Tax planning checklist for students

If you’re a student, tax planning may not rank very high on your list of priorities. However, when you consider that taking advantage of certain tax credits and deductions may be beneficial in helping you stretch your funds while in school, it makes sense to learn and understand the options out there. This checklist provides a useful quick reference for some of the most common federal tax credits, deductions and tax-assisted programs available to students.

Note: Different rules may apply for international students studying in Canada or if you’re enrolled at an educational institution located outside of Canada.

Tuition amount – Some students may be eligible to claim a 15 percent tax credit of qualifying tuition fees.
Transfer or carry forward unused tuition amounts – For students who can’t use all of their available tuition credits, it may be possible to transfer unused amounts, up to $5,000. Remember that you must first claim your tuition credit on your own tax return to reduce your taxes payable to zero for that particular year. In general, unused credits can be transferred to a spouse, common-law partner, parent or grandparent. You can also carry forward the unused credits to future years.
Interest on student loans – Some students may be eligible for a 15 percent non-refundable tax credit for the amount of interest paid on certain student loans.
Moving expenses – If a student moves to be at least 40 kilometres closer to their new school (a full-time student in a post-secondary program at a university, college or other educational institution) or place of work (including summer employment or as a co-op student), 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 paid to have someone care for their child while they attended school.
GST/HST credit – The GST/HST credit is a tax-free quarterly payment that aims to help Canadian residents who have a low or modest income offset a portion or all of the GST/HST they pay. Someone who is 19 years of age or over may be eligible for the GST credit simply by filing a tax return.
Canada employment amount – Certain employed individuals (e.g., those in a co-op position) may be eligible to claim this tax credit.
Scholarships, fellowships, bursaries and study grants – For qualifying students, amounts received for annual scholarships, fellowships, bursaries and certain awards are likely tax-free. For those who aren’t a qualifying student, a partial amount is usually still tax-free.
Lifelong Learning Plan (LLP) – The LLP may allow a Canadian resident to withdraw up to $10,000 per year (to an overall limit of $20,000 over a qualifying period) from their RRSP with no immediate tax consequences, to finance full-time training or post-secondary education. Amounts not repaid over the required 10-year period will be taxed as income.
Research grants/expenses – If a student receives a research grant, from a tax perspective, they only have to include in income the portion that exceeds their allowable expenses incurred for research (e.g., laboratory fees, research equipment and supplies costs). Allowable research expenses may be used to reduce the amount of taxable research grants received.
Educational assistance payments (EAP) – If a student is a beneficiary of an RESP, it’s important to consider how to use the funds in the plan to fund their education. Original contributions made to an RESP can be withdrawn at any time on a tax-free basis. An Educational Assistance Payment (EAP) is a payment of the income and government grants that have accumulated in the RESP over time. EAPs can generally be withdrawn if the student is in a qualifying program. An EAP is taxable to the receiving individual in the year it’s received.

Did you know?

Before 2017, there was an education credit and a textbook credit that students could claim on their personal income tax return. If you were unable to use those credits in prior years, it may still be possible to carry forward any unused education or textbook credits and apply them to future taxation years.

This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliate, Royal Mutual Funds Inc. (RMFI). *Member – Canada Investor Protection Fund. Each of the Companies, RMFI and Royal Bank of Canada are separate corporate entities which are affiliates. “RBC advisor” refers to Private Bankers who are employees of Royal Bank of Canada and licensed representatives of RMFI, Investment Counsellors who are employees of RBC Phillips, Hager & North Investment Counsel Inc. and the private client division of RBC Global Asset Management Inc., Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC Dominion Securities Inc. In Quebec, financial planning services are provided by RMFI which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI, Royal Trust Corporation of Canada, The Royal Trust Company, or RBC Dominion Securities Inc. Estate and trust services are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies, clients may request a referral to another RBC partner. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but neither the Companies, RMFI, nor Royal Bank of Canada, nor any of its affiliates nor any other person can guarantee accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, Royal Bank of Canada nor any of its affiliates nor any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. In certain branch locations, one or more of the Companies may carry on business from premises shared with other Royal Bank of Canada affiliates. Notwithstanding this fact, each of the Companies is a separate business and personal information and confidential information relating to client accounts can only be disclosed to other RBC affiliates if required to service your needs, by law or with your consent. Under the RBC Code of Conduct, RBC Privacy Principles and RBC Conflict of Interest Policy confidential information may not be shared between RBC affiliates without a valid reason.

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