Last updated: December 13, 2021
In Canada, the months of March and April are not only symbolic of the spring season but hold financial significance as well because it’s also tax season!
As an international student, you may be apprehensive or confused about the prevailing tax laws and guidelines for filing your tax returns in Canada; especially since the process or norms may have been different in your home country. Through this article, we hope to equip you with all the tax-related information and resources you’ll need as an international student in Canada.
But first, what are tax returns?
According to the Government of Canada, generally, individuals residing in Canada must determine their final tax obligation by completing an income tax return and sending it to the Canada Revenue Agency (CRA).
On the tax return, you list your income and deductions, calculate federal and provincial or territorial tax, and determine if you have a balance of tax owing for the year, or whether you are entitled to a refund of some or all of the tax that was deducted from your income during the year.
Income tax returns for most individuals, including international students, are to be filed on or before April 30 of the year following the calendar year for which the return is being filed. If the deadline falls on a weekend, individuals can file their tax returns on the first business day that follows. For instance, tax returns for 2022 have to be filed by May 2, 2022 (since April 30 falls on a weekend).
If you owe tax and you file your tax return late, the CRA will charge you a late-filing penalty and interest on any unpaid amounts.
Importance of filing tax returns
Besides being financially responsible, here are a couple of more reasons you should consider filing your tax returns:
- To avoid interest and penalty charges. If you owe money to the government and do not file your return on time, the CRA will charge you a late-filing penalty. The penalty is 5% of the money owed on the due date of your return, plus 1% of the money owed for each full month your return is late, to a maximum of 12 months.
- To avoid possible delays or interruptions in your benefit and credit payments. If you receive benefit payments, like the Canada child benefit (CCB), and you don’t file your tax return on time, your payments may be delayed or stopped.
|Learn the basics of finance in Canada and get essential resources as well as information you can rely on to make confident financial decisions. Take charge of your finances by downloading the International Students Finance Guide now.|
The first step is to identify your residency status
According to the Government of Canada, for tax purposes, residency status is based on the residential ties you have with Canada. Residential ties include but aren’t limited to owning or renting a home in Canada, having a spouse or common-law partner or dependants who move to Canada to live with you, having social ties in Canada, a Canadian driver’s license, Canadian bank accounts, credit cards or even Canadian provincial or territorial health insurance.
You could belong to any one of the following categories:
- Resident: Many individuals who move to Canada and are studying would be included in this category since they establish significant residential ties with Canada. It can also include students who reside in Canada for only part of the year.
- Non-resident: Those who have not established significant residential ties with Canada and have lived in Canada for a period of fewer than six months (or 183 days) in a calendar year.
- Deemed resident: Those who have not established significant residential ties with Canada and have lived in Canada for more than six months (or 183 days) and are not considered a resident of their home country under the terms of a tax treaty between Canada and that country.
- Deemed non-resident: Those who establish significant residential ties with Canada (Resident) AND are also considered a resident of another country with which Canada has a tax treaty. In this case, the same rules apply as that of a Non-resident.
Knowing your residency status is important because it will determine how you will be taxed.
|Additional resources from the Government of Canada
If you’re not certain about your residency status, the Government of Canada has some detailed resources you can refer to: Determining your residency status and Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status.
You can also fill out this form: Form NR74, Determination of Residency Status (Entering Canada) if you would like government officials to provide an opinion on your residency status.
Determining if you should file tax returns as an international student
For residents and deemed residents studying in Canada, if you answer ‘yes’ to any of the following questions, you should file a tax return:
- Have you been employed in any capacity with a Canadian employer?
- Do you have a source of income in Canada?
- Do you have income from outside Canada?
- Do you owe tax or want to claim a tax refund or benefits or credits of any kind?
- Were you contacted by the CRA to file a tax return?
At this point, you may be wondering what kind of refunds, benefits or credits are available to international students. So here’s some more information to help guide you.
Understanding tax refunds, benefits and credits
- If you’re a resident studying in Canada, just like other residents and citizens, you may qualify for GST/HST credits, tuition carry-forward credits and other provincial credits or tuition rebates.
- If you’re a non-resident student, generally, you won’t be eligible for benefits and credits but may qualify for a tax refund if excess tax was paid on your Canadian income.
- Learn more about tax credits and get tips on how to save money here: Get ready to do your taxes.
Note: The CRA determines the eligibility of individuals for refunds, benefits and credits on a case by case basis, depending on the residency status. So if you’re unsure of your status in Canada, do not hesitate to contact the CRA.
By now, you should have a fair idea of whether or not you need to file tax returns in Canada. So let’s look at the most important part — filing your return.
Filing a tax return as an international student for the first time in Canada
What you’ll need:
- Social Insurance Number (SIN) from Service Canada OR
- Individual Tax Number (ITN) from the CRA
|Important: If you’ve requested a SIN but have not yet received one, you should file your tax return without a SIN to avoid late-filing penalties and interest charges. Attach a note to your return to let the CRA know why you did not enter your SIN: t4055-20e.pdf (canada.ca)|
- Additional supporting documents (depending on your circumstances):
- T2202 Tuition and Enrolment Certificate — issued by your school, used for claiming tuition credits
- T4 — for employment income and deductions. A T4 is issued by your employer.
- T4A — for scholarships and bursaries.
- Expense receipts, if any: Money spent on transportation and storage of personal effects, travel, and temporary accommodation may be considered eligible deductions.
- Donation receipts if you made a donation to a Canadian charity.
- Medical receipts for out-of-pocket medical expenses.
- Any correspondence from the CRA if you have filed taxes in Canada before, including your past notice of assessments.
Government of Canada and CRA recommends that if you’ve identified yourself:
- As a resident, you can follow the filing procedures for newcomers to Canada.
- As a non-resident OR deemed non-resident, you need to follow the tax return filing requirements for non-residents of Canada.
- As a deemed resident, follow the filing requirements for deemed residents.
How to file a tax return
H&R Block provides access to tax experts who can help you file your tax returns in-person or remotely. If you have a modest income and a simple tax situation, a volunteer from the Community Volunteer Income Tax Program (CVITP) may be able to do your taxes for you, for free. Find a tax preparation clinic near you through the CRA webpage or by using the MyCRA mobile web app.
- Online: You can use NETFILE or EFILE, electronic tax-filing options that allow you to file your income tax directly to the CRA online. Tax returns filed via NETFILE must first be prepared using a NETFILE-certified product you can find on their website.
- Paper-based: Fill out the required forms and mail your tax return to the CRA.
To claim tuition, education, and textbook credits, you must file a tax return and attach a completed Schedule 11. You also need to complete and attach the corresponding provincial or territorial Schedule (S11).
Don’t be overwhelmed, help is just around the corner!
All of this information may seem overwhelming but know that most schools and universities provide free tax assistance to students. Organizations like Arrive have plenty of blogs, resources and webinars to help you be better informed and set you up for success in Canada!