While Canada welcomes tens of thousands international students whose tuition fees contribute to the national revenues, each year, many Canadians students opt for studying abroad. If you are among the Canadian students who have registered at an overseas institution, you may be subject to additional requirements when filing your taxes in order to qualify for a variety of credits and deductions available for university students.
Whether you can withdraw from your registered education savings plan, along with other tax credits and obligations, hinges on your residential status. If you are a Canadian citizen, studying abroad will have no impact on your residential status. That is, you will still be considered a Canadian resident as per the CRA. However, if you establish significant social ties, e.g. marriage, job contracts, purchase of real estate property, starting your own business, in the other country where you study, your residential status may change for tax purposes. If you are unsure of your residence status, you can submit to the CRA Form NR73, Determination of Residency Status (Leaving Canada). Likewise, if you have finished your studies and plan to return to Canada, you can file Form NR74, Determination of Residency Status (Entering Canada) to be sure of your status.
Registered Education Savings Plans (RESPs)
You can withdraw from your RESPs even if you are studying abroad on the caveats that first, you are considered a Canadian resident, and two, you are registered at a recognized program outside Canada. In general, you are not subject to tax duty withdrawing from contributions made to that account. This, however, does not apply to other assistance you may receive in the interim, such as EAPs.
You may be able to apply for Canada Student Loans for your overseas studies from the website for student financial assistance of your province. You can deduct the interest of the loans on your tax return once you begin to repay them. That said, your eligibility for deduction no longer holds valid if you receive other financial aids or loans from foreign institutions.
Overseas Tax Obligations
In general, you should file a Canadian tax return when you study abroad given your residential status. However, if you earn income in the country where you study, you will have to file taxes to that country. Please note that rules vary between different countries. If you are uncertain about your tax obligations overseas, please consult a tax advisor.
To avoid double taxation, you can claim a foreign tax credit on your Canadian tax return provided that the income is made in one of the countries with which Canada has signed tax treaties.
Too much of a hassle?
Indeed, taking care of your study while edging into a new environment is daunting enough, and you may not have the time to take care of taxes at home. In that case, you can authorize a representative for the CRA My Account. Give us a call at anytime, and we will take care of everything from there, starting from filling out Form T1013 on your behalf.