Tax breaks for students

Even if you have little to no income in the year, filing a tax return has its advantages – it’s the only way to receive all the benefits that are available to you.

If you are 19 or over, you are eligible for the annual GST/HST credit. To obtain this money, which is paid in quarterly installments, you have to apply for it by filing a tax return and completing the GST/HST application section of your return. If you are turning 19 before April 1,2012, make sure you apply for the credit on your 2010 tax return.

If you worked last summer and tax deductions were made from your paycheque, you can probably recover most of the tax, and some of the CPP premiums, when you file your return. If your net income is low enough, you may even be able to save your parents some taxes. To maximize the savings, take advantage of as many deductions as you can, but do not waste any that are available to you. The tuition fees, the education amount and the textbook tax credit that you do not need this year, can be transferred. If you prefer, they can also be carried forward through your tax return, so that you can use them in a future year when your income is higher.

Scholarships, Grants and Student Loans

Not all of your student income is taxable. Since the 2008 tax year, all income from scholarships, fellowships, bursaries and achievement prizes is tax exempt if you are enrolled in a program that qualifies for the education amount in 2007, 2008, 2009 or 2010.
Student loans, of course, are completely non-taxable. You can even claim a tax credit on the interest when you begin paying back the loan.

Deducting Your Moving Expenses

If you relocated during the course of the year, either to get a summer job or to take up attendance at your college or university, it’s possible that you can deduct your moving expenses.
These expenses are deductible if your residence is at least 40 kilometers closer to your new school that your old residence was. However, they can only be deducted against either employment income at your new location or, when you are moving to go to school, against award income such as fellowships, bursaries, scholarships and research grants.

Moving expenses include transportation costs such as your plane ticket. If you used your car, you can claim gas expenses and the cost of any meals and lodging en route. Also deductible is the cost of up to 15 days of temporary accommodation near your new or old residence. Receipts need to be filed with your return, but should be kept in case the Canada Revenue Agency (CRA) asks to see them later.

Claiming Your Tuition Fees

Tuition fees over $100 can be claimed as a tax credit. You can claim tuition fees for post-secondary courses at a college or university or, if you are 16 and over, for courses that you take at other approved institutions to improve your occupational skills. You need an official income tax receipt to claim your tuition fees or a T2202A, but the receipt does not have to be attached to your income tax return if you electronically file. Just keep it on hand incase the CRA asks to see it.

Textbook Tax Credit

Post-secondary students will benefit from a non-refundable tax credit for textbooks. The amount on which the credit is base will be calculated as:
$65 for each month the student qualifies for the full-time education amount; and
$20 for each month the student qualifies for the part-time education amount.
Proof that textbooks have actually been purchased is not required.

Unused Credits

Tuition fees and education amounts that are not needed to reduce your tax payable to zero need not be wasted. If you are single, you can transfer the unused portion to a parent or grandparent. If you are married or living in a common-law relationship, you may transfer it to your spouse or common-law partner. The maximum amount that can be transferred is $5,000 per year. There may also be limitations if you are transferring unused provincial amounts to a resident of another province.