Students Studying Abroad

CRA has updated RC192 Information for Students ñ Educational Institutions Outside Canada. Students should seek professional advice in advance of leaving for foreign studies so they are aware of their Canadian tax filing requirements.

Determining whether the sojourn is a temporary absence or if the student is severing ties with Canada is the first thing to establish. A temporary absence would make you a factual resident of Canada while a permanent move would make you a non-resident. A factual resident has to file a tax return every year to report worldwide income, using the tax package from your most recent province of residence. Even with no income it is important to record tuition, education and textbook amounts and apply for tax credits. Form CPT20 will allow CPP contributions when there is employment income outside Canada, and this income also counts for RRSP contribution room.

Tax treaties avoid double taxation, so depending where you end up your residency and income treatment may be affected. CRA provides a link to tax treaties where your tax advisor can research terms and conditions for current agreements. Some countries, like the U.S., have special rules for students.

Students who are away temporarily will have to file in Canada and usually also in the country where they are residing. Your advisor should research the tax filing requirements of the host country. Foreign tax credits can offset foreign tax paid, and there are federal (Form T2209) and provincial (form T2036) credits available. Make sure that you are made aware of the rules for reporting as some types of income that is tax-exempt in Canada, such as scholarships, may be taxable in another country.

The complete details for reporting income and claiming deductions, credits and benefits is available through RC192, which provides links to other publications and web pages. This publication will be familiar to tax professionals who work with student pursuing educational opportunities outside of Canada. Note that the recent federal budget proposed reducing the duration of eligible courses from 13 to 3 consecutive full-time weeks for the purpose of claiming Tuition, Education and Textbook credit and accessing Educational Assistance Payments from RESPs.

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