Little-Known Tax Relief for Student Loans

Student loan indebtedness is a burden that often haunts graduates for many years after they have completed their post-secondary education. According to a Statistics Canada report from 2012, the average university student’s debt is $21,700. Fortunately, there is some relief on the tax return.

Taxpayers who pay interest on student loans under the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Canada Apprenticeship Loans Act or a provincial statute that governs the granting of financial assistance to students at a post-secondary level, may claim a non-refundable credit for the interest paid (on line 319 of Schedule 1) against total income taxes payable. You should have official receipts on hand for the amount paid in case CRA asks for them.

Although not transferable to another person, such as a spouse or common-law partner, any credit not claimed in one year may be carried forward for up to five years. Keep back-up documentation on file.

If you missed this credit on your 2016 tax return, be sure to make an adjustment request. If you had a professional EFILE your return, they can quickly adjust it for you once you provide them with the details. If you filed your own return, get form T1ADJ to request the adjustment. When making adjustment requests, it is generally a good idea to submit a copy of the receipts with your request. Be sure to keep a copy for yourself in case the ones you submit are somehow misplaced. Adjustment requests may take some time to be processed, so be patient while waiting for the refund of your overpaid taxes.

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