The Canada Revenue Agency offers university students a range of credits and deductions; if you study abroad, you qualify for many of these benefits. However, you also have to be aware of your additional obligations and filing requirements, both in Canada and abroad.
Authorizing a Rep for My Account
While you studying abroad, it can be hard to keep on top of financial matters. To make it easier, the CRA allows you to authorize a rep to use CRA My Account on your behalf. CRA My Account, the CRA’s online portal, has valuable information on benefits, refunds, tax notices and more.
To authorize or cancel a representative, use the Authorize My Representative service on My Account, or fill out Form T1013 and mail it to the CRA.
Determining Residency Status
Your residency status has a direct impact on whether you can withdraw education assistance payments from your registered education savings plan as well as other tax matters.
- In most cases, when you study abroad, you continue to be a resident of Canada.
- However, if you begin to establish ties in the country where you are studying, you may no longer be considered a resident in the eyes of the CRA.
Significant ties include things like buying property or starting a business. If you are unsure of your residency status, fill out Form NR73, Determination of Residency Status (Leaving Canada) and submit it to the CRA.
Using Registered Education Savings Plans (RESPs)
If you are a Canadian resident, and you have enrolled in a qualifying university program outside of Canada, you may make withdrawals from your RESP.
- You do not have to pay taxes on withdrawals based on contributions made to that account.
- However, when you receive EAPs, withdraws based on interest or grants, you have to pay tax on those withdrawals.
Understanding Student Loans
You may apply for Canada Student Loans for study abroad programs through the student financial assistance website of your province or territory.
- When you begin to repay these loans, you will be able to deduct their interest on your tax return.
- However, if you take out additional student loans from foreign institutions, you will not be able to deduct their interest on your future tax returns.
Filing Canadian and Foreign Taxes
- In most cases, you should file a Canadian tax return even if you study abroad.
- Additionally, depending on your circumstances, you also may have to file taxes in the country where you are studying.
In most cases, if you earned income in that country, you have to file taxes. However, the exact rules vary based on the country.
Canada has tax treaties more than 100 countries. If you pay taxes to one of these countries, you may be able to claim a foreign tax credit on your Canadian tax return. Claiming the credit can help you avoid double taxation.