Taxation tips for international students in Canada

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When people come to Canada, they don’t know the tax law here. Tax filing has become a matter that is easily overlooked by new international students.

Do international students need to file tax returns?
Yes. According to the tax law, anyone who has lived in Canada for more than 183 days with or without income needs to file a tax return. In this way, foreign students who are studying in Canada should exceed the prescribed time limit for residence, and tax filing becomes inevitable. Tax filing is a stipulation of compliance with Canadian tax laws and is an obligation of international students.
As a student, the general situation is that there is no income, or the income is low, but there are two major expenses of tuition and rent. By filing tax returns, international students can enjoy the same tax refund as Canadian residents. The tuition paid can also be deducted from Canada’s income and used to offset the tax.

What Can I get after tax filing?
1. GST/HST credit: This subsidy is GST/HST paid by the government to low-income individuals and families for partial or full compensation every quarter, usually before April 30 after the tax for the previous year. The government will issue a GST/HST subsidy every three months from the next July. Usually, each person can get a maximum of $250 a year, depending on the income of the individual or family. International students also enjoy this subsidy, but in order to receive this subsidy, you must first complete the tax return.
2. Tuition fee credit: Due to the large amount of tuition fees, this is the area that international students need to focus on. In the year when there is no income, students do not get refund since the tuition fee credit is non-refundable, but it can be carried over to the future years indefinitely to reduce the tax payment when you have income.

What kind of materials do you
need to file tax returns?
1. Social Insurance Number.
All post-secondary studies allow students to work outside the school. Students need to go to Service Canada to get their social insurance number; if there is no social insurance number, they need to apply to Canada Revenue Agency for a temporary tax number (ITN).
2. Proof of income.
T4: If the student is working outside the school, the employer will issue T4 for the previous year at the beginning of the year.
T4A: If the student receives scholarship income, the school will issue T4A for the previous year at the beginning of the year.
T5: If the student has bank interest income, the bank will issue T5 for the interest income for more than $50 in the previous year at the beginning of the year.
3. T2202 or T2202A: This is a form issued by school for tuition paid. It is important to note that only tuition fees for post-secondary school or higher education courses can be used for tax purposes. The school must also be an accredited institution of the Human Resources Department of Canada.
4. Your mailing address and bank information: Canada Revenue Agency will mail the cheque and relevant notice to your address. If you provide a bank account number, Canada Revenue Agency will transfer the tax refund to your bank account directly.

How to file tax returns?
1. The first choice is to seek professional opinion on your taxation from a Chartered Professional Accountant. He/she will assess your tax status and guide you to process your tax filing properly. Canada’s tax law is complicated. Changes or modifications are in place every year. Professional service will help you to file tax return accordingly. After tax return, Canada Revenue Agency performs tax review and tax audit on personal tax returns from time to time. Having a professional accountant as your representative will release the stress on dealing with CRA’s questions.
2. Self-service tax return: If your situation is simple, and you have basic knowledge about tax issues related to international students, you can use the tax software certified by the tax bureau to file your own tax returns.

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