For students, the month of April is quickly approaching and with it comes not only the stress of final exams but also the deadline for filing your tax return. Of course you need to make sure you're paying what the law requires, but you also want to take advantage of some of the ways that students can reduce their tax bills. Here are a few of the FAQs from student taxpayers.
1. I have tips from my part-time job. They're not shown on my T4; do I have to report them?
Yes, they are income from employment and even if they're not included on your T4 slip, you must report them. It is your responsibility to keep track of your employment earnings.
2. I'm a full-time student and have scholarship income -- Is that taxable?
Probably not. If your form T2202A from your university shows you're eligible for a full-time education credit, then your scholarship income will be tax-exempt. But if the scholarship came from your employer it's likely to be considered employment income, and will be taxed.
3. I know that my university will issue me a form so that I can get tax credits for tuition, education and textbooks. I don't think I have enough income to make use of it so is it worthless to me?
Although these tax credits can have substantial value given the cost of university education, they are non-refundable. That means that you can only use them to reduce tax you would otherwise have to pay. You do have to claim them on your own return, even if somebody else paid your fees. You may want to transfer an amount to your parent or spouse, or carry the unused amount to a future year when you have to pay income tax.
4. I don't have much income but I did make some charitable donations in 2015. I've never had donations before. How does that work?
If you're a first-time donor, there's a new "super-credit" for charitable donations that boosts the value of the regular charitable donations tax credit by 25% on donations made after March 20, 2015. There's a "charitable donation tax credit calculator" on the Canada Revenue Agency website to help you. Like your tuition and education credits, unused amounts of charitable donations credit can be carried forward to future years.
5. I have so little income that I'm sure I have nothing to pay. Is there any point in filing a tax return?
Yes, there are several reasons you should file a tax return even when you don't owe anything. First, if you paid any tax, you'll need to file to get a refund. Secondly, if you have credits that you can't use this year but can carry-forward to future years when you will have tax to pay, file a return so that these amounts are put on record. Thirdly, your tax return will be used to assess your eligibility for the GST/HST credit. Also, if you have income, reporting it will increase your future RRSP deduction limits.
These are just a few of the tax matters that are relevant to many students. You will certainly have others if you're an international student, a student with a disability, a married student or a co-op student.
The Canada Revenue Agency has a pamphlet just for you: "Students and Income Tax" available from their website.