Lori Meadows
Canada has established itself as a welcoming place for international students, with a range of benefits and credits available to newcomers. However, it is important to note that there is no such thing as a Welcome to Canada bonus or tax benefit, despite its popularity in the international student community. Newcomers to Canada are eligible for various tax benefits, including sales-tax credits, the Trillium Benefit, the GST/HST tax credit, and the Canada Child Benefit. These benefits can provide between $200 and $700 per year, but it is important to understand that claiming them constitutes filing a tax return. To access these benefits, individuals must determine their residency status, as this impacts their tax obligations and eligibility for benefits.
| Characteristics | Values |
|---|---|
| International students' residency status | Residents (including students who reside in Canada only part of the year) |
| How residency status is determined | Based on residential ties to Canada |
| Tax obligations | Depend on residency status |
| Tax benefits | GST/HST credit, Canada Child Benefit (CCB), Climate Action Incentive Payment (CAIP) |
| Passport requirements | Must be valid; apply immediately if not |
| Work requirements | May need a visitor visa or work permit |
| Healthcare | Apply for healthcare coverage |
| Banking | Apply for banking products |
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What You'll Learn
International students may need to do their taxes in Canada
Canada is committed to welcoming newcomers, including international students, who bring the skills needed by its economy. International students in Canada may need to do their taxes, depending on their residency status and income.
For income tax purposes, international students studying in Canada are considered to be one of the following types of residents:
- Resident: This includes students who reside in Canada for only part of the year.
- Non-resident: This applies if you do not establish significant residential ties with Canada and stay in the country for less than 183 days per year.
- Deemed resident or non-resident: If you meet specific conditions, such as staying in Canada for 183 days or more and having residential ties to another country with a tax treaty with Canada, you may be deemed a resident or non-resident for tax purposes.
Your residency status is based on the residential ties you have with Canada. Most international students who study or conduct research in Canada establish significant residential ties and are considered residents for tax purposes. However, if you periodically return to your home country or spend a significant amount of time there during the year, or if you move to another country when not attending university in Canada, you likely have not established significant residential ties.
As an international student, you may need to file a Canadian income tax return, even if you do not have any income in Canada. Filing taxes can help you access benefit and credit payments that can offset your cost of living. These include the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit, the Canada Carbon Rebate, and provincial or territorial payments. Additionally, newcomers are eligible for federal and provincial benefits, such as sales tax credits and the Trillium Benefit, which can only be claimed by filing a tax return.
To summarize, international students in Canada may need to do their taxes, and by understanding their residency status and filing tax returns, they can access various benefits and credits that can improve their financial situation during their time in the country.
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Understanding tax residency status for international students
International students in Canada are considered one of the following types of residents for tax purposes: resident or non-resident. A resident is someone who has established significant residential ties with Canada, including those who reside in Canada only part of the year.
You have established significant residential ties with Canada if you do not return to your home country on a periodic basis or for a significant amount of time during the calendar year, and if you do not move to another country when you are not attending university in Canada. Many international students who study or conduct research in Canada establish significant residential ties with the country.
If you are a resident of Canada for tax purposes, you must report your worldwide income (all income from inside and outside Canada) to the Canada Revenue Agency (CRA) and file a tax return. Even if you don't work in Canada or don't have any taxes owing, you can still carry your tuition tax credit forward to the following year to reduce your tax bill. You may also be eligible for federal and provincial benefits, such as sales tax credits and the Trillium Benefit, which can only be claimed by filing a tax return.
If you are a non-resident of Canada for tax purposes, the same rules apply to you as a non-resident. This means that you must declare your net income earned outside of Canada on your tax return to avail of the non-refundable tax credits in Canada. However, if you earned more than 10% of your net income outside of Canada, you cannot avail of these tax credits.
If you are unsure about your residency status, you can complete and submit Form NR74, Determination of Residency Status (entering Canada) to the CRA.
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Work permits and visas for international students
International students in Canada must apply for a study permit before arriving in the country. If you want to work during your studies, you will need to apply for a work permit. Your study permit will indicate whether you are eligible to work while studying, and your eligibility depends on factors such as the length of your program and the location of your work.
International students can now work up to 24 hours per week off-campus while classes are in session. Additionally, some study programs offer co-op or internship work placements, for which you can apply for a co-op or intern work permit.
