If you have spent time in Canada as an international student in 2020, you may have to file a Canadian income tax return before the 30 April deadline.
Generally, international students will have to pay taxes on income they have earned through employment, business or other investments. They must also report any income they have received from outside of Canada.
Filing a tax return can be daunting for any international student. With that in mind, we have put together this handy guide to help you prepare your taxes as easy as possible.
How To Determine Your Residency Status?
Before you can file your student tax return you will have to determine your residency status.
Filing under the wrong residency status may cause you difficulties with the Canadian tax authorities in the future, so it’s important to get it right!
Whether you are studying or working in Canada, you will be considered a resident once you have established residential ties in Canada.
These residential ties include:
- A spouse or common law partner
- A house or apartment
A non-resident is anyone without any residential ties and who lives in Canada for less than 183 days of the year.
As an international student, you may have studied in Canada for 183 days or more during the year, without establishing significant residential ties in Canada and not having residential ties in your home country, making you a deemed resident.
For tax purposes, deemed residents should not be considered as residents of their home country.
Whether you are considered a resident or deemed a resident, you are still responsible for paying taxes on your world income in Canada.
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If you have residential ties to a country that Canada shares a tax treaty with and you are considered a resident of that country, but have also established residential ties with Canada or lived in Canada for more than 183 days of the year, you may be considered a deemed non-resident of Canada for tax purposes. For income tax purposes the term deemed non-resident is the same as non-resident in Canada.
Both deemed non-residents and non-residents have to pay taxes to the government if they have received income in Canada and don’t pay taxes on their income earned outside of Canada.
This income could include wages from employment, scholarships that are taxable and income from investment.
What will I need when filing my tax return?
Once you have determined your residency status, it is time to file your student tax return!
As an international student, you will need either a Social Insurance Number (SIN) or an Individual Tax Number (ITN) to file your Canadian tax return.
To secure your SIN number you will need two documents that prove your identity. For example, it could be your:
- Birth Certificate
- Work permit
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In order to get an Individual Tax Number (ITN), you will need to fill in the T1261 form and attach all the supporting documents before sending your application.
Additional documents you will need include:
- Form T4: Contains all the information regarding income and deductions
- Form T4A: This form will indicate any bursaries and scholarships you may have received while in Canada
- From T2202A: Contains all the details of the course fee that was paid during the financial year
- Receipts for any expenses incurred
What expenses can I claim on my international student tax return?
As an international student, you may be eligible to deduct certain expenses from the taxes you paid in Canada.
These deductions include moving expenses such as transportation and storage of personal effects, travel and temporary accommodation.
Make sure to save your receipts for the cost of relocating to Canada!
If your income from the time spent in Canada was from a fellowship, bursary or scholarship, tax deductions on moving expenses may not be possible as these forms of income are exempt from taxes if you are a full-time qualifying student.
The expenses that students can claim as non-refundable tax credits include tuition fees, medical expenses, donations and interest paid on your student loans.
Filing your tax return
You always have the option to file your tax return yourself.
However, the process can be time-consuming and confusing, especially when you have never had to go through it before.
Sprintax Canada makes preparing Canadian international student tax returns easy.
Their software was specifically designed for non-residents in Canada and when you prepare your taxes with Sprintax Canada you can guarantee you will be fully tax compliant with the CRA.
To get started, all you need to do is create your Sprintax Canada account and complete their easy online questionnaire.
What happens if I don’t file my tax return?
The Canadian tax deadline is 30 April.
If you owe taxes to the Canadian government and miss the deadline, you will be subject to a late filing penalty of 5% of your balance.
In addition, 1% of your balance will be taken each month your return is late, up to 12 months.
If you don’t owe any tax but decide to apply for a tax refund, there will be no penalty for filing late. You will have 10 years to file your return after the end of the tax year.
Filing your tax return with Sprintax Canada guarantees that you will receive your maximum legal tax refund!