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Tax Facts for International Students in Canada – How, Why and When

Learn how, why, and when to file a tax in Canada as an International student.
Are you seeking for information about the tax fact for international students in Canada? you are on the right track. Read on. International students studying in Canada can have difficult time determining whether they should file Canadian income tax. Lets explore how, why and when the tax for international students in Canada can be filed.

If you are an international student in Canada, you may have to file a Canadian tax return. You also may have to pay Canadian income tax on earning from teaching and/or research assistant-ships, other employment, and investment and business income. This article will guide you on how to determine whether you should file a Canadian tax return and how to complete it.

Tax Facts for International Students in Canada

The first step is to determine your residency status so you know how you will be taxed. For tax purpose, International students will fit in one of the four categories that are based on your residential ties:

  • Resident or Non resident
  • Deemed Resident or Non Deemed Resident

As mention prior, your residential ties to Canada will determine which of the four options you fit into. Ties may include a Canadian a Canadian driver’s license, a home in Canada, A Canadian bank account, or credit card health insurance with a Canadian province or territory, social ties in Canada, or a dependent

Resident or Non resident

Someone who has established residential ties to the country would be classified as a resident of Canada, while a non resident would classify as anyone without such ties, and who reside in Canada for less than 183 days.

Deemed Resident or Deemed Non-Resident

If you have not established significant ties to Canada but have stayed in Canada for 183 days or more during the calendar year and are not considered a resident of your home country when it comes to tax treaty terms between that country and Canada, you are likely a Deemed resident of Canada. You might be considered a deemed non-resident for tax purposes.

Filing your tax return

If you are an international student considered as a resident or with Canadian source income then you can claim tuition credits and you can be qualified to receive benefits such as the harmonized sales tax credit.

You need to be aware of the tax facts for International Students in Canada. If you are new and you are filing your taxes for the first year in Canada be sure to indicate your arrival date. By so doing, 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.

Do I have to file a tax return in Canada as an International Student?

International students who have lived in Canada, for even part of the year, likely need to file a tax return. If you meet any of the below items, you should file a tax return for the current year:

  • You would like to claim a refund
  • You have to pay tax for the year
  • Also, you would like to get benefit and credit payments

Didn’t receive income in the year? You might still want to file a tax return. Doing so allows the CRA to determine if you are eligible for:

  • The goods and services tax/harmonized sales tax (GST/HST) credit
  • Receiving the Canada child benefit
  • Other benefits from certain related provincial or territorial related programs

Not filing a tax return when needed could mean fines and penalties from the CRA, along with any future visa you apply for being at risk as you will be flagged because of your tax history.

Even if you don’t work in Canada or if you don’t have any taxes owing, you can still carry your tuition tax credit forward to the following year to reduce your tax bill. It is also possible to transfer this credit to certain relations if unused by the student.

What do you need to file for Tax Return?

  • Determine residency status
  • SIN (social insurance number or ITN (individual tax umber)
  • T2202 – Tuition fees paid for the tax year
  • T4 – Employment income and deductions
  • T4A – Scholarships and bursaries
  • Receipt for expenses

How to file your taxes

  • Online
  • By paper – complete the formed and submit by paper
  • By mailing – When you submit your first tax return, you should send your return to International Tax Services Office. If this is not the first year you are filing a tax return, you may apply online, or send it to the local office at Canada Revenue Agency.

Your tax obligations

Your residency status determines your income tax return filing requirements in Canada:

  • If you entered Canada during the year and have established significant residential ties with Canada, follow the filing requirements for newcomers to Canada.
  • You have not established significant residential ties and are not deemed to be a resident of Canada, follow the filing requirements for non-residents of Canada.
  • As a deemed resident of Canada, follow the filing requirements for deemed residents of Canada.
  • If you are a deemed non-resident of Canada, the rules that apply to non-residents of Canada also apply to you.

Expenses

The most common expenses that students can claim as non-refundable tax credits are tuition fee, medical expenses, interest paid on your student loans, and donations.

If you earned more than the tax free allowance, you may be able to claim on the cost of certain expenses to reduce your overall tax liability. Expense examples may include:

  • Medical
  • Moving
  • Business
  • Working from Home Cost

Ensure to save your receipts for the cost of relocating to Canada. However, you cannot deduct moving expenses if your only income at the new location is scholarship, fellowship, or bursary income that is entirely exempted from tax under the current legislation.

Frequently Asked Questions

Do I have to file a tax return in Canada as an International Student?

International students who have lived in Canada, for even part of the year, likely need to file a tax return.

Can I claim expenses in my return?

If you earned more than the tax free allowance, you may be able to claim on the cost of certain expenses to reduce your overall tax liability. Expense examples may include:

  • Medical
  • Moving
  • Business
  • Working from Home Costs

Do I need to report my foreign income?

Yes, non-residents must declare their net income earned outside of Canada on their tax return in order to avail of the non-refundable tax credits in Canada.

Conclusion

This article contains the tax facts for International Students in Canada and how, why and when to file a tax.

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