Useful information and options to help with education-related costs.
For many students, tax planning may not rank very high on the list of priorities. However, when you consider that taking advantage of tax credits and deductions is very beneficial in helping students stretch their funds while in school, it makes sense to learn and understand the options out there. This checklist provides a useful quick reference for the most-common federal tax credits, deductions, and tax-assisted programs available to students.
- Tuition fees – Some students may be eligible to claim a 15 percent tax credit of qualifying tuition fees.
- Education amount* – Full-time and part-time students may be entitled to an additional 15 percent tax credit of $400 per month or $120 per month, respectively.
- Textbook amount* – Those who qualify for the education amount may be entitled to a 15 percent further textbook credit of $65 per month for full-time students or $20 per month for part-time students.
- Transfer or carry forward unused tuition, education, and textbook credits – Students who can’t use all of their tuition, education, or textbook credits may be able to transfer up to $5,000 to a spouse, common-law partner, parent, or grandparent.
- Interest on student loans – Some students may be eligible for a 15 percent tax credit for the amount of interest paid on certain student loans.
- Scholarships, fellowships, bursaries, and study grants* – These amounts are likely tax-free for those who qualify for the full-time education amount tax credit. A partial exemption is available for those who don’t qualify for the education amount.
- Moving expenses – If a student moves to be at least 40 kilometres closer to their new educational institution or place of work, they may be able to deduct moving expenses.
- Childcare expenses – In certain situations, students, or their higher-earning spouse, may be entitled to deduct eligible childcare expenses.
- Lifelong Learning Plan (LLP) – The LLP allows a Canadian resident to withdraw up to $20,000 from their RRSP with no immediate tax consequences. Amounts not repaid over the required 10-year period will be taxed as income.
- Research expenses – The research expenses students incur may be used to reduce the amount of taxable research grants received.
- Educational assistance payments (EAP) – EAP received from an RESP is taxable to the receiving individual. Original contributions withdrawn from an RESP are not taxable.
- GST credit – Someone who is 19 years of age or older may be eligible for the GST credit simply by filing a tax return.
- Public transit amount – Students may be able to claim a tax credit for the cost of public transit passes.
- Canada employment amount – Certain employed individuals (e.g., those in a co-op position) may be eligible to claim this tax credit.
*Federal budget 2016, once enacted, will eliminate the education and textbook amounts after December 31, 2016. Changes will be introduced to the criteria that allows scholarship, bursary and study grant income to remain tax-free.
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