Douglas Olsen
International students in Canada have many questions about their residency status, particularly as it relates to their tax obligations. In general, an international student in Canada is considered a resident for tax purposes if they have established 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. If an international student has not established significant residential ties but stays in Canada for 183 days or more in a year, they may still be considered a resident for tax purposes. It's important to note that residency status for tax purposes may differ from immigration status. International students who are considered residents for tax purposes may be eligible for benefit and credit payments to help with their cost of living.
| Characteristics | Values |
|---|---|
| Residency status | Based on residential ties with Canada |
| Residential ties | Having a home in Canada, a spouse or common-law partner, or a dependent who is moving to Canada to live with you |
| Deemed resident | If you have not established significant residential ties but stayed in Canada for 183 or more days in the year |
| Deemed non-resident | If you do not establish significant residential ties and stay in Canada for less than 183 days during the year |
| Filing requirements | If deemed a resident of Canada, follow the filing requirements for residents; if deemed a non-resident, follow the filing requirements for non-residents |
| Benefits | If you are a resident for tax purposes, you may be eligible for benefit and credit payments that can help with the cost of living |
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What You'll Learn
International students and residency status
For international students, residency status in Canada is a crucial consideration, particularly concerning tax obligations and benefits. While an individual's residency status may differ from their immigration status, it is essential to understand the criteria and implications of being a resident or non-resident for tax purposes.
International students studying in Canada are generally considered residents or non-residents for tax purposes, depending on their residential ties to the country. Residential ties refer to various factors that indicate an individual's level of establishment and integration into Canadian society. This includes owning a home, having a spouse or common-law partner, or having dependents living in Canada. Other factors that contribute to residential ties include having a Canadian bank account, a lease agreement, or a provincial ID.
International students who reside in Canada for only part of the year can still be considered residents for tax purposes if they establish significant residential ties. On the other hand, students who frequently return to their home country or move to another country outside of their time in Canada may not be deemed to have established substantial residential ties. In such cases, they may be considered non-residents for income tax purposes.
It is important to note that even if international students do not work in Canada, they may still need to file taxes. Filing taxes allows students to access benefits and credits, such as the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit and the Canada Carbon Rebate. Additionally, filing taxes can help offset the cost of the federal carbon pollution pricing. International students should refer to resources such as "Taxology" and "Learn about your taxes" to understand their tax obligations and benefits better.
To determine their residency status, international students can complete and submit Form NR74, "Determination of Residency Status (entering Canada)" to the Canada Revenue Agency (CRA). This form helps clarify their specific situation and ensures they follow the appropriate filing requirements. It is worth noting that residency status can impact tax obligations and benefits, so it is essential for international students to understand their status and stay compliant with Canadian tax laws.
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Residential ties and tax treaties
For income tax purposes, international students in Canada are classified as one of the following types of residents: resident (includes students who reside in Canada only part of the year) or non-resident. Your residency status is based on the residential ties you have with Canada. Residential ties can include having a home in Canada, a spouse or common-law partner, or a dependent who is moving to Canada to live with you. Other residential ties can include having a Canadian driver's license, or maintaining a Canadian bank account.
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. This means that you are considered a resident of the other country and the same rules apply to you as a non-resident of Canada.
On the other hand, if you have not established significant residential ties with Canada but meet certain conditions, you may still be deemed a resident of Canada for income tax purposes. These conditions include staying in Canada for 183 days or more in a calendar year and not being considered a resident of your home country under the terms of a tax treaty between Canada and that country.
It is important to note that your residency status determines your income tax obligations to Canada. As a resident, you pay taxes on your worldwide income, while non-residents pay taxes only on Canadian income. Additionally, as an international student who is a resident for tax purposes, you may be eligible for benefit and credit payments that can help with your cost of living.
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Benefits and credit payments
International students in Canada are typically considered residents for tax purposes if they have established significant residential ties with Canada. These ties include having a home in Canada, a spouse or common-law partner, or a dependent who is moving to Canada to live with you. Other factors that indicate residential ties include a Canadian driver's license, a Canadian bank account or credit card, health insurance with a Canadian province or territory, and social ties in Canada.
