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Students should take advantage of tax credits

If you are a student, take advantage of all the tax credits and deductions to which you are entitled. While you may think you are only eligible for education-related credits while attending school in Canada, you may also qualify for tax credits for overseas and/or online studies. You may also be eligible to receive credits that are available to all qualifying Ontarians, provided you file a tax return.

To make sure you receive all of the credits for which you are authorized, consider these tips from Chartered Accountant Julie Robson, Associate Director of the Master of Taxation Program at the University of Waterloo’s School of Accounting and Finance.

Claim for study outside Canada – “There are three tax credits related to being a student: The Education Tax Credit, the Textbook Tax Credit and the Tuition Tax Credit,” explains Robson. “All three are available for studies outside Canada under the right circumstances.” To be eligible for the Education and Textbook Tax Credits, your study outside Canada must be a course of at least 13 consecutive weeks and in a post-secondary-level program at a university that leads to a degree. The foreign country’s accrediting body must recognize the school as an educational institution that confers degrees at a minimum of the bachelor’s level or equivalent.

“This is more restrictive than the rules for study within Canada, in that studies at a community college outside Canada do not qualify, except where the student lived in Canada near the border with the United States and the student commuted to the college in the United States,” says Robson. “Full-time students studying outside Canada can claim a Tuition Tax Credit for tuition fees paid to the university. Again, this is tighter than the rules applying to study inside Canada, in that part-time students studying outside Canada cannot claim the Tuition Tax Credit (unless the part-time students are commuting to the United States).

Claim for online studies – “Students taking online courses can qualify for the Education and Textbook credits,” says Robson. “For online study through Canadian institutions, tuition credits are also allowed.” If you are doing online coursework at a foreign university, the Canada Revenue Agency (CRA) must consider you to be attending full-time before you are eligible for the Tuition Credit. “The CRA’s current position is that online studies may constitute full-time attendance if students are required to participate in regularly scheduled interactive learning sessions,” adds Robson. “Again, to be eligible, the foreign post-secondary course must be 13 consecutive weeks and lead to a degree.”

Claim the Public Transit Tax Credit – “A student or student’s spouse may claim a credit equal to 15 per cent of the cost of a public transit pass or electronic payment card for the use of public commuter transit services,” says Robson. “The pass or card must have unlimited rights of usage for specified periods or meet usage requirements.”

Claim the Ontario Energy and Property Tax Credit – “The new Ontario Energy and Property Tax Credit will be available to students if they pay rent or property tax for a principal residence in Ontario and were living in Ontario on December 31, 2010,” says Robson. “The maximum credit is $900 for 2010, and is reduced by two per cent of income over $20,000. You must file a 2010 personal income tax return to receive this refundable credit.”

Claim the Ontario Sales Tax Credit – “The new Ontario Sales Tax Credit is available to an Ontario resident who is a resident of Canada for tax purposes and who is 19 years of age or older at the beginning of the month before the month that the credit instalment is paid,” explains Robson. “This refundable credit provides up to $260 a year and is reduced by four per cent of income over $20,000.” You must file a 2010 personal income tax return to receive this credit.

Claim the Ontario Sales Tax Transition Benefit – “This benefit provides three tax-free payments to Ontario residents to assist with the transition to the Harmonized Sales Tax (HST),” says Robson. “The maximum refundable benefit is $300 and is clawed back when 2010 income reaches $80,000.” To receive this benefit, you must be living in Ontario on the last day of the month before the month in which the payment is made. You must also be a resident of Canada for tax purposes and file 2009 and 2010 tax returns by April 30, 2011 and April 30, 2012 respectively.