Filing taxes can be a complex and daunting task for anyone, but for international students in Canada, navigating the intricacies of the Canadian tax system can present unique challenges. From understanding residency status to determining taxable income and accessing available credits and deductions, there's a lot to consider. In this comprehensive guide, I'll walk you through everything you need to know about filing taxes as an international student in Canada. Whether you're a newcomer to the country or a seasoned student looking to optimize your tax return, this resource is designed to provide clarity and guidance every step of the way. Let's demystify the tax filing process and ensure you're equipped to fulfill your tax obligations with confidence.

Income tax in Canada

In Canada, income tax is administered by the Canada Revenue Agency (CRA). The Canadian income tax year is from January 1 to December 31. If you owe income tax, you must pay it by April 30 for the previous calendar year. Late submissions are accepted, but there may be a penalty.

If you are employed in Canada, your employer must withhold and remit to the CRA statutory deductions from your wages. These statutory deductions include income tax, Canada Pension Plan (CPP), and Employment Insurance (EI).

To deduct the proper amount of income tax from your wages, your employer will ask you to complete both the TD-1 (federal) and the TD1-Ontario forms. Employers will deduct an amount from each pay cheque for the Canada Pension Plan (CPP) and Employment Insurance (EI).

You are responsible for determining your tax filing obligations and income tax status in Canada.

What you need to file a tax return

To file a Canadian tax return, you need one of the following:

• A Social Insurance Number (SIN)
• An Individual Tax Number (ITN)

Social Insurance Number (SIN)

To apply for a Social Insurance Number (SIN), you must have a work permit or a study permit which includes a condition to work on and/or off campus.

Individual Tax Number (ITN)

If you are not eligible for a SIN, you can apply for an Individual Tax Number (ITN). This is especially important for students who receive scholarships, as your college or university will require you to provide an ITN at the end of the year.

Additional supporting documents

You may also need the following documents when filing your taxes.

• T2202: These forms show the tuition fees you paid for the tax year. Your institution will provide you with this form.
• T4: This form highlights your employment income and deductions. You should receive your T4 from your employer.
• T4A: The T4A form is available for students who have received a taxable tuition waiver, teacher certificate, scholarship, or bursary in the tax year.

Apply for tax deductions

You may be eligible to deduct certain expenses from your tax payments.

Moving expenses such as transportation and storage of personal effects, travel, and temporary accommodation may be considered eligible deductions. Save your receipts for the cost of relocating to Canada. However, you cannot deduct moving expenses if your only income at the new location is scholarship, fellowship, or bursary income that is entirely exempt from tax under the current legislation.

You may also deduct childcare expenses, Registered Retirement Savings Plan (RRSP) contributions, and union dues.

How to file your taxes

Online

You might be able to file your income tax directly to the Canada Revenue Agency (CRA) online through the electronic tax filing software NETFILE. Tax returns filed via NETFILE must first be prepared using a NETFILE-certified product which you can find on CRA website.

By paper

If you are submitting your tax return by paper, find the forms you need on the CRA website.

Mailing your tax return

Check the CRA website for where you can submit your taxes by mail.

Do international students file taxes?

Most international students “file a tax return” (submit an income tax form to the government) to receive benefits and tax credits (money from governments or the chance to lower taxes later). International students may have to pay Canadian income tax on income earned from teaching and/or research assistantships, other employment, and investment and business income. Generally, students also have to report income they receive from outside of Canada.

The Canadian tax system is based on your residency status, not citizenship. Students from countries that have a tax treaty with Canada may not have to pay Canadian income tax and may be able to request that their employer stop withholding tax from their Canadian employment income with permission from CRA.

Determine if you must file a return

You must file a return if:

• You owe income tax to the government (e.g., you earn significant income in Canada).
• The CRA asks you to file a return.

Even if you don’t owe any tax, you should file a tax return if:

• You expect an income tax refund from the government.
• You're applying for the GST/HST credit (which provides cash payments to low- and middle-income taxpayers, to help offset the costs of paying GST/HST on taxable purchases).
• You're eligible to receive the child tax credit (for low- and middle-income taxpayers with children).
• You might earn more income in Canada later, such as through Co-op, and want to carry forward Tuition Payments and Education Credits (e.g., save for future years) to reduce the tax you owe in future years.

International Students Studying in Canada.

Students who have shown they have significant residential ties to Canada, in the eyes of the federal government, are considered residents of Canada. This means that, like other fellow Canadian residents, they would be eligible for GST/HST credits, tuition carry-forward credits, and other provincial credits or tuition rebates!

But if you’re a student who spends less than 183 days or 6 months in Canada, and you don’t have significant residential ties in Canada, you would be considered a non-resident. Non-residents are unfortunately not eligible for benefits or credits. In addition, you would only need to file a tax return to pay taxes or receive a refund if you paid too much tax on income from Canadian sources.

This concept would also apply to people deemed non-residents, who are students and have established residential ties with Canada, but who are still considered residents of their own country or another country with which Canada has a tax treaty.

Do I need to report my foreign income?

Yes, non-residents must declare their net income earned outside of Canada on their tax return to avail of the non-refundable tax credits in Canada.

There is a 90% rule that comes in that states if you earned more than 10% (net) of your income outside Canada, you can't avail of the tax credits. However, if you earned 90% or more of the income within Canada, then you can claim the credits.

Your TD1 form must be accurately completed when you begin your employment in Canada so you can obtain your tax credits. Claiming tax credits when you are not entitled to them could mean being faced with a tax liability at the end of the tax year.

What Is The Final Step of Tax Filing In 2024?

After all the preparation and hard work, once you submit your tax filing, the CRA will start processing your documents and undergo assessments. All tax filers will receive a Notice of Assessment (NOA) which evaluates their tax return after the tax return 2024 deadline.

On your NOA, you will be able to find the following information:

• The date that CRA assessed your tax return
• The particulars of how much you owe or how much you have for refund/credit
• Registered Retirement Savings Plan (RRSP) deduction limit of the year

Notice of Assessment is a significant document for your future taxation process. Please make sure you keep your NOA safely and securely with your tax records.

When Will International Students Receive Their Tax Refund?

Depending on the method you use to file your tax, the date of receiving a tax refund will be different.

According to the CRA, for the tax return 2024 deadline, they aim to transfer tax refund:

• Within 2 weeks if you file electronically or online
• Within 8 weeks if you file through a paper form

When Is The International Student Tax Return 2024 Deadline?

The key dates for Canada’s tax season in 2024:

• Start date of tax filing: Feb 20, 2024
• Deadline to tax filing: May 1, 2024
• Deadline to tax filing if you/your spouse/common-law partner are self-employed: June 15, 2024
• Deadline to tax payment: April 30, 2024

If you have missed the tax return 2024 deadline, you may still file taxes. However, all returns will be charged with a penalty of 5% of the entire balance. So, remember not to miss the tax return 2024 deadline!

Conclusion:

In conclusion, filing taxes as an international student in Canada may seem daunting at first, but armed with the right knowledge and resources, it can be a manageable and rewarding experience. By understanding your residency status, knowing what income is taxable, and taking advantage of available credits and deductions, you can ensure compliance with Canadian tax laws while maximizing your tax refund.
Remember, tax filing is not a one-time task—it's an ongoing process that requires attention to detail and diligence. Keep track of important documents, stay informed about tax law changes, and seek assistance from tax professionals or resources like this guide whenever needed.

If you need any assistance, reach out to me to get started on your tax journey in Canada! Your financial future starts with informed decisions—let's make tax season a breeze together.

Thank you for Reading,
Rokon Alam, CPA, MBA
[email protected] or [email protected]