Banka: Students and taxes

For some students taxes can be quite complicated and some students may be wondering if they need to file at all.

When I was a student, I was also employed in a full time job, so it was pretty clear to me that I needed to file income taxes.  For some students taxes can be quite complicated and some students may be wondering if they need to file at all.

The Canada Revenue Agency has a pamphlet #105 called Students and Income tax.  It provides a good overview of the taxes students may need to pay.  If this pamphlet is not readily available from your college or university, please let them know that it exists and that they can obtain copies from the CRA to have on hand.

Here are the examples of when a student must file: if you know you have to pay tax; if you have to repay your RRSP for your lifelong learning plan; if your employment income is more than $3,500 and you have to contribute to the Canada Pension Plan; if you received working income tax benefit advance or want to apply for working income tax benefit advance payments.

The examples of when a student may want to file are:  when you think you have a refund; if you are turning 19, you may be eligible for the GST and related provincial credits; if you have children and want to receive your child tax benefits; if you have tuition and education deductions that you want to carry forward or transfer to a parent or grandparent; if you want to report income so that you can set up your RRSP contribution limit for the next year.

Students can be full or part-time employees or they can be self employed, all of which would be taxable income.  Students can be full or part-time students and they can receive scholarships, grants, fellowships, bursaries and awards, some of which may not be taxable.  On the deduction side, students may be able to deduct moving expenses if they moved closer to their university or college or child care expenses if they are raising a child.  The non-refundable tax credits that are available are the employment tax credit, public transit tax credit if the public transit is the mode of transportation, interest paid on your student loan and the tuition, education and textbook credit which require the prescribed form T2202.

In order to qualify as a student, you must have attended a designated educational institution for at least 3 consecutive weeks in a course that requires a minimum of 10 hours of instruction in that week that leads to a degree at the bachelor level or higher, or be registered in a course at a post-secondary school level, or taking courses offered by ESDC or HRSDC.

Elementary and secondary school scholarships and bursaries are non-taxable.  A post-secondary program that consists mainly of research is still eligible for the education amount and the scholarship exemption if it leads to a college or CEGEP diploma, or a bachelor, masters or doctoral degree or equivalent.  Post-doctoral fellowships, however, are taxable.