If you are an international student and a resident of Canada for tax purposes, you may be eligible for benefit and credit payments, which can help with your cost of living. These benefits and credits include:
- Goods and services tax/harmonized sales tax (GST/HST) credit: Eligible individuals may receive money every three months to offset what they pay in GST/HST.
- Canada Carbon Rebate: This rebate was previously known as the Climate Action Incentive Payment and can help offset the cost of the federal carbon pollution pricing.
- Provincial or territorial payments: There may be additional financial support available through the province or territory you reside in.
- Tuition tax credits: Students can claim tuition credits using the T2202/T2202A form provided by their school. Any unused credits for the current tax year can be carried forward to claim in future years.
- Moving expenses: If you moved at least 40 kilometres away from home to get a summer job or to take courses as a full-time student in a post-secondary program, you may be able to claim your moving expenses.
- Tax-free threshold: In 2020, individuals could earn up to $12,069 without paying tax.
To receive these benefits and credits, international students must file a Canadian income tax return each year and determine their residency status. It is important to note that your residency status for tax purposes may differ from your immigration status. By understanding your residency status, you can be aware of your tax obligations and determine your eligibility for benefit and credit payments.
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Filing taxes as a non-resident
International students in Canada are considered residents for tax purposes if they have established significant residential ties with the country. Residential ties can include having a home in Canada, a spouse or common-law partner, or a dependent who is moving to Canada to live with them. Other ties include social memberships, provincial medical cards, a driver's license, and bank accounts based in Canada.
If you are an international student and have not established significant residential ties, you are considered a non-resident for tax purposes. As a non-resident, you pay tax on any income you receive 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.
If you are a non-resident, you must notify your Canadian payers (people, employers, or other entities who pay you money) of your status so that they can deduct the Part XIII tax, usually at a rate of 25%. This tax is non-refundable, and you do not need to file a Canadian tax return unless you choose to. Individuals usually elect to file a return if they receive Canadian rental income or certain types of pension income.
If you receive income from employment in Canada or from a business or partnership with a permanent establishment in Canada, use the tax package for the province or territory where you earned the income. If you receive other types of Canadian-source income such as taxable scholarships, fellowships, or research grants, you will need Form T2203, Provincial and Territorial Taxes for Multiple Jurisdictions, to calculate your provincial and territorial tax payable.
If you are not eligible for a Social Insurance Number (SIN), you must complete Form T1261, Application for a Canada Revenue Agency Individual Tax Number (ITN) for Non-Residents, and send it to the Canada Revenue Agency (CRA) as soon as possible.
If you receive old-age security pension during the tax year, you may have to file the Old Age Security Return of Income (OASRI) annually. If you believe that an incorrect amount of Part XIII tax was deducted, you can contact the CRA directly to request an investigation.
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Immigration status and residency
For income tax purposes, international students in Canada are considered residents if they have established significant residential ties with the country. 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 ties include having a lease, a Canadian bank account, or a provincial ID.
If you are considered a resident of Canada for tax purposes, you may be eligible for benefit and credit payments that can help with your cost of living. However, to continue receiving these benefits, you will need to file your income tax and benefit return each year.
If you have not established significant residential ties and are not deemed a resident of Canada, you will need to follow the filing requirements for non-residents.
It is important to note that your residency status for tax purposes may differ from your immigration status. Additionally, if you are considered a resident of another country that Canada has a tax treaty with, you may be deemed a non-resident of Canada for tax purposes, even if you have established significant residential ties.
In terms of filing taxes, it is not mandatory for international students who do not work in Canada. However, filing taxes is the only way to obtain certain benefits, such as GST credits and the Child Tax Benefit. International students can file taxes using an Individual Tax Number (ITN) instead of a Social Insurance Number.
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Frequently asked questions
The criteria for being a resident of Canada as an international student are having significant residential ties and staying in Canada for at least 183 days in a year. 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.
Being a resident of Canada for tax purposes may make you eligible for benefit and credit payments that can help with the cost of living.
International students who are residents of Canada are required to file a tax return every year. Even if you do not have any income in Canada, you may still need to file a return to receive certain benefit and credit payments.
Your residency status in Canada as an international student is typically based on your residential ties to the country. If you are unsure about your residency status, you can complete and submit Form NR74, Determination of Residency Status (entering Canada) to the Canada Revenue Agency (CRA).
