Students Must Keep Good Records
Jarrett McKay - Sep 26, 2016
Baby boomers will remember how simple the world was when they were starting university. All costs were measured in hundreds of dollars. That is, annual tuition fees might be $500 or so. Textbooks, even in the most costly disciplines, would normally n
Baby boomers will remember how simple the world was when they were starting university. All costs were measured in hundreds of dollars. That is, annual tuition fees might be $500 or so. Textbooks, even in the most costly disciplines, would normally not be any more. Room and board costs could be avoided by living at home.
Not so today. For starters, typical tuition fees of $4,000 to $10,000 are not uncommon, with some specialty faculties charging considerably more.* And all other expenses are higher. We did not have to buy fancy computers back in the day, for example.
But we did not have Registered Education Savings Plans (RESPs) back then, either. Indeed, RESP contribution limits of $50,000 seem entirely fitting to today’s reality. If you don’t have one in place for your children or grandchildren, get started immediately to benefit from tax-sheltered growth and government grants.
Beyond RESPs, today’s tax rules mean there are other actions that students should take to save themselves (or their parents) some money.
Keep Receipts — Receipts are important, in order to claim tuition, education, and textbook allowances on federal tax returns, or to transfer the credits to other family members, if allowed.
Keep receipts as well for any moving expenses. Students attending a distant post-secondary institution may be able to deduct the costs of moving closer to their workplace for the summer (even to home) under certain conditions. Note that this provision also applies to non-students as well.
Students who use public transit to get to and from classes should also keep their receipts for monthly or annual passes when claiming the public transit tax credit.
File Tax Returns — Students having any kind of earned income from summer or part-time jobs should be sure to file tax returns, even if they don’t need to pay any income tax immediately. The reasons: Earned income will result in Registered Retirement Savings Plan (RRSP) contribution room for the future. The credits will mean less tax will be payable in some future year when they start to work full time. Moreover, some of the tuition, education or textbook allowances, or the tax credit available for student loans, may be carried over to future years if not required to reduce current income tax to zero.
*For the 2014/2015 academic year, the average undergraduate tuition fee was $5,959, according to Statistics Canada.
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