Parent’s Guide to Tax Returns for University Students

“You can take care of all tax matters while your child is in college by becoming an authorized representative with the Canada Revenue Agency,” says investment advisor Jane Shaw, from London, Ontario. “If your child has a CRA My Account set up, he can activate you instantly using the ‘Authorize my representative’ service on his My Account web page.”

You can also become the tax representative by filing form T1013, Authorizing or Cancelling a Representative. Once you are authorized, this consent stays in place until changed by the student, or until it reaches a chosen expiry date. You can, for example, set up authorization once to cover the entire time your child will be in college.

Income reporting rules for students aren’t all that different from those for an average taxpayer. Income from employment, tips and investment income are all declared on the student’s tax return. Some income sources unique to a student must also be reported. These may include:

• Payments from registered education savings plans
• Some scholarships and bursaries
• Fellowships
• Study grants, including artists’ project grants, apprenticeship grants and research grants

Most scholarships and bursaries are exempt from income tax, as are government benefit programs, such as the GST/HST credit or Canada Child Benefit payments and provincial counterparts. Gifts and inheritances are usually tax free and aren’t reported on your child’s tax return.

“Schedule 11 is the central hub of a student’s tax breaks and credits,” says Shaw. “This can only be filed with the student’s tax return, though unused tax reductions, up to a maximum, can be transferred to qualifying family members, such as a spouse, parent or grandparent.” Students receive tax forms from their schools (usually the T2202A), which declares tuition and months of full- and part-time study. Schedule 11 takes the information from the T2202A and calculates tuition, education and textbook amounts for the current tax year. Schedule 11 also declares surpluses transferred or carried forward. This form also stays with the student’s return. It is not forwarded with a transferred amount. That’s done using the “transfer” part of the T2202A form.

The federal education and tax credits have been eliminated as of 2017, however, depending upon your province, you may still have other qualifying education credits.  The tuition tax credit was not affected, nor was the ability to carry-forward any unused amounts from years prior to 2017.

While available to any taxpayer, there are some tax credits that typically fit the student lifestyle. Consider these deductions and non-refundable credits when you complete your child’s return:

• Moving expenses: Claim this if the student moved a substantial distance to continue studies, such as another city. You can only deduct these expenses from the part of your scholarships, fellowships, bursaries, certain prizes and research grants that are required to be included in your taxable income — not from your total income.
• Child care expenses: These can be claimed when child care is required for the parent to attend classes.
• Interest paid on a student loan: Only the student can claim the interest amount on a student loan, regardless of who actually paid the interest. If the student doesn’t need to claim the interest to reduce tax payable to zero, this amount can carry forward up to five years.