Non-refundable tax credits - Segment 12
Host: Welcome to the segment called Non-refundable tax credits, part of the International Students and Income Tax video.
This segment mentions links where you can get more information. You can find all these links in the Related links for this segment.
With me is Peter Cheng. Welcome Peter.
Subject matter expert: Thank you, Sarah.
Host: What deductions can international students claim to reduce the amount of tax that they have to pay?
Subject matter expert: There are four types of deductions and credits that you may be eligible for.
They are: deductions from your total income, which are used to calculate your net income; deductions from your net income, which are used to calculate your taxable income; non-refundable tax credits; and federal and provincial or territorial tax credits.
This segment will focus on the non-refundable tax credits, which are calculated on page 1 of Schedule 1.
Host: What exactly are non-refundable tax credits?
Subject matter expert: A non-refundable tax credit reduces the federal income tax that you have to pay. However, if the total of your non-refundable tax credits is more than your federal income tax payable, you will not receive a refund for the difference. This is why they're called “non-refundable.”
Host: Are there both federal and provincial non-refundable tax credits?
Subject matter expert: Yes there are. Federal non-refundable tax credits are calculated on Schedule 1 of the general income tax and benefit return. You may also be entitled to provincial or territorial non-refundable tax credits in addition to your federal non-refundable tax credits. Each province and territory has its own forms for claiming credits.
All provincial and territorial forms, except for Quebec's, are available on the CRA website. To get the forms for Quebec, go to www.revenuquebec.ca.
Host: What are some common non-refundable tax credits that apply to students?
Subject matter expert: Most students can claim the basic personal amount, the public transit amount, and the tuition, education, and textbook amounts.
Host: Are there any special non-refundable tax credits that students who are reporting employment income can claim?
Subject matter expert: Students who report employment income may be able to claim the Canada employment amount.
While you were employed, you may have had Canada Pension Plan, or Quebec Pension Plan, and employment insurance premiums deducted from your pay. If so, you may be able to claim a portion of these deductions as non-refundable tax credits.
Host: Where can I get more information on these non-refundable tax credits?
Subject matter expert: For more information, visit the CRA's video gallery page at www.cra.gc.ca/videogallery and watch the video series Canadian Students and Income Tax.
For a full list of non-refundable tax credits, go to the CRA webpage on that topic.
Host: Is an international student who is not a resident of Canada entitled to the same non-refundable tax credits as a resident of Canada?
Subject matter expert: If you're a non-resident of Canada for tax purposes, and 90% or more of your income is from Canadian sources, you can claim all of the federal non-refundable tax credits that apply to you. You can also claim any equivalent provincial or territorial non-refundable tax credits if you are filing a provincial or territorial return.
If you're a non-resident, and less than 90% of your income is from sources in Canada, you can claim certain non-refundable tax credits that apply to you.
Host: Can you explain that a little further?
Subject matter expert: Of course. If you're an international student who is not a resident of Canada for tax purposes and you're reporting Canadian-sourced income, but that income is less than 90% of your worldwide income for the year, you can claim only the following non-refundable tax credits if they apply to you: Canada Pension Plan or Quebec Pension Plan contributions, employment insurance premiums, the disability amount for yourself, interest paid on Canadian student loans, the tuition amount for yourself, and donations and gifts.
You are not entitled to the textbook or education amounts.
If you are not reporting any Canadian income, you cannot claim any non-refundable tax credits.
Host: Let's say I'm an international student who is a newcomer and became a resident of Canada during the year. Will I be able to claim the full amount of non-refundable tax credits?
Subject matter expert: You will be able to claim some non-refundable tax credits in full, such as the public transit amount.
As a newcomer to Canada, other amounts you can claim, like the basic personal amount, might need to be calculated based on the number of days you were in Canada.
Host: What do you mean?
Subject matter expert: You need to figure out the number of days you were in Canada and what percentage of your income was from Canadian sources. The calculations are fairly complex.
You can find all the rules that apply to newcomers and non-refundable tax credits in Pamphlet T4055, Newcomers to Canada. See the section on federal non-refundable tax credits.
Host: What if I didn't have any income from any sources during the non-resident period?
Subject matter expert: If you had no income during the non-resident period, you may claim all the non-refundable tax credits that apply to you.
Host: Thank you, Peter.
This concludes the segment called Non-refundable tax credits, part of the CRA's International Students and Income Tax video.
Thank you for watching.
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