1.7 What are tax credits that might be relevant to a typical 20-year-old student who is also working part-time?

A tax credit is an amount that is subtracted from the tax payable owed to the government. Credits can be refundable or non-refundable; however, they are typically “use it or lose it” credits (i.e. if they are not used by the taxpayer in the year, they cannot be carried forward).  Some of the tax credits that might be relevant to a single student (with no kids) working part-time are as follow:

• Tuition credit – This is based on your tuition fees paid in the year.  In some circumstances, a portion of your tuition fees can be transferred to your parents (and other individuals specified in the ITA).
• Credit for interest on a student loan – only on a student loan, e.g., if you receive it under the Canada Student Loan Act, Canada Student Financial Assistance Act.
• Credit for EI and CPP contributions – Canadian pension plan (CPP) and Employment Insurance (EI) are programs run by the federal government and are deducted from the pay of an employee, the employer may also make the contribution to CPP and EI on the behalf of the employee.
• Personal tax credit – all residents of Canada are eligible for the Personal tax credit.
• Employment tax credit – a non-refundable tax credit referred to as Canada employment credit recognizes that employees often incur various work-related expenses.

A student in Canada can claim any of these tax credits. The more tax credits that apply to a student, the more they can reduce the income tax they owe to their government.  Remember that the tax credit is typically calculated by taking the tax credit base (for example, the tuition fees paid would be the base) and multiplying it by the ‘appropriate percentage’ (currently 15%).

References and Resources

• Income Tax Act, RSC 1985, c1, (5th Supp.) 117 – 122
• VIDEO – Simple Tax Hacks for Canadian Students (Author: Student life networking)
• Chartered Professional Accountants. (2022). The Chartered Professional Accountant Competency Map. Part 1: The CPA Competency Map: 6.3.2

January 14, 2019

“What are tax credits that might be relevant to a typical 20-year-old student who is also working part-time?” from Introductory Canadian Tax Copyright © 2021 by Manpreet Kaur is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.