If you are an international student studying in Canada, you may have to file a Canadian income tax return. You must determine your residency status to know how you will be taxed in Canada.
Residency status
For income tax purposes, international students studying in Canada are considered to be one of the following types of residents:
- resident (includes students who reside in Canada only part of the year)
- non-resident
- deemed resident
- deemed non-resident
Residency status is based on the residential ties you have with Canada.
What are residential ties
Residential ties include:
- a home in Canada
- a spouse or common-law partner or dependents who move to Canada to live with you
- social ties in Canada
Other residential ties that may be relevant include:
- a Canadian driver’s license
- Canadian bank accounts or credit cards
- health insurance with a Canadian province or territory
Determining your residency status
In general, you probably have not established significant residential ties with Canada if you:
- return to your home country on a periodic basis or for a significant amount of time in the calendar year
- move to another country when not attending university in Canada
However, many international students who study or carry-on research in Canada do establish significant residential ties with Canada.
Your tax obligations
Canada’s tax system is like that of many countries. Employers deduct taxes from the income they pay you, and people with business or rental income are required to pay their taxes by installments.
Your residency status determines your income tax return filing requirements in Canada:
- if you entered Canada during the year and have established significant residential ties with Canada, follow the filing requirements for newcomers to Canada
- if you have not established significant residential ties and are not deemed to be a resident of Canada, follow the filing requirements for non-residents of Canada
- if you are a deemed resident of Canada, follow the filing requirements for deemed residents
- if you are a deemed non-resident of Canada, the rules that apply to non-residents of Canada also apply to you
Should you file or not?
Canada Tax Return is called “Tax and Benefit Return”. So, filing taxes would determine your eligibility to claim benefits even though your income is non-taxable or NIL. You may also file to carry forward of your unused amounts/ credits to future years.
Common credits that any taxpayer or an international student are eligible for include:
- tuition tax credit- Form T2202-Tution and Enrollment Certificate is required
- transfer unused eligible tuition fees amounts of the current year to the designated individuals, up-to a maximum of $5000. You may carry forward the unused amounts to the future years as well.
- goods and services tax/ harmonized sales tax (GST/HST) credit
- to begin/ continue receiving the Canada child benefit (CCB)
- and other benefits from certain provincial related programs.