One topic that may come as a surprise to students (particularly international students) is the Canadian tax filing requirements based on the concept of residency. Canada, like many other countries such as the US, taxes based on residency status. That means that the type of income you earn and what type of tax resident you are in Canada will determine whether you need to file a tax return and how much tax you might have to pay.
A detailed breakdown can be found on the CRA website on the Income Tax Folio S5-F1-C1.
A key takeaway is that depending on how closely “tied” you are to your home country (e.g., whether that be through the location of your primary home, where your family is living, and any property or social/economic ties like bank accounts and club memberships), that will impact your residency status. You likely won’t be considered a resident of Canada if you maintain your primary home in another country, visit your home country frequently, and maintain most of your ties in that country. However, you can still be deemed to be a resident of Canada if you are physically in Canada for 183 days or more in the calendar year. For most students, for most school years, you will be deemed a resident of Canada throughout the calendar year. The exception could be where you work abroad or if it is your first year of university and therefore doesn’t meet the 183 day threshold to be a deemed resident.
Residents (including deemed residents) of Canada are taxed on their worldwide income, while non-residents of Canada are only taxable on their Canadian source income. If you are a resident of Canada and also a resident of another country under their tax laws, relevant tax treaties may apply and should be considered to determine whether you need to file a Canadian tax return.
If you are a non-resident, you are required to file a Canadian return if you were employed in Canada, carried on a business in Canada or disposed of taxable Canadian property as defined. For example, if you are a non-resident and do TA work for UW, you will only be taxed on that UW TA income on a Canadian tax return.
Even if you conclude that based on your residency status, you don’t need to file for the year, there may still be some advantages to filing a return that you should investigate. You may still be eligible to claim certain refundable credits such as the GST/HST credit, Ontario Trillium Benefits (if you paid for rent in Ontario), and the Climate Action Incentive.
- Meagan, Young Tax Professional