Tax Tip – People On the Move (part 2) : Studying Abroad

People on the move and taxation in Canada;
Part 2

This time we will talk about Canadian Students studying Abroad;

The situation changes a lot if you move out of country for education as many international jurisdictions require you to file taxes in that country as well.

As a Canadian citizen, a student studying internationally would still file a tax return in their home province. But if they are working out of country, then they have to report that income in both places, where they are living and on the Canadian tax return. The student will have to ensure the tax preparer is competent and can determine if Canada and the other country have tax treaties or not.

The Canadian Revenue Agency will rely your Residency Status to determine how you should file your tax return when living abroad to study at a post-secondary institution. The determination will be if you are a Factual Resident;

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/factual-residents-temporarily-outside-canada.html

or a Deemed Resident;

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/deemed-residents.html

The filing options are very similar but there are differences in deductions and credits for both. Follow the link above for more detailed information, or contact Accounting-4-U.

If you worked abroad while attending College or University, the country you are working will likely have rules that you need to follow and will likely insist that you file a statement of income and pay any non-resident income taxes. If the country in question has tax treaties with Canada, you may be able to claim tax credits for taxes paid in that country when claiming the same income on your Canadian tax return. Ask your tax preparer if they are aware of this.

Incidentally, the advice of not filing Canadian tax returns till you get home is in fact a horrible plan. This can lead to everything from simply missing refunds that you are then ineligible for, to large tax debts and ultimately, the possibility of not being able to get work or even social assistance once you have returned to Canada until you get all the unfiled years caught up.

And of course, you have to keep all of your income data from the country you lived in as you are expected to declare world income. Yes, it is one of the main reasons people become Ex-pats, or expatriated from their home country. They failed to keep up their residency status in Canada by coming home to visit for a while and filing taxes in Canada. And the cost of the tax burden of filing all of those missed years becomes more than they can deal with upon returning. All things come at a cost. Don’t get caught in this mess! If you do, let Accounting-4-U help with that!

File your Canadian tax returns through a competent and reputable firm such as Acounting-4-U. The internet lets us work with anyone, anywhere in the world. And check out the Canada Revenue Agency website at http://www.cra-arc.gc.ca for specific topics.

If you need further clarification on this or other tax related topics, please contact me using the link on our website at www.Accounting-4-U.com , until then work hard and play hard, but pay your fair share. It keeps the country running!

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