In the last few weeks I received a number of calls from international students studying here Toronto who were in need of advice. Admittedly I have a soft spot for foreign students and I appreciate their struggles. I was one myself a couple of decades back. Given the level of confusion that international students have around taxes and recent announcement by the federal government to double international student body in Canada, I thought it is necessary to post this article.
I think majority of the international student body see their education abroad as a privilege and many are financially stretched in chasing their academic goals. For instance, University of Toronto tuition fees for international students are 400% higher than for domestic. Financial strains are only exacerbated by culture shock. Although Toronto is very much a multi-culture city, we still have our own rules of behaviorand view of social roles. Language is another barrier for proper integration into the community and impacts financial affairs negatively. On many occasions international students are self-conscious about their less than perfect English. This causes difficulty in the interview process and many either do not persist to explain full context of their respective situation, or service providers take advantage of the language gap and perform suboptimal service for unaware consumer.
In many instances students, due to cultural backgrounds, are also prone to “bargain hunting” where cheap tax preparation fee translates into an equivalent service. In most cases of inherited student files, I find lack of continuity schedules, improper disclosure of carryover amounts, missing moving expenses and other numerous elements that should come up in a thorough interview process. Unfortunately, it is a bit of a perfect storm where cash-strapped students are looking for the least expensive service, and this demand is met by service providers who are interested in quantity not quality.
At Equilibrium Financial, students get the same level of attention as any other client. We have special rates for our full-time-student clients and we view this work as an opportunity to contribute back to the community.
If you are an international student in Canada, it is important that you understand your entitlements and obligations under Canadian tax system. Under Canadian rules, your entitlements and income tax obligations are based on your residency status in Canada. Nearly all international full-time students satisfy residency requirements and can file taxes. If you are not sure of your residency status in Canada for income tax purposes, complete Form NR74, Determination of Residency Status (Entering Canada), and send it to the International Tax Services Office.
It is important to understand for international students that in almost all cases it is to the benefit of the student to file taxes. Most students work part-time jobs, have significant tuition spent, urban housing costs and other factors that in compilation of tax files produce a tax refund, HST rebates, and other potential benefits. It is important to understand that CRA will not issue the refund without the tax filing claiming this refund! CRA only follows up with taxpayers in instances where CRA feels that tax-payer owes money! Not all is bad with CRA, specifically in the last few years agency has been optimizing its website and streamlining access to information: for instance, Students and Income Tax Pamphlet.
If you are a student, know that we are interested in setting you up for success and I was in your shoes not so long ago. Do not hesitate to connect with me – help is only a phone call or an email away!