This post was updated on April 10, 2013
Many university and college students have part-time and summer jobs in order to pay for school as well as their living expenses. With a job and a paycheque comes the responsibility of filing an income tax return. If you’re a resident of Canada for all or part of a tax year, you have to file a tax return if you either owe taxes or you think you may be entitled to a refund.
Students can reduce their taxes by claiming some of the costs of their post-secondary studies.
- Claim tuition fees for courses costing $100 or more that are taken at a recognized educational institution. Tuition fees include examination fees, which must be paid for a mandatory examination to become certified or licensed in your profession or trade. For example, the uniform final examination fees to become a chartered accountant will now qualify for this tax credit.
Full-time students studying at a university abroad can claim tuition fees for at least three consecutive weeks of study.
- Claim an education tax credit of $400 per month (worth $60 per month in tax savings) for each month that you are a full-time student. Claim $120 per month if you are a part-time student.
- Claim a credit of $65 per month for textbooks for full-time students and $20 per month for part-time students.
- Complete the T2202A, Tuition, Education and Textbook Amounts Certificate form when you file your tax return. You must claim these tax credits first yourself, but if you aren’t able to use all of them, you can transfer the unused amount (up to $5,000) to your spouse, parent or grandparent. You can also carry forward and claim them in the future when you owe taxes.
Some university students may also find it necessary to get student loans to help pay for their education. You can claim most of the interest paid on loans granted under the Canada Student Loans Act, the Canada Students Financial Assistance Act or similar provincial laws, as a tax credit. If you cannot use the credit, you can carry it forward for five years. But you can’t transfer the tax credit to anyone else, even if someone else paid the interest on the loan. You also can’t claim interest paid on any other kind of loan, such as a personal line of credit.
Some other tax breaks students should be aware of are moving expenses and transit passes. If you move to attend full-time university studies, you may be able to claim moving expenses if:
- You receive scholarships, fellowships and bursaries while at school that are included in your income; and
- You move at least 40 kilometres closer to attend school
A public transit tax credit is available to encourage public transit use. Anyone is eligible – not just students – but students are most likely to rely on public transit to get around. The credit is for the cost of monthly or annual passes (not individual tickets) for unlimited travel within Canada on local buses, streetcars, subways, commuter trains/buses and local ferries. Remember to keep receipts or expired passes as proof of your claim.