Angela Iermieri | Financial Planner | Desjardins Group
Yes! Why not take advantage of all the benefits available to you?
Here are 6 reasons why you, as a student, should file a tax return and keep from missing out on credits you’re entitled to:
1. Get back certain taxes deducted from your paycheque
Every cent counts when you’re a student. If you received employment income, you might be able to get back some of the taxes your employer deducted from your paycheque (e.g., Canada Pension Plan (CPP) or Régie de rente du Québec (RRQ) contributions).
If the taxes you have to pay are less than the tax credits you’re entitled to, you might be able to get back the federal and provincial taxes that were taken off your pay. With the basic credit, you don’t have to pay any federal tax if your taxable income for 2016 is less than $11,474 and no Quebec provincial tax if it’s less than $14,438.
2. Build up RRSP contribution room
As soon as you file your first tax return, even if you’re not yet 18, RRSP contribution room starts to build on income earned. No money to contribute? No problem! Unused contributions accumulate and can be used later on, when your earnings are higher and you can get a better tax reduction.
3. Position yourself for the GST/HST tax credit and Quebec’s solidarity tax credit
These credits are for low- and modest-income individuals. One of the eligibility conditions: you need to have filed an income tax return, even if you don’t have any income. That’s right: it’s the only way that the tax authorities can confirm that you have a low income, or no income at all, and that you can show your eligibility for various credits. You have to be 19 years of age for the GST/HST tax credit, and 18 years of age for the solidarity tax credit.
4. Claim education and textbook amounts
2016 is the last year to take advantage, so don’t miss out! This credit can be claimed by the student or their parents. Any previous unused amounts will remain available for future years. Only the student can ask that this amount be carried forward.
5. Use the public transit tax credit
Last year to claim all of your expenses! When it’s the main way to get around, it’s a major expense, so it’s worth it to take advantage. The 2017 federal budget proposes eliminating this credit as of July 1, 2017, so any expenses after that date won’t be eligible.
6. Pay your dues
If you received any scholarships or bursaries, interest income, investment dividends or the educational assistance payment from a registered education savings plan (RESP), these amounts are added to your employment income. If the taxes on the amount of your income are more than your tax credits, you will owe taxes. As a citizen, the taxes you pay make a positive contribution to society.