Make sure students file a tax return
Students may find themselves with some extra cash for the summer if they take the time to file a tax return this April.
Even though there is generally no obligation to file a tax return if no taxes are owed, there are several reasons why students should consider filing.
- If they are at least 19 years old, filing a tax return establishes a right to collect the GST/HST credit, which is a tax-free quarterly payment meant to assist individuals with low incomes to offset all or part of the GST/HST they pay on goods and services. To receive the GST/HST credit, you must apply for it by filing an income tax return, even if you received it in the prior year. To estimate how much the credit could be worth, filers can go to the Child and Family Benefits Online Calculator on the Canada Revenue Agency’s website.
- Filing a return to report par-time or summer earnings will generate RRSP contribution room for use in future years, since the RRSP limit is based on 18% of earned income from the previous year. Since there is no limit as to how much unused RRSP contribution room can be carried forward, filing a tax return to report earned income will allow students access to more of a contribution later in life when they are in a higher tax bracket.
- Filing a tax return may also allow them to get a refund on any tax withheld during a part-time or summer job. Since most students are in a non-taxable position due to the myriad of credits available to students, filing a return to get back the amounts withheld at source is worthwhile.
- Full-time students should be able to claim the education amount of $400 for each eligible month of full time attendance. If you are eligible for this credit, most can claim the textbook amount, equal to $65 for each eligible month in full-time school.
- Tuition fees and interest on student loans may also be eligible for a credit.
- Students who take public transit are able to claim the transit credit.