International Student Tax Return: Do I Need to File Taxes as an International Student in Canada?
If you are an international student studying in Canada, you may be required to file an income tax return. Even if it’s not required, there are some reasons why you might want to file. But how does one know if they need to file Canadian taxes, and where can you go for tax assistance. In this article, I’ll explain how the Canada Revenue Agency determines your taxable status in Canada, and show you where you can go to have your tax returns filed.
Canadian Residency Status
For tax purposes, the Canada Revenue Agency (CRA) has established the following four types of residency status for international students studying in Canada:
Canada considers you a resident if you’ve established significant residential ties to the country; I’ve outlined some examples of these “ties” below.
A non-resident does not establish significant residential ties and remains in Canada less than six months per year (183 days).
A deemed resident may not have significant residential ties with Canada, but they stay in the country for more than 183 days per year, and their home country has determined that they are NOT a resident of that country under an existing tax treaty with Canada.
Even if you have significant residential ties with Canada, you may be deemed a non-resident for tax purposes if you have stronger ties to your home country, per an existing tax treaty. Remember that Canada does not have tax treaties with all foreign countries.
Which category you fall under will depend on the residency ties to Canada. For example, it matters whether you own a home in Canada, have a spouse or common-law partner, dependents living with you in Canada, possess a Canadian driver’s license, have a Canadian bank account, or receive Canadian provincial health insurance.
All of these, and more, are factors that will determine how the Canada Revenue Agency treats your residency.
What Documents Will I Need to File a Return?
If you’re filing your first income tax return as an international student, you will need some, if not all, of the following documents to complete your return:
Social Insurance Number (SIN) or Individual Tax Number (ITN)
To file a tax return, international students must have either a Social Insurance Number or, if you don’t have one, an Individual Tax Number, which you can obtain from the CRA by completing a T1261 form.
If you earned employment income in Canada, you would receive a T4 slip. You will need to use this to declare your income on your return for the current tax year.
If you earned taxable investment income in Canada, you would likely receive a T3 or T5 slip. You’ll need to report this on your income tax return. If you are qualified to open a registered savings plan, like a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA), you will not have to pay tax on the income earned.
Charitable Donation Receipts
Suppose you donated to a registered Canadian charity during the previous year. You will receive a charitable donation receipt for income tax purposes, which you can use to receive a tax credit on your return. However, you’ll need to have the donation receipt on hand if the CRA wants to check your eligible deductions.
You may be eligible to claim any out-of-pocket medical expenses you paid during the tax year. Make sure you keep any receipts as evidence.
The Tuition Tax Credit lets you claim tuition fees paid to a Canadian college or university during the tax year. You can also choose to carry forward these amounts for future years. The school will provide a tuition receipt (Form T2202A) that you can use for your income tax return.
If you are an international post-secondary student living off-campus, you may be eligible to claim your rental expenses under the Canadian tax system as a tax credit.
Other Reasons You Should File a Canadian Tax Return
While there will be exceptions, most international students will be required to file an income tax return if they’ve established significant residential ties in Canada and earned income during the previous year. Regardless of your income tax status, here are some compelling reasons why you might want to file anyways:
- You have tax owing
- You’re eligible for a tax refund
- To receive federal tax credits (CCB, GST/HST Credit, etc.)
- To receive other provincial credits
- To claim tuition credits
- To accumulate RRSP contribution room for future years
- To claim non-refundable tax credits
Where Can I File My Income Tax Return?
International students required to file a tax return in Canada can do so in a few different ways. If you’re comfortable filing taxes yourself, you can file online using a tax return software program like TurboTax or Wealthsimple Tax. These “smart” apps guide you through a series of questions to determine your tax situation and make filing a breeze.
If you’d prefer to have someone file on your behalf, I recommend you speak with an accountant or other licensed tax professional. Companies such as H&R Block, or Liberty Tax, provide tax filing services. If you’re unsure if you need to file a Canadian income tax return, speak to an accountant or check with the CRA.
Filing tax as an international student provides more benefits in my opinion. International students can get some GST/HST rebates quarterly due to the low total income. In addition, international students can have the tuition tax credits in CRA’s file to offset future taxes, should he/she chooses to continue to work in Canada after graduation. International students generally pay 3x or more tuition fees, so this along is a great and immediate boost to the early career earnings. Also, students can start accumulating TFSA and RRSP room if they have some part-time work during school years.