Get yourself prepared
There’s no reason to do your taxes by hand these days. With NETFILE, the secured government tax-filing service, you can file online with approved software. To file, you will need a NETFILE access code, which can be found on your Canada Revenue Agency (CRA) “My Account” page or on your previous year’s notice of assessment.
In addition, you’ll want to gather all of your supporting documents, such as any income statements, receipts, and your tuition enrolment certificate.
The individual tax filing deadline is normally April 30. However, since that falls on a Saturday this year, the CRA has moved the deadline to May 2. For those that are self-employed, you have until June 15 to file. In the event that you owe taxes, you have until April 30 to pay.
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If you haven’t already, be sure to sign up for direct deposit in your CRA account. With direct deposit, any tax refund you’re owed (or credits that you’re eligible for) will be automatically deposited into your bank account.
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Get to know your tax credits
Tuition is the largest expense for most students. Fortunately, the amount you pay toward your tuition can be claimed as a non-refundable tax credit. What this means is that if your tuition is more than any taxes you owe, the credit can reduce your overall tax burden.
To claim tuition tax credits, you must be at least 16 years old and enrolled at a designated educational institution in Canada. This includes post-secondary and trade schools. Those attending an eligible school outside of Canada full-time for at least three weeks may also qualify for the tax credit. That said, if you have an employer that’s reimbursing your tuition, you can’t claim anything.
To certify that you’re enrolled, you need to get a T2202 – Tuition and Enrolment Certificate from your school. This document can usually be downloaded directly from your school’s website. Alternatively, you could ask your school’s admission office for help.
When filing your taxes, any leftover tax credit can be carried over to the next year. Alternatively, you can transfer up to $5,000 of the tax credit to your parents or grandparents, minus the amount you’ve used. This can be highly beneficial as students are typically in a low tax bracket, so they don’t owe much taxes if any at all. By transferring the tax credit to a parent, they can reduce their taxes owed.
Note that you can’t transfer your tax credits to your parents or grandparents if you have a spouse or common-law partner that’s eligible. It must be transferred to them or carried forward.
Your RRSP may not be necessary
While it’s never a bad idea to start saving for your future regularly at a young age, it may not always be beneficial. If you were to contribute to your Registered Retirement Savings Plan (RRSP), your taxable income would be reduced by an equal amount. For example, if you earned $10,000 last year, and contributed $1,500 to your RRSP, your taxable income for the year would be $8,500.
Having a lower tax burden is nice, but Canada has a marginal tax system: the more you earn, the more you pay in taxes.
For the 2021 tax year, the basic non-refundable tax credit, also known as the personal amount for federal taxes, was $13,808. Each province and territory also has a personal amount that gets added to the federal amount. These amounts provide a base income level that isn’t taxable.
Many students' incomes don’t exceed the personal amount. Even if they did, they’d likely still end up in a low tax bracket. That means RRSP contributions are less important since students typically have a low tax burden. That said, you can still contribute to your RRSP and claim the deduction on your taxes at a later date when your income is higher.
It’s worth mentioning that you only gain RRSP room after you’ve earned an income and filed your taxes. If this is your first time filing your taxes or you’ve never earned an income, you won’t have any RRSP contribution space available.
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Get help if you need it
When filing your taxes, you should only be using CRA-certified tax software. The government has a list of free and pay-what-you-want certified tax software listed on their site.
The tax software will help walk you through the tax filing process. Most software will even search for any eligible credits that you may qualify for and automatically apply them to your tax return.
If you need extra assistance, there are often tax clinics that will file taxes for students for free. In addition, all of TurboTax’s products are free for those aged 25 and under this year.
Additional tax tips for students
- If you moved at least 40 kilometres to attend school full time, you may be able to claim some of your moving expenses, such as movers, storage costs, and temporary living expenses.
- If you’re eligible for the GST/HST credit, a quarterly payment worth up to $456 if you’re single or $598 if you’re married or common-law, you’ll get it automatically as long as you’re filing your taxes.
- Residents of Alberta, Saskatchewan, Manitoba, and Ontario may be eligible for the Climate Action Incentive (CAI), which is a quarterly payment.
- Child-care expenses can be claimed if you paid someone to care for your child while you attended school or worked.
Finally, the CRA will never contact you and request that you pay in cryptocurrency or gift cards for any taxes owed. Nor will they apply for benefits on your behalf over the phone. If you’re ever unsure about the legitimacy of CRA notices, you can call the CRA directly to get more information.
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