Institute Of Chartered Accountants Of Ontario

Institute Of Chartered Accountants Of Ontario

August 11, 2009 08:15 ET

Ontario's Chartered Accountants Offer Tax Tips for Students

CAs' advice designed to help students save money, make money

TORONTO, ONTARIO--(Marketwire - Aug. 11, 2009) - As Labour Day approaches, students might be surprised to learn that planning for school also means that they should be thinking about next year's tax-filing deadline. According to the Institute of Chartered Accountants of Ontario, there are taxation-related steps a student can take to minimize the costs of university. Here are some tax tips from CAs to help students save or even earn money on their taxes.

- Scholarship income - Scholarship, fellowship or bursary income received by a taxpayer in a taxation year with respect to elementary, secondary, post-secondary education or occupational training is not included in income and is, therefore, exempt from tax.

- Tuition, education and textbook credits - The federal government allows a non-refundable tax credit to assist with the cost of textbooks for post-secondary students. The textbook tax credit is calculated based on $65 for each month the student qualifies for the full-time education tax credit and $20 for each month the student qualifies for the part-time education tax credit. In addition, both Ontario and the federal government allow a post-secondary education credit and a credit for tuition expenses.

- Reduce a supporting person's taxes - The education, tuition fee and federal textbook credits arising during the year can be transferred by a student to a supporting person such as a spouse, parent or grandparent (up to certain limits), which allows them to claim the credit and reduce their taxes.

- Unused tax credits - If students have any education, tuition fee or federal textbook credits that aren't claimed or transferred, they can carry them forward to reduce their taxes in the future when their income is higher. They have five years to claim tax credits for student loan interest, but they can carry forward and claim education, federal textbook and tuition fee credits indefinitely.

- Tax refunds - Depending on a student's earnings from summer or part-time jobs, they may qualify for tax refunds, especially if they apply and qualify for GST rebates, tuition credits, education and federal textbook credits or the student loan interest credit.

- RRSP contribution room - Even if students are not expecting a tax refund, if the student has earned income, filing a return could provide some welcome tax relief in the future. Students with earned income should always file a tax return because it will generate Registered Retirement Savings Plan (RRSP) contribution room.

- Moving expenses - Students who move at least 40 kilometres to attend full-time post-secondary school may claim costs associated with moving. Whether studying in Canada or outside the country, students can deduct moving expenses, but only against income from scholarships, fellowships, bursaries and research or similar grants (that isn't exempt) or from part-time jobs they hold while going to school. In some cases, this can increase the credit amount that can be transferred to a supporting person. The biggest benefit comes in the year the student leaves school and begins their new job as the moving costs can be deducted against their new employment income. Moving expenses can also be deducted if a student moves from school to home or another location to work at, for example, a summer job.

- Transit expenses - The federal government offers a non-refundable tax credit to help pay the cost of public transit passes that are of monthly or longer duration. Payments for electronic payment cards and weekly passes where an individual purchases passes for four consecutive weeks (provided certain conditions are satisfied in each case) are also eligible. Students need to remember to keep receipts so that a credit can be claimed. If the students are under 19 at the end of the year, their parents can claim the credit.

- Ontario property tax credit - For students renting accommodation while at school, Ontario provides a refundable tax credit for qualifying individuals based on their occupancy costs in Ontario. Occupancy costs would be based on the rent the student pays (or that someone else pays on their behalf) in Ontario. Students living in residence can claim $25 for their occupancy cost.

As always, individual circumstances will dictate whether these or other tax strategies best apply and conditions must be met in some cases. The Institute recommends contacting a Chartered Accountant for specific tax advice.

About the Institute of Chartered Accountants of Ontario:

The Institute of Chartered Accountants of Ontario is the qualifying and regulatory body of Ontario's more than 33,000 CAs and 5,000 CA students. Since 1879, the Institute has protected the public interest through the CA profession's internationally recognized standards of qualification and conduct. A wide range of organizations and individuals count on Ontario CAs to provide trustworthy and strategic insight, business leadership and financial guidance. The Institute's website is: www.icao.on.ca and the student website is www.guidetorulingtheworld.ca.

Contact Information

  • The Institute of Chartered Accountants of Ontario
    Perry Jensen
    416-969-4271 or 1-800-387-0735 ext. 271
    pjensen@icao.on.ca