For many international students, traveling overseas or to a non-native country is a great experience. It provides foreign citizens studying abroad with the opportunity to meet new people, learn about a different culture, and understand the laws of that nation.
It also extends to learning about a country’s tax system. Because as a full-time international student in Canada, you’re not exempt from paying income tax.
Here we help you figure out your tax status as an international student studying in Canada. Because it’s important to know about any tax obligations—as well as benefits—you may have.
- If the CRA considers you a resident or deemed resident of Canada—even as a full-time international student—you must report all sources of income earned in Canada and abroad.
- If you are an international student with Canadian sources of income or are considered a resident, then you can claim benefits like tuition tax credits.
- If you are a non-resident or a deemed non-resident and you do not have any Canadian income sources, then you don’t have to file a Canadian tax return as an international student.
Do international students in Canada need to file taxes?
If you’re an international student completing a degree in Canada, you are considered a resident of Canada for tax purposes and may be required to file a Canadian tax return. How much you owe depends on if you earn income—perhaps you have a teaching or research assistantship, a summer or part-time job, or income from investments. And, since you’re considered a resident of Canada while you’re getting your degree, any income you receive from outside of Canada also counts.
What’s important to know about the Canadian tax system is that it’s based on residency, not citizenship. So understanding whether you need to file a return as an international student often comes down to something called residential ties. These are factors that determine your residency status. In addition to these ties, your length of stay in Canada may also be analyzed. Still unsure whether you should submit a Canadian tax return? Read on.
How to determine your residency status
The length of your stay and the residential ties you establish while studying in Canada are factors that the Canada Revenue Agency (CRA) uses to determine whether you are a Canadian resident for tax purposes. The length of stay does not have to be in a single entry or exit; multiple entries and exits are counted.
There are a variety of criteria that the CRA considers when determining residency. Some of the factors that suggests an international student has residential ties include:
- Arranging rental agreements for extended lengths of time in the country
- Buying a home or purchasing other property
- Filing for a credit card
- Having a spouse, common-law partner, or dependants move to the country with you
- Obtaining a Canadian driver’s licence or health card
- Opening a Canadian bank account
- Owning a business
- Purchasing club memberships
The following factors would suggest an international student does not have residential ties in Canada:
- Returning to your home country periodically for a significant amount of time
- Moving to another country while not attending school in Canada
Weighing these criteria, the CRA will determine if you are considered a resident, non-resident, deemed resident, or deemed non-resident of Canada.
Here’s a little more on each type of residency and the possible tax obligations:
What are my tax obligations as a resident or a non-resident of Canada?
Since a resident of Canada is someone who has established residential ties to the country, as outlined above, residents are responsible for paying Canadian taxes. The CRA requires you to report all sources of income earned in Canada or abroad on your Canadian tax return.
A non-resident would classify as anyone without such ties and who resides in Canada for less than 183 days of the year. You’re required to pay tax on income you receive from Canadian sources, and taxes are dependent on the type of income you receive. This income could include investment earnings, such as interest or dividends, as well as any employment wages garnered through a part-time job, seasonal work, or taxable scholarships.
If you are a non-resident and you do not have any Canadian income sources, then you are not required to file a Canadian tax return.
What are my tax obligations as a deemed resident or a deemed non-resident of Canada?
A deemed resident is someone who doesn’t have significant residential ties in Canada, but stays here for 183 days or more during a calendar year. Deemed residents also shouldn’t be considered residents of their home country under the terms of any tax treaty between Canada and that country. Deemed residents are also responsible for paying Canadian taxes and reporting all sources of income earned in Canada and abroad.
If you are an individual who has established significant residential ties with Canada and are considered a resident of another country with which Canada has a tax treaty, you might be counted as a deemed non-resident of Canada for tax purposes. If so, you are required to pay tax on income you receive from Canadian sources, including investment earnings such as interest or dividends, any employment wages through part-time or seasonal work, or taxable scholarships.
If you’re a deemed non-resident and you do not have any Canadian income sources, then you are not required to file a Canadian tax return.
Note: A tax treaty avoids double taxation for taxpayers who work in multiple countries and who are only counted as a resident of one country for tax purposes.
Benefits of filing Canadian taxes as an international student
If you are an international student with Canadian sources of income or are considered a resident, then you can claim tuition tax credits and are eligible for benefits, such as the goods and services/harmonized sales tax (GST/HST) credit. You also may be eligible for tuition carry-forward credits and other provincial credits or tuition rebates.
Non-residents and deemed non-residents are not eligible for benefits and credits, and are only required to file a tax return to pay taxes or to receive a refund if too much tax was paid on income from Canadian sources.
However, if you are a non-resident or deemed non-resident from a country that has a tax treaty with Canada, qualified income taxes deducted from your pay during your employment or self-employment in Canada can be claimed as foreign tax credits. (Any excess of withholding taxes by your employer can be refunded by making a formal request to the CRA.)
If you are new to Canada and are filing your taxes for the first year, be sure to indicate the date you first arrived. This will result in a proration of credits for the overall tax year, as you were not a resident for the full year.
Last word: How to file
The first step to filing a tax return is to obtain a Social Insurance Number from Service Canada, or an Individual Tax Number from the CRA.
Canadian residents should then complete their tax return with the General Income Tax and Benefit package of the province in which they resided on December 31 of the tax year. Complete the return by stating your income from both Canadian and international sources. As a resident, you will be taxed on income from all sources, but you will be able to claim any taxes paid to a foreign government as a foreign tax credit.
Non-residents and deemed non-residents will complete an income tax package specific to their residency status.
Finally, keep in mind that, as a student, you are eligible to claim tuition credits using the T2202/T2202A form, which is given to you by your school.
If you are a non-resident or a deemed non-resident and you do not have any Canadian-source income, then you are not required to file a Canadian tax return.
If you are a non-resident of Canada, unfortunately you can’t use the NETFILE service to submit your return electronically. Instead, you’ll have to print out and mail your return.
As such, give time to allow for CRA delivery and receipt by April 30 (individual income tax deadline) or June 15 (if you are self-employed).
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