Back to School Tax Tips for Students

With back-to-school just around the corner, there are several important recent tax issues for students that will be helpful to keep in mind for the year ahead.

Exam Fees. Students can now claim certain exam fees if the exams are written to get a professional status recognized by the federal or provincial governments or required to qualify as a licensed or certified tradesperson. The claim is based on a calendar, not an academic year, and fees must be over $100.

Foreign Studies. For the purposes of claiming the tuition, education and textbook amount, the minimum qualifying time for a course of studies for full-time students studying abroad falls from 13 to three consecutive weeks. This will also be the minimum duration for the purposes of taking Education Assistance Payments under a Registered Education Savings Plan (RESP), starting in 2011 and subsequent years.

RESP Sharing with Siblings. Tax free transfers will be allowed between individual RESPs for siblings without triggering a repayment of the Canada Education Savings Grant, so long as the receiving beneficiary is under 21 at the time of the transfer. This rule has been in effect for tax years after 2010.

Rollovers of RESPs to RDSPs. Beginning in 2014, the current RESP rollover provisions to RRSPs will be extended to rollovers to Registered Disability Savings Plans (RDSPs). RESP investments, after Canada Education Savings Grants (CESGs) and Bonds (CESBs) have been repaid may be rolled over to an RDSP so long as the plan holder has sufficient RDSP contribution room. These contributions will not generate government contributions (CDSB or CDSGs). Withdrawals of rolled over RESPs will be taxable.

Provincial Tuition Rebate Programs. In an effort to retain graduates, provinces have recently begun to reimburse tuition paid to post-secondary graduates if they remain in the province. Saskatchewan will reimburse 100% of the tuition paid if the graduate remains in the province long enough, while Manitoba will reimburse up to 60%, and New Brunswick will reimburse 50%. This reimbursement is in addition to the credits allowed to students in the year that the tuition is paid (or in a later year if carried forward). For students who continue to live and work in the same province after graduation, the result is a reimbursement of more than the amount of tuition paid (in Manitoba and Saskatchewan).

Excerpted from Essential Tax Facts: 2013 Edition. © All rights reserved.