Living in Canada as an international student? Well, it might not be that bad. Having adjusted to the new environment, you should also know about your rights, your duties, and the benefits (in terms of tax savings) that you can render when filing taxes for international students in Canada.
It is your responsibility to determine where you stand in terms of your income tax status and ensure that you pay all your taxes within the due date.
Specify your state of residence?
When filing taxes for international students in Canada, specify your state of residence. In general, you are unlikely to have established significant residential ties to Canada if:
- The student returns to their home country regularly or for a significant period of time in a calendar year
- moves to another country when not attending college in Canada
However, many international students studying or researching in Canada develop significant residential ties to Canada.
Resident of Canada
You are a resident of Canada for income tax purposes if you have significant residential ties to Canada.
Not a resident of Canada
You are not a resident of Canada for income tax purposes unless you establish significant residential ties with Canada and stay in Canada for less than 183 days during the year.
Deemed to be a resident of Canada
If you do not have significant residential ties to Canada, you may be considered a resident of Canada for income tax purposes if you meet all of the following conditions:
- You stay in Canada for 183 or more days in a calendar year
- You are not considered a resident of your home country under the tax treaty between Canada and that country
Deemed to be a non-resident in Canada
If you have significant residential ties to Canada and are treated as a resident of another country with which Canada has a tax treaty, you may be considered a non-resident of Canada for income tax purposes.
You are considered a non-resident of Canada if your ties to another country become such that you are considered a resident of that other country under a tax treaty. As a non-resident, you are subject to the same rules as a non-resident of Canada.
Your tax obligations
Your state of residence determines the tax filing requirements in Canada:
- If you entered Canada during the year and established significant residential ties to Canada, comply with reporting requirements for newcomers to Canada
- If you have not established significant residency ties and are not considered a resident of Canada, follow the filing requirements for non-Canadian residents
- If you are a presumed resident of Canada, follow Canada’s presumed resident filing requirements
- If you are considered a non-resident of Canada, the rules that apply to non-Canadian residents also apply to you
Non-refundable tax credits: Canadian residents receive a basic personal amount of non-refundable tax credits. Tax credits can help reduce the amount of tax you have to pay. After that, the CRA can refund the tax already withheld from your wages. If you weren’t taxed enough to begin with, you might have to pay additional taxes. If you had no income in the reporting tax year, you most likely have no reason to claim tax credits, apart from tuition fees (as they can be carried forward to a future tax year) and rent paid for the Ontario trillium benefit.
Frequently asked questions
What will I need to file taxes for international students in Canada?
Social Insurance Number (SIN), Income tax slips like T4 or T4A, Interest tax slips like a T3 or T5, Tuition receipt T2202A, Donation receipts, Medical receipts, Rent receipts, etc.
What are the probable deductions/ credits from income tax?
Your income can be reduced to a lower tax bracket by deducting the amount paid into pension plans, Registered Retirement Savings Plans (RRSPs), union and employee contributions, childcare costs, and other deductions. Moving expenses can be claimed against some income if you’ve only moved for business and you meet other conditions.
How are taxes on rental income from foreign property taxed in Canada?
As a non-resident who owns and rents out your Canadian property, you pay 25% tax on the gross income of your property. This can be done through a withholding agent who can be your tenant or property manager. At the end of each month, they pay the tax to the Canada Revenue Agency and send you what’s left over. Also, check out the obligations for Canadian taxes on foreign income.
Can I use tax preparation software?
You can use tax preparation software to complete and file your tax return online. The CRA website has a list of tax preparation software you can use. If you are a first-time filer and/or do not have a Social Security number, you must print, sign, and mail the tax return to the CRA with all supporting documents.
What if one forgets to file taxes before the due date?
The tax period runs from January to December each year, and the deadline for submitting a tax return is April 30 of the following year. If you miss the April 30 deadline, you can still file a late tax return. However, if you owe state taxes, you may be charged daily interest and a late payment penalty.
Once you’ve filed at least one tax return, received an assessment, and have a valid Social Insurance Number (SIN), you can create a My Account on the CRA website. Your account allows you to receive electronic correspondence from the CRA, set up direct electronic bank deposits for any refunds or benefits you may receive, and keep your personal information, address, and banking information current with the CRA.