Janice Lozano
International students in Canada may need to file a Canadian income tax return, depending on their residency status and income. Students who have established significant residential ties with Canada are considered residents and must file a tax return. Significant residential ties include having a home, a Canadian bank account, a spouse or dependants, or other social connections to Canada. Students who spend less than 183 days in Canada and do not have residential ties are generally considered non-residents and are not required to file a tax return unless they have income from Canadian sources. International students may also be able to claim tax credits, such as tuition fees, moving expenses, and textbook amounts, to reduce their tax payable.
| Characteristics | Values |
|---|---|
| Who needs to file taxes? | International students who have established significant residential ties with Canada and are considered residents. |
| What determines residency status? | Residential ties include a home, spouse/common-law partner, dependents, Canadian bank account, driver's license, and other social connections. |
| How long does an international student need to stay in Canada to be considered a resident? | More than 183 days (6 months) in a calendar year. |
| What are the tax credits and deductions available to international students? | GST/HST credits, tuition carry-forward credits, textbook amount, interest on student loans, public transit expenses, moving expenses, and more. |
| What income needs to be reported? | Income from Canadian sources and worldwide income if a resident. |
| What is the first step in filing taxes? | Obtain a Social Insurance Number or an individual Tax Number from the Canada Revenue Agency. |
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What You'll Learn
Determining residency status
As an international student in Canada, you may need to file a Canadian income tax return. Your residency status determines your income tax obligations. Your residency status is based on the residential ties you have with Canada.
You are a resident of Canada for income tax purposes if you establish significant residential ties with Canada. Residential ties can include having a home in Canada, a spouse or common-law partner, or a dependent child moving to Canada to live with you. Other residential ties include having lived in Canada for part of the year, returning to your home country periodically or for a significant amount of time in the calendar year, or moving to another country when not attending university in Canada.
If you have not established significant residential ties with Canada and have stayed in the country for less than 183 days during the year, you are considered a non-resident for income tax purposes. However, if you meet all of the following conditions, you may still be deemed a resident of Canada for income tax purposes:
- You stay in Canada for 183 days or more in a calendar year.
- You are not considered a resident of your home country or another country under the terms of a tax treaty between Canada and that country.
If you have established significant residential ties with Canada and are considered a resident of another country that Canada has a tax treaty with, you may be deemed a non-resident of Canada for income tax purposes. In this case, you are required to pay tax on income received from Canadian sources, including investment earnings, employment income, interest, dividends, and taxable scholarships.
It is important to determine your residency status and consult official government sources or tax professionals for detailed information on your specific situation.
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Tax credits and deductions
International students in Canada may be eligible for various tax credits and deductions, depending on their residency status.
If an international student is considered a resident of Canada for tax purposes, they may be eligible for similar benefits and credits as other residents and citizens. These can include:
- GST/HST credit: This credit helps individuals with low or modest incomes offset the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) they pay.
- Tuition carry-forward credits: Students can claim tuition fees as non-refundable tax credits. If they have unused tuition tax credits, they can carry them forward to future years or transfer them to qualifying relatives, such as parents or spouses, in the year they are incurred.
- Child care expenses: If students have children and need to pay for child care while attending school, they may be able to deduct these expenses.
- Moving expenses: Students may be able to claim moving expenses such as transportation, storage, travel, and temporary accommodation when relocating to Canada or moving to take up a summer job. However, moving expenses cannot be deducted if the student's only income is from scholarships, fellowships, or bursaries.
- Other provincial credits or tuition rebates: There may be additional credits or rebates available depending on the province.
It is important to note that non-residents of Canada, including international students who do not meet the residency requirements, are generally not eligible for benefits or credits. However, they may still need to file a tax return to pay taxes on any income earned from Canadian sources.
To determine residency status, international students should consider their residential ties to Canada, such as having a home, a spouse or common-law partner, or dependents in the country. Additionally, the length of stay in Canada can impact residency status, with those staying for more than 183 days in a calendar year potentially being considered residents for tax purposes.
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Tax treaties
An international student's residency status determines their income tax return filing requirements in Canada. This status is based on the residential ties they have with Canada. Residential ties include owning a home in Canada, having a spouse or common-law partner in Canada, or having dependents in Canada.
International students who have not established significant residential ties with Canada and have lived in the country for less than 183 days in a calendar year are considered non-residents. Non-residents are only subject to Canadian income tax if they have earned income from a Canadian source.
