the Lifelong Learning Plan withdrawals from your registered retirement savings plan (RRSP).
It is mandatory that you pay into the Canada Pension Plan (CPP).
Your self-employment and other qualifying income is subject to employment insurance premiums.
You are a non-resident of Canada who receives income from Canada.
If any of the following conditions are met, you should still file a return:
A refund is something you’d like.
This tax year, you intend to utilise the working income tax benefit.
Credit for goods and services tax (GST/HST) is what you’re looking for (including any related provincial credits).
It’s time for you or your spouse/common-law partner to start or continue receiving Canada Child Benefit payments, as well as any relevant provincial or territorial benefit payments that might be due.
Non-capital losses that you accrued during the tax year can be applied to future years.
Transferring or reserving the unused portion of your tuition for the next year is your goal.
Maintaining a current deduction limit for future contributions to RRSPs and/or pooled registered pension plans (PRPP) is important to you.
Your current year’s investment tax credit is going to expire, but you wish to spend it next year.
As part of the old-age security scheme, you are entitled to a guaranteed income supplement or allowance.

I am a student in Canada what type of expenses can I claim on my income tax return?

Paying for college while studying in Canada can be claimed as a tax credit and even carried over into subsequent academic years. The interest you pay on your student loan can also be deducted from your taxable income.

Expenses for moving closer to the university can be reimbursed if you are a Canadian resident.