Canadian Tax obligations for International Students : For many Canadians, the arrival of April means it’s time to prepare and file their income tax returns. It’s a time when people pull out their boxes of receipts and either visit their accountant or get to work with a pencil and calculator to calculate their income tax forms themselves.
But for international students studying in Canada, filing income tax returns can be a confusing process, especially if they don't have any income to declare. However, there are many reasons why international students should file income tax returns in Canada.
Canada has a progressive tax system, which means that as an individual’s income increases, they move into higher tax brackets and pay a higher percentage of their income in taxes. This system funds government programs and services like healthcare, education, social services, infrastructure projects, national defence, and public safety.
If you’re an international student studying in Canada, whether you need to file an income tax return depends on your residency status for tax purposes, your income earned in Canada, and any applicable tax treaties between Canada and your home country.
Residency status for tax purposes in Canada is determined by the Canada Revenue Agency based on factors such as the duration of your stay in Canada, your residential ties to Canada, and your significant social and economic connections to Canada.
If you’re considered a resident of Canada for tax purposes, you’re generally required to report and pay taxes on your worldwide income, including income earned both inside and outside of Canada. On the other hand, if you’re a non-resident of Canada for tax purposes, you’re generally only required to report and pay taxes on certain types of Canadian-source income.
However, one important reason for international students to file taxes is to claim benefits like GST credits (payments to offset all or part of the tax paid on purchases), the Child Tax Benefit, or to claim a refund.
Filing income tax returns in Canada can be a complex process, especially for international students. That’s why it’s recommended to seek professional tax advice from a qualified tax professional or accountant who is knowledgeable about Canadian tax laws and regulations for international students.
To file your income tax return, you’ll need a Social Insurance Number (SIN) or, if you’re not eligible for a SIN, an Individual Tax Number (ITN). You’ll also need other documents such as the T2202 form to show tuition fees paid, the T4 form from your employer, T4A form for scholarships or bursaries, interest tax slips, receipts for charitable donations and medical expenses, and more.
In conclusion, international students studying in Canada should understand the importance of filing income tax returns, even if they dont have any income to declare. By seeking professional tax advice and ensuring that they comply with their tax obligations, international students can take advantage of available tax benefits and exemptions while contributing to the Canadian tax system.