Keeping the taxman at bay
Smart tax tips for university students
You’ve seen them, slowly filtering into newspapers and onto airwaves and billboards.
Each year at about this time they start to appear, beckoning you—the average full-time student—to start thinking about how much money you earn and how much money you can make. They may be everywhere, but do we take them seriously? They’re advertisements after all. But every time we catch them, they remind us that one thing’s sure: you’ve got to pay the taxman.
Advertisements for tax preparation services and software providers are not the most exciting thing for many university students. Taxes tend to fall into the realm of “grown-up responsibilities” and are the last thing on the list of things to do as finals approach.
Many students may not understand the ins and outs of filing income taxes and feel like they are probably going to have to pay. The truth is that you might just benefit from everything Revenue Canada has to offer those of us studying full-time. Why not let the tax man pay you?
As a student, you are required to file a return if you have had to pay tax for the year or if you have worked during the year. There are also many other reasons why filing your taxes is required—like your Lifelong Learning Plan or Working Income Tax Benefit—but the most important is that you should apply for a tax refund. Do you want more money? Of course you do.
There are many good reasons to apply for a tax refund. As a Canadian resident you receive a basic personal exemption, meaning that you can earn up to $10,320 during the 2009 tax year tax free!
If you worked during the year and your employer deducted federal and provincial income taxes, you will be refunded back all this money when you file your tax return. If you don’t file your return, the government certainly won’t come knocking at your door to tell you that you are entitled to get this money back. It’s in your best interests to make that happen.
An added bonus: if you will turn 19 years old before April 2011, you may be eligible to receive Goods and Services Tax/Quebec Sales Tax credits. This tax year, this amounts to $549 if you live alone. Some other reasons to file your income taxes are to carry forward or transfer unused tuition tax credits. As a bit of advice, you should also report income which will start opening up room for Registered Retirement Savings Plan contributions.
Many people wonder how exactly GST/QST credits work, or why they should expect money even if they were not employed during the year. The GST/QST Credit program issues payments to Canadians with low and modest incomes to help offset all or part of the GST/QST they pay on their purchases, so even if you did not work during the year, you are still eligible to receive payments. GST payments are made quarterly in July, October, January and April and QST payments are made twice annually in August and December.
Each year in February, Concordia issues official tax slips to all students on record. These tax slips are available for download from the MyConcordia Student Portal. The Federal slip is titled T2202A and the Provincial slip is titled Relevé-8 and you should print them out or save them digitally in a secure location.
If your tuition tax credits cannot be used in the current year, you will be able to transfer them to a parent or spouse or carry them forward to a future year. In many cases, if your tuition credits are carried forward to the future, you will receive some large tax refunds in the first few years when you begin to work full-time after school.
Before you get started on filing your taxes, make sure you have your Canadian social insurance number, which all Canadian citizens require. If you don’t have one, contact Service Canada for an application or, if you are an international student, you should have an individual tax number which will still allow you to file your income taxes and reap the same benefits. The form is available on the Service Canada website as well.
The deadline to file your income taxes is April 30. If you expect a refund, this deadline will not apply and you can file anytime, though it’s recommended to file early. The money’s way better off in your pocket than in the government’s.
As a student, there are many different routes you can take in order to get your taxes filed on time. You may opt to try filing on your own or you may visit your local accountant or tax preparation service provider, many of whom offer discounts to full-time students.
Just don’t delay any longer, get started right away! Trust me, your pocketbook will thank you.
Allan Fefergrad graduated from commerce at Concordia in 2003 and recently received his Certified General Accountant’s designation.