International students in Canada are subject to income tax
Filing taxes not only fulfils legal obligations but also unlocks access to government benefits and credits
Toronto: International students who study in Canada must pay taxes on their income, just like Canadian residents.
When international students work in Canada, their employers withhold statutory deductions from their income, including income tax, Canada Pension Plan (CPP), and Employment Insurance (EI), and submit them to the CRA. To ensure accurate deductions, they must complete TD-1 and TD1-BC forms. Furthermore, CPP and EI deductions are routinely subtracted from their wages.
CRA
The Canada Revenue Agency (CRA) manages income tax, which covers tax obligations from January 1 to December 31 each year. Failure to meet the deadlines, especially the April 30 payment due date for the previous year's taxes, can result in penalties.
SIN
International students must understand their tax filing requirements and status, which requires a Social Insurance Number (SIN) or an Individual Tax Number (ITN) for tax returns. If their SIN or ITN has expired and they are not currently employed, they can renew it for tax purposes.
International students must hold a valid work or study permit to obtain a Social Insurance Number (SIN) in Canada. Those not eligible for a SIN can get an Individual Tax Number (ITN). It is recommended that students, particularly scholarship recipients, obtain an ITN for reporting purposes. Some expenses, such as relocation costs, may be eligible for deductions, but tax-exempt income sources, like scholarship income, are not.
Foreign Income
Moreover, International students who participate in income-generating activities, such as research assistantships or investments, may need to pay Canadian income tax. Additionally, foreign income is subject to reporting requirements. Depending on their residency status, students may be exempt from certain tax obligations under tax treaties, regardless of their citizenship.
Tax Benefits
Filing taxes not only fulfils legal obligations but also unlocks access to government benefits and credits, including tuition credits, GST/HST credits, and the Canada Child Benefit (CCB). Credits like the Disability Tax Credit (DTC) and the Ontario Trillium Benefit cater to specific demographic needs.
Did you know? In Canada, doing your taxes every year opens doors to benefits and credits, and sometimes even returns! (even if you don’t have an income)! The deadline is today but there's still time to do your taxes!: https://t.co/CYUNUwi2zH pic.twitter.com/0abvsCUR1C
— Canada Revenue Agency (@CanRevAgency) April 30, 2024
Seek tax advisor
International students who pay taxes in Canada can carry forward credits to offset future tax liabilities or transfer them to eligible family members, offering long-term financial planning opportunities. Seeking advice from the correct tax advisors can always be productive.