Getting a degree can be pricey, especially when you have to pay for tuition and textbooks. The average cost for an undergraduate education in Canada for the 2022–2023 academic year was $6,834. As a student, chances are you’ve applied for a student loan to help pay for your post-secondary education.

If you’re a newbie when it comes to filing a tax return as a student, you may be curious to know whether your student loan is tax deductible in Canada. In this article, we’ll show how you can make the most of your tax return to get some extra cash in your pocket (to save up for when Taylor Swift comes to Canada!).

Key Takeaways
  1. Receive a 15% tax credit based on the interest you paid on your student loans in 2022 and the preceding five years. 
  2. To qualify for the student loan tax credit, you must be a Canadian citizen, permanent resident, or protected person, and you must have an eligible student loan.
  3. You can carry forward any unclaimed credits for up to five years and apply them when you have a higher income.

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What is the student loan tax credit?

This government program helps offset the cost of paying back your student loan. You can claim the interest paid on your student loan in 2022 or for the previous 5 years of your post-secondary education. The interest payments that you make on your federal and provincial student loans will be eligible for a 15% tax credit

One thing to note: You can give a sigh of relief—as of April 1, 2023, the federal government stopped charging interest on student loans—although you’re still responsible for paying any interest that accrued prior to April 1, 2023. 

Which student loans are eligible for the tax credit?

You can claim a student loan tax credit if you received the funds through one of the following:

  • The Canada Student Loans Act
  • The Canada Student Financial Assistance Act
  • The Apprentice Loans Act
  • Similar provincial or territorial government laws

This tax credit applies only to domestic students (Canadian residents, permanent residents, and protected persons). And, keep in mind that only you (the student) can claim an amount for the interest you, or a person related to you, paid on a loan in 2022, or the preceding 5 years

Don’t worry, we didn’t forget about international students! If you’re a foreign student studying in Canada, you can find out more about the tax implications on the CRA website.

Where can I find the interest paid on student loans in Canada?

You’ll want to find out how much interest you paid on your student loans in the previous year. You can obtain your official receipt by logging in to your National Student Loans Service Centre (NSLSC) account. It’s an easy way to access your records online.

How is the student loan interest tax credit calculated?

Now that you know the amount of interest you paid, the next step is to do some simple math to find out how much you can claim. 

Let’s take a look at an example. Samantha paid $500 in interest on her student loans last year. 

$500 interest paid x 15% tax credit = $75 is the amount she can claim.

However, Samantha doesn’t owe any taxes, since she didn’t earn any income while studying in school. So, she can apply the credit to next year’s return instead, as she plans to start working after graduation (she’s a smart cookie in optimizing her taxes!). 

Where do I put student loan interest on my tax return? 

When you file your tax return, you can claim this credit by entering the amount of interest you paid in the last year on line 31900. You can also claim the corresponding provincial or territorial credits on line 58520 on Form 428. 

If you use TurboTax software, you can fill out a quick questionnaire to determine which credits you’re eligible for. Once complete, the software will open all the entry forms you need so you can claim the interest paid (a time and money saver!).

What happens to the unused tax credits?

If you’re a full-time post-secondary student, you may not have much income as you’re primarily focusing on your studies. Be sure to check the provincial BPA based on where you live as each province sets their own amount. This means if you’ve earned less than that amount, you won’t have to pay any income tax. 

If this scenario applies to you, then you’ll want to be strategic and maximize your student loan tax credit in your earning years. This tax credit helps to reduce your tax liability—but not in the form of a refund. So, you can carry forward any excess or unused tax credits to be applied to your tax return in any of the next 5 years during which you have taxable income.

Am I required to pay income tax if I have a student loan?

It really depends on how much you earned in the past year. In reality, most students don’t earn that much income while they’re in school, which means they likely won’t have to pay taxes. If, however, you’re working during a co-op term or landed a paid internship role and you earn more than the BPA, you may have to pay income tax.

Also, if you received any scholarships, grants, or bursaries (kudos for scoring more money to fund your education!), the CRA may consider this as taxable income depending on your situation. So be sure to report it on your tax return.

Getting the appropriate tax credit

You’ve been working hard to ace your exams. And now you have to work hard to pay back your student loans. It’s a financial burden—especially when you’re juggling other priorities, like paying your rent and credit card bills. That’s why taking advantage of the student loan tax credit can help alleviate some of the financial pressure and put money back in your pocket. 

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