A student may be deemed a resident of Canada for income tax purposes if they stay in Canada for 183 days or more in a calendar year and are not considered a resident of their home country under the terms of a tax treaty between Canada and that country.
Canada has tax treaties with many countries that may affect how income is taxed. These treaties can help avoid double taxation. It is important to check if a tax treaty applies and how it might affect your tax situation.
If an international student establishes significant residential ties with Canada and is considered a resident of another country that Canada has a tax treaty with, they may be deemed a non-resident of Canada for income tax purposes. In this case, the same rules would apply as for a non-resident of Canada.
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Filing requirements for residents and non-residents
To understand the filing requirements for residents and non-residents in Canada, one must first determine their residency status. This is because your income tax obligations to Canada are based on your residency status.
You are considered a resident of Canada for income tax purposes if you establish significant residential ties with Canada. These ties include having a home in Canada, a spouse or common-law partner in Canada, or dependents in Canada. International students who complete more than one academic term in Canada during a calendar year will most likely be residents of Canada.
If you have not established significant residential ties with Canada and have lived in Canada for less than 183 days during the year, you are considered a non-resident for income tax purposes.
If you are a resident of Canada, you must file a Canadian tax return, reporting your worldwide income for the year. You may also qualify for GST/HST credits, tuition carry-forward credits, and other provincial credits or tuition rebates.
If you are a non-resident of Canada, you only pay tax on income received from sources in Canada. The type of tax you pay and the requirement to file an income tax return depend on the type of income you receive. Generally, Canadian income received by a non-resident is subject to Part XIII tax or Part I tax.
If you are a non-resident and have received Canadian income subject to Part XIII tax, Canadian payers must deduct this tax when income is paid or credited to you. The usual Part XIII tax rate is 25% unless a tax treaty between Canada and your home country reduces this rate.
If you are a non-resident and have received old age security pension during the tax year, you may have to file the Old Age Security Return of Income (OASRI) each year.
To determine your residency status, you can complete Form NR74, Determination of Residency Status (entering Canada) and submit it to the CRA for their opinion.
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Claiming tuition fees
International students in Canada may be able to claim a tuition tax credit on their tax return to offset the tax payable on their income. This is known as a carry forward credit.
To be eligible for this credit, students must file a Canadian tax return in the year the tuition tax credit is earned. This applies even if the student has no income or tax payable. The student's residency status will determine their income tax return filing requirements in Canada.
If an international student has established significant residential ties with Canada, they are considered a resident for income tax purposes. Residential ties include connections such as owning a home in Canada, having a spouse or common-law partner in Canada, or having dependents in Canada. International students who complete more than one academic term in Canada during a calendar year will most likely be considered residents.
If an international student does not have significant residential ties to Canada and stays in the country for less than 183 days during the year, they are considered a non-resident for income tax purposes. In this case, they are not required to file a Canadian tax return unless they have earned income from a Canadian source.
For students who are not tax residents in Canada, the tuition credit amounts can only be used to offset their Canadian taxes payable on Canadian source income. It's important to note that the cost of books can only be included in eligible tuition fees if the educational institution is located in Canada.
International students can also transfer their tuition tax credit to a spouse, common-law partner, or, with some limitations, to a parent or grandparent to offset their tax payable. This transfer must be done in the year the tuition tax credit is incurred.
To claim tuition fees in Canada, students must keep documents proving their expenses for a period of six years after receiving a Notice of Assessment from the tax office. This includes the T2202 form, which outlines the tuition fees paid each year.
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Frequently asked questions
International students in Canada may have to pay taxes if they are considered residents or deemed residents. This is determined by the number of residential ties they have in Canada, such as owning a home, having a Canadian bank account, or having a spouse or dependents.
If you have established significant residential ties with Canada and have lived in the country for more than 183 days in a calendar year, you are likely a resident for tax purposes. If you have not established significant residential ties and have lived in Canada for less than 183 days, you are likely a non-resident.
International students in Canada may be able to claim tax credits for tuition fees, education amounts, textbook amounts, interest on student loans, and public transit costs. They may also be able to deduct moving expenses and certain medical expenses from their tax payments.
International students must first determine their residency status and then obtain a Social Insurance Number or an individual Tax Number. They can then complete their tax return, reporting income from both Canadian and international sources.
The tax filing deadline in Canada is typically in April for the previous calendar year. For example, the deadline to file taxes for the 2022 tax year is April 30, 2023.
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