This article originally appeared on Arrive powered by RBC Ventures Inc.
In Canada, the months of March and April are not only symbolic of the spring season but hold financial significance as well because it’s also tax season!
As an international student, you may be apprehensive or confused about the prevailing tax laws and guidelines for filing your tax returns in Canada; especially since the process or norms may have been different in your home country. This article can help equip you with the tax-related information and resources you’ll need as an international student in Canada.
But first, what are tax returns?
According to the Government of Canada, generally, individuals residing in Canada can determine their final tax obligation by completing an income tax return and sending it to the Canada Revenue Agency (CRA).
On the tax return, you list your income and deductions, calculate federal and provincial or territorial tax, and determine if you have a balance of tax owing for the year. On the other hand, you may find you’re entitled to a refund based on the tax deducted from your income during the year.
Income tax returns for most individuals, including international students, are to be filed by April 30 of the year following the calendar year for the return. For instance, tax returns for 2020 have to be filed by April 30, 2021.
If you owe tax and you file your tax return late, the CRA might charge you a late-filing penalty and interest on any unpaid amounts.
The first step is to identify your residency status
For tax purposes, residency status is based on the residential ties you have with Canada. Residential ties include owning or renting a home in Canada, having a spouse or common-law partner or dependents who move to Canada to live with you, having social ties in Canada, a Canadian driver’s license, Canadian bank accounts, credit cards, or even Canadian provincial or territorial health insurance.
You could belong to any one of the following categories:
- Resident: If you have established significant residential ties with Canada you will be considered a resident. Significant ties include “a dwelling place (or places); spouse or common-law partner; and dependants.”
- Non-resident: Those who have not established significant residential ties with Canada and have lived in Canada for a period of fewer than six months (or 183 days) in a calendar year. Since you are only subject to Canadian income tax if you’ve earned income from a source in Canada, it’s unlikely you’d need to file a Canadian tax return as a non-resident. The CRA can provide more guidance on what constitutes income earned in Canada.
- Deemed resident: Those who have not established significant residential ties with Canada and have lived in Canada for more than six months (or 183 days) and are not considered a resident of their home country under the terms of a tax treaty between Canada and that country.
- Deemed non-resident: Those who establish significant residential ties with Canada (Resident) AND are also considered a resident of another country with which Canada has a tax treaty. In this case, the same rules apply as that of a Non-resident.
Knowing your residency status is important because it will determine how you will be taxed.
Determining if you should file tax returns as an international student
For residents and deemed residents studying in Canada, if you answer ‘yes’ to any of the following questions, it’s likely you should file a tax return:
- Have you been employed in any capacity by a Canadian employer?
- Do you have a source of income in Canada?
- Do you have income from outside Canada?
- Do you owe tax or want to claim a tax refund, benefits or credits?
- Were you contacted by the CRA to file a tax return?
How to file a tax return as an international student
The government of Canada and CRA recommends that if you’ve identified yourself:
- As a resident, you can follow the filing procedures for newcomers to Canada.
- As a non-resident OR deemed non-resident, you need to follow the tax return filing requirements for non-residents of Canada.
- As a deemed resident, follow the filing requirements for deemed residents.
At this point, you might be wondering what kind of refunds, benefits or credits may be available to international students. Here’s some more information to help guide you.
Understanding tax refunds, benefits and credits
- If you’re a resident studying in Canada, just like other residents and citizens, you may qualify for GST/HST credits, tuition carry-forward credits, and other provincial credits or tuition rebates.
- If you’re a non-resident student in Canada, generally, you won’t be eligible for benefits and credits but may qualify for a tax refund if excess tax was paid on your Canadian income.
Note: The CRA determines the eligibility of individuals for refunds, benefits and credits on a case by case basis, depending on the residency status. So if you’re unsure of your residency status in Canada, don’t hesitate to contact the CRA.
Learn more about tax credits and get tips on how to file your taxes.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.