TurboTax wants to ensure accuracy with the information we have provided in this article, all content will be updated as we learn more from the Canada Revenue Agency and the Government of Canada.
As part of Canada’s COVID-19 Economic Response Plan, changes were made to provide support to students and other individuals; the suspension of loan repayments and interest on student loans was one of those measures.
What does the student loan moratorium mean?
For students that had borrowed money for school as a part of Canada Student Loans or Canada Apprentice Loans, normally there were repayment plans and interest payments to be made.
With this new measure, the loan repayments and interest were automatically suspended until September 30, 2020.
What qualified for the moratorium?
- The Federal portion of the student loan, unless issued by NL, NB, ON, SK or BC, then it applied to both federal and provincial portion of the loan.
- Interest was not charged from March 30 to September 30, 2020.
- If in the “non-repayment” period, federal loans that were already interest-free, and provincial loans that normally were not, (ON, NB, and SK), would be interest-free for March 30 to September 30, 2020.
How does this affect your taxes?
Usually, you are able to claim Student Loan Interest paid on government loans as a Non-Refundable Tax Credit. Since the payments were deferred, the amount of interest you will be able to claim on your 2020 tax return is what you paid before March 30th or after Sep 30th, 2020. The missing periods will be added to the amortization periods and can be claimed when paid.
If the interest paid does not change your tax liability, you don’t have to claim them on your 2020 tax return. You can combine 2020 interest payments with coming years and claim up to 5 years together to get you more credit.
For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, click here.
See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.
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Susan has been an accounting professional for over 20 years, and has been working with businesses and individuals and their taxes for the past 12. Education is a passion for Susan, and when not writing or talking about tax for TurboTax Canada, she can be found speaking at events, teaching at Mohawk College, and working with many businesses and entrepreneurs through her own accounting advisory practice. Susan is known to be approachable but pulls no punches when it comes to the reality of business finance and taxes.