If you are a citizen of a country whose citizens usually require a visa to enter Canada, you will need a valid passport and may need a visitor visa to enter the country. If you are coming to Canada to work, you may need a visitor visa and a letter of introduction as proof that your work permit application was approved.
A designated learning institution (DLI) is a school approved by a provincial or territorial government to host international students. As an international student with a study permit, you must always be enrolled at a DLI, show progress toward finishing your study program, and respect the conditions listed on your study permit.
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Healthcare coverage for international students
Canada has universal healthcare at the federal level, but individual provinces and territories operate their own healthcare programs. This means that healthcare coverage for international students can vary depending on where they live and the length of their stay.
All international students in Canada must arrange for health insurance for the duration of their studies. While Canadian citizens and permanent residents have reasonable access to medically necessary hospital services without paying out-of-pocket, those without permanent resident or citizen status should expect to pay for medical services unless they have private health insurance. Many immigration programs require temporary residents to purchase private health insurance for the duration of their stay.
International students in some provinces, such as Nova Scotia, are not eligible for the provincial health care program and must purchase health coverage. However, after legally residing in the province for at least 12 months, students may become eligible to apply for a provincial health card, which grants access to free basic health coverage.
In the province of British Columbia (BC), international students with a valid study permit for six months or longer are required to apply for BC's healthcare coverage, MSP, as soon as they arrive. Only adult international students who formally opt out of provincial health coverage through MSP are exempt from paying the health fee.
It is important to note that the "Welcome to Canada" benefit for international students is a myth. While there are federal and provincial benefits and credits that international students can access by filing a tax return, there is no specific "Welcome to Canada" bonus.
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Temporary housing and permanent residency
When it comes to temporary housing and permanent residency in Canada, there are a few key things to keep in mind. Firstly, it's important to understand the difference between temporary and permanent residency. As an international student, you will typically be considered a temporary resident, even if you plan on staying in Canada for an extended period of time.
If you're coming to Canada as a temporary resident, you'll need to ensure that you have the necessary documentation, such as a valid passport and any relevant visas or permits. It's also important to be aware of the requirements for temporary housing. While you may initially stay in temporary housing, such as a student residence or short-term rental, it's a good idea to start looking for something more permanent as soon as possible. This could involve researching different neighbourhoods, comparing prices, and understanding the local rental market.
On the other hand, if you plan on becoming a permanent resident of Canada, there are a few additional steps you need to take. You will need to apply for permanent residency and receive a Confirmation of Permanent Resident (CoPR) from Immigration, Refugees, and Citizenship Canada. This confirms that you have been approved for permanent residency and can start the process of establishing significant residential ties with Canada.
As a permanent resident, you will have the right to live and work in Canada indefinitely. You will also be eligible for various government benefits and credits, such as the Canada Child Benefit (CCB) and the climate action incentive payment (CAIP). It's important to keep the Canada Revenue Agency (CRA) updated on your residency status to ensure that you receive the correct benefit and credit payments. Additionally, as a permanent resident, you will need to file a tax return each year and report your worldwide income to the CRA.
Whether you're a temporary or permanent resident, understanding your tax obligations is crucial. International students may need to do their taxes in Canada, depending on their residency status and income. By filing a tax return, newcomers may become eligible for various tax benefits and credits, such as the GST/HST credit and sales-tax credits. It's worth noting that there is no official "welcome to Canada" tax benefit, but by understanding the tax system, you can take advantage of the financial perks available to newcomers.
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Frequently asked questions
"Welcome to Canada" is a phrase coined by accountant Samarjit Khaira to encourage international students to file their income tax returns. By filing a tax return, international students can access federal and provincial benefits, such as sales tax credits and the Trillium Benefit, which can provide between CAD 200 and CAD 700 a year.
International students in Canada are considered residents for tax purposes if they have established significant residential ties with Canada. This usually happens on the day they arrive in the country. To file taxes, international students must report their worldwide income to the Canada Revenue Agency (CRA).
International students in Canada may be eligible for several federal and provincial benefits and credits, including the GST/HST tax credit, the Canada Child Benefit (CCB), and the Climate Action Incentive Payment (CAIP). These benefits can provide financial support and help with the cost of living.
Yes, there have been cases of scammers targeting international students and pretending to be CRA agents. They may ask for personal information, such as social insurance numbers, to receive a "welcome to Canada" benefit, which does not exist. International students should be cautious of such scams and always verify the legitimacy of any requests for personal information.
