Post-secondary students from the north have it good because of their long list of tax breaks.
Your bursaries or scholarships are totally tax-free if you attend at least one month of full-time the post-secondary schooling during the year. This tax concession is particularly important because the GNWT/GN provides generous bursaries to cover your travel, books, tuition, and in some cases, childcare and living costs, if you qualify under the student assistance programs.
Your tuition fees – and related fees such as admission, exam, library, laboratory, mandatory computer services, and athletic and health services – can be claimed as tuition credits on your tax return. This amounts to a legitimate double-dip because the bursary is tax-free while the related schooling costs are claimable.
You can also claim an education amount of $400 for each month of full time schooling ($120/month, if part-time schooling) against your Northwest Territories taxes. Nunavut residents get to claim a total of $465 for both the education and textbook amounts for each month of full time schooling ($140, if part time schooling).
The education (and textbook) amounts and tuition fees have two important features. You may transfer up to $5,000 to a parent or grandparent if you are cannot use them up because of your low income. Or you may choose not to because you can bank your unused credits indefinitely for future use. For example, unused credits of $1,000 equal a future savings of about $200 (or 20 per cent). Since this is a credit and not a deduction, a transfer of the credit to a parent/grandparent yields the same fixed 20 per cent tax savings, regardless of their income. My advice on whether to transfer your schooling credits? Save them for yourself. Transferring these credits involves some complexity because both parties have to report additional information on your tax returns.
You can also claim interest paid on your student loans that were provided to you under the Canada Student Loans Act or the equivalent territorial program. Unused student loan interest can be carried forward and claimed in any of the next five years. It cannot be transferred to a parent/grandparent.
Since you have to leave home to study, moving expenses (your airfare or driving costs) to go to school can be claimed against your employment income earned at the location where you attend school. The moving expense to come home can also be claimed against income earned provided you worked upon your return. In either case, moving costs cannot be claimed if there is no income earned at the locations you moved to.
This is the best tax advice I can give to a student. File your tax return even if you have no income to report. You will be leaving money on the table if you don’t. You must file your tax return to report your schooling credits (tuition fees, education credits or textbook credit , if any) in order for these to be recorded by the Canada Revenue Agency (CRA) and carried forward for future use. You must also file your tax return to receive your GST cheques of up to $300 (annually) that are payable to low-income earners aged 19 or older. Even if you are not yet 19 during 2017, you must file your 2017 tax return to kick start your GST cheques once you turn 19.
Here is another cash giveaway for NT students. The GNWT, through the CRA, pays all low or zero income Northwest Territories residents, aged 18 or older during 2017, a cost of living supplement of $350 if you file your tax return. Nunavut residents do not receive this windfall because of the different GN tax rules.