Have A Student In Your Life? Do They Need To File A Tax Return? Things To Consider

Filing tax returns is often associated with working, so many Canadian students don’t bother filing taxes; they don’t have significant income to pay taxes on. Some students even earn below the basic personal amount (BPA).

The Canada Revenue Agency (CRA) offers various tax benefits to low-income earners and students, whether you avail yourself of them or pass them on to a family member. 

Do Students Need To File A Tax Return?

Filing tax returns has several benefits for students in the short and medium term, as they can either use them now or carry them forward to future years when their taxable income increases.

• Tax refund and refundable credits: The CRA determines a BPA ($16,129 for 2025) every year on which no tax is deducted. If you have done a part-time or summer job and the employer still deducted tax, you can file a tax return and request a refund.
• GST/HST Credit: Low-income Canadians above 19 years of age may qualify to get a tax-free quarterly payment in the form of goods and services tax (GST)/Harmonized Sales Tax (HST) credit. But you have to file tax returns to get these payments.
• Canada Child Benefit (CCB): If you are a parent raising a child under 18 and also studying, you can apply for a tax-free, monthly federal payment in the form of Canada Child Benefit. The benefit amount will depend on the previous year’s adjusted family net income, the number of children, and the child’s age.

Not filing tax returns is like leaving cash on the table. These payments can help you repay your student loan, invest, or make ends meet. If you are also earning or likely to start earning in the next few years, you can also accumulate tax credits now to lower your future tax liability just by filing tax returns.

• Tuition Tax Credit (TTC): Students aged 16 or older enrolled in designated institutions can claim Tuition Tax Credit for admission, application, and examination fees totalling $100 or more. If they don’t have taxable income, they can carry forward unused credit and claim it when they start earning taxable income, or transfer some of it to a spouse, parent, or grandparent.
• Interest on student loans: Students can claim a tax credit on the interest on qualifying student loans. Any unused credit can be carried forward for 5 years or transferred to someone, such as a spouse or parent.
• Canada Training Credit (CTC): If you are a Canadian resident aged 26-65 and planning to pursue a course, you will accumulate $250 in CTC each year, up to a lifetime limit of $5,000. You can use it to offset 50% of the tuition and fees or the accumulated CTC, whichever is less.
• RRSP Contribution: If you have started earning, you want to report that income on your tax returns to be eligible for the Registered Retirement Savings Plan (RRSP), which is 18% of your earnings or the maximum contribution limit, whichever is lower. You do not need to contribute to an RRSP, but filing returns will help you accumulate contribution room, so that when your earnings rise, you can use your RRSP contributions to reduce taxable income.

Key Considerations for Canadian Students Filing Taxes

Once you have decided to file tax returns, start collecting the necessary documents, which may include:

• T4 slip if you are working full-time or part-time. It will show your income and tax deductions, and help you claim a tax refund.
• T4A slip for freelancers, scholarships/grants, bursaries, fellowships and prizes needed to claim exemption.
• T3 slip for beneficiaries of a trust, estate, or mutual fund trust that earned income in a non-registered account. It reports income like dividends, interest, and capital gains allocated by the trust.
• T2202to claim tuition tax credit on tuition, education, and textbook amounts.

Filing tax returns at the early stages of life can be rewarding, as you may be able to claim benefits to ease your financial burdens and accumulate tax credits for future tax use.

To learn more about how DNTW Toronto LLP can provide you with the best accounting services, reach out to us here.