As an international student in Canada, are there any tax obligations for you in this country? Can you claim refunds? And if yes to both these questions, what are they?
First, let’s explain some commonly used terms:
Tax filing/Filing your return: this is not paying tax. A tax return is collection of forms through which annual income, and any tax deductions and credits, are reported to the Canada Revenue Agency (CRA).
Tay payment/Balance due: Based on your tax return the amount you have to pay CRA for the previous tax year.
Tax Refund: Based on your tax return the amount CRA will refund you if you have overpaid taxes during the previous tax year.
Tax due dates for 2024 for your 2023 Taxes:
- February 19, 2024: Earliest day to file your taxes online
- April 30, 2024: Deadline to file your taxes
- June 15, 2024 (June 17, 2024, since June 15 is a Saturday): Deadline to file your taxes if you or your spouse or common-law partner are self-employed
Payment date for 2023 taxes
April 30, 2024: Deadline to pay your taxes This the deadline to pay any balance due to CRA. If you don’t pay on or before this date you will incur interest on the balance due.
To file Tax or Not to File Tax
Simply put, if you work in Canada, you must pay your taxes on your income, and you can claim credit and deductions. If you have paid more taxes that you should be paying then you will receive a tax refund. Many students will get a refund as they have lower income, and they can claim tuition credit for the tuition payment based on T2202. In addition, they will also receive GST/HST credit, Ontario Trillium amount as well as Climate Action Incentive Payment the following year.
But even if you do not work, you may have to file your tax return because of criteria provided by CRA. Your tax status is based on your residence status, and not on your Canadian citizenship.
So, you must determine your residency status to know how you will be taxed in Canada.
CRA considers international students into the four groups:
- Resident (includes students who reside in Canada only part of the year)
- Non-resident
- Deemed Resident
- Deemed Non-resident
Your residency status is also based on the residential ties you have with Canada.
How does the CRA define ‘significant residential ties” or “secondary residential ties” to Canada?
- Your spouse and/dependents in Canada.
- Personal property, including a car or even furniture, in Canada.
- Canadian bank accounts, credit cards etc.
- Social ties, such as member ship to religions and/or recreational organizations.
- A Canadian driver’s licence
- Health insurance
The information above is general in nature. For more information on your residential ties, see Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status.
The “T’s”
You will hear the various T forms and here is a summary:
- T1: this is your personal tax return form
- T2: if you have a corporation, you will file T2.
- T4: when you work for salary, the employer will issue you T4.
- T2202/T2202A: these are forms your educational institution will issue for tuition paid
Note: T1 is your personal tax form so you will file that even if you have a corporation.
Filing a Tax Return as a Canadian International Student
- The first step to filing a tax return is to obtain a Social Insurance Number from Service Canada, or, if you still haven’t received your SIN, you can obtain a temporary tax number (TTN) from the CRA when you file the first return. You need to send a cover letter to CRA with the return requesting TTN by providing the reason why Service Canada could not provide SIN number for you.
- You can then complete the form with the T1 General Income Tax and Benefit package of the province in which you resided on Dec. 31 of the tax year.
- State your income from all Canadian sources. If you have had any income from non-Canadian sources, please include that as well. In case you have to pay, or already paid, taxes on your foreign income that country where you earned, you can claim that amount as a tax credit.
- Please note that if you are considered a non-resident or a deemed non-resident, your tax form will be different one. Check with CRA for the appropriate form.
Claiming Refunds/Credits
- There are non-refundable credits that you claim.
- Tuition fees: Use for T2202/T2202A which your educational institution will issue.
Payments from CRA
- GST/HST Credit: The goods and services tax/harmonized sales tax (GST/HST) credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset the GST or HST that they pay
- For more information on what deductions you can claim, visit this CRA site.
How to File Your Tax Return
You can file your taxes online or by paper, or find other options such as having someone else complete them for you. Options include:
- NETFILE-certified tax software (electronic filing)
- Through a tax preparer using EFILE-certified tax software (electronic filing)
- Community volunteer tax clinic
- Paper tax return
- SimpleFile by phone (by invitation only)
NOTE:
You must keep all your receipts etc., for six years as the CRA can run an audit. This is the length of time you’re legally required to hold onto old tax returns and supporting documents. The six-year period starts at the end of the tax year to which the records relate.