International Students & Income Tax: Working in Canada

International Students & Income Tax: Working in Canada

September 1, 2019 0 By Stanley Isaacs


Welcome to the segment called International students
working in Canada, part of the International
Students and Income Tax video. This segment mentions links where you can get
more information. You can find all these links in the Related links
for this segment. Joining us today is Peter Cheng. Welcome Peter. Thanks Sarah. Let’s say I’m an international
student who is in Canada on a study permit, am I
allowed to work in Canada? If you’re in Canada as an
international student, you can only work off-campus in
Canada if you get a valid work permit from Citizenship
and Immigration Canada. For more information on work
permits, visit www.cic.gc.ca. You will also need a
social insurance number, or SIN, from Service Canada. You can find more information
on SINs in another segment of this video, or by visiting
www.servicecanada.gc.ca. As an international student,
will I have to fill out any tax forms when I start working? Yes, you will have
to complete Form TD1, Personal Tax Credits Return. The employer uses this form
to figure out how much tax to deduct from your employment
income or other income, such as pension income. The TD1 also outlines the
non-refundable tax credits that you can claim on your
income tax and benefit return. Does my residency status
affect how I fill out the TD1? Yes, it does. The basic personal amount is
already filled out on Form TD1, but your residency status
affects how much of it, if any, that you can claim in the year. If you are a
non-resident of Canada, you can only claim the basic
personal amount if 90% or more of your world-wide
income for the year is from Canadian sources. If less than 90% of your income
is from Canadian sources, put a zero for the total claim
amount on line 13 of Form TD1. You also have to check the box
for non-residents on page 2. Let’s say I’m an international
student and this is my first tax year, can I claim the full
basic personal amount? That depends on the percentage
of Canadian income you earned during the part of the year you
were not a resident of Canada. You can claim the full basic
amount if one of the following two situations applies: the
Canadian-source income you are reporting for the part of
the year that you were not a resident of Canada represents
90% or more of your net world income for that
part of the year, or you had no income from
sources inside and outside Canada for that
part of the year. Keep in mind you are entitled to
a portion of the basic personal amount if less than 90% of your
income is from Canadian sources. Generally, part-year residents,
who are not entitled to the full basic personal amount,
put a zero on line 13. Why would they put zero dollars as their total claim
amount on line 13? Most people would rather
have more tax withheld on each paycheque than owe that
money at the end of the year. Where can I get more
information about Form TD1? For more information on how
residents of Canada fill out Form TD1, visit
www.cra.gc.ca/videogallery and look for the CRA
video series called Canadian Students
and Income Tax. What happens if I start a new
job and the employer doesn’t get me to fill out Form TD1? If you don’t give your
employer a completed Form TD1, both you and your employer
could face penalties. You should print a copy of the
form from the CRA website. If your employer doesn’t
give you Form TD1, they might be participating
in the underground economy. What is the underground economy? The underground economy is
commercial activity that is not reported for tax purposes. The underground economy is often
found in industry sectors where cash transactions are common. Students are most often involved
in the underground economy when they work in the
hospitality industry, which includes working
in bars and restaurants, and the construction industry,
such as landscaping, painting, and renovations. What is the impact of
the underground economy? The underground economy
hurts all Canadians. Those who participate in the
underground economy avoid their tax responsibilities and
place an unfair burden on all law-abiding taxpayers. Unpaid taxes mean less money for
programs such as health care, education, employment
insurance, and childcare. How can I tell if the job
I am being offered is part of the underground economy? Generally, you can tell
because you are paid in cash, you don’t have any
deductions from your pay, and your employer doesn’t
give you a pay stub or an information slip for
income tax purposes. You can learn more about the
underground economy by going to www.cra.gc.ca/undergroundeconomy So, what exactly is a pay stub? Employers and payers must
deduct federal and provincial or territorial taxes, Canada
Pension Plan or Quebec Pension Plan contributions, employment
insurance premiums, and other contributions
from your pay. They then send these
deductions to the government on your behalf. The employee is
paid the balance. Employers give employees a pay
stub that shows the amounts that have been deducted from pay. You can learn more about what
your employer can and cannot withhold from you on
the CRA webpage called Information for employees. How do I know how much
has been deducted from my pay throughout the year? Employers have to issue
information slips, such as T4s, to you and the CRA by
the last day of February for the previous calendar year. The slips show the amounts
earned and the details of deductions, such as income tax,
employment insurance premiums, Canada Pension Plan, or Quebec
Pension Plan contributions. What do I use these
information slips for? You use the information on these
slips to help you fill out your income tax and benefit return. The front of the T4 slip shows
the income that you earned and any deductions from
your gross income. The back of the T4 slip gives a
description of each numbered box that is on the front of the slip
and tells you what line the box corresponds to on the income
tax and benefit return. What type of employment
income can a student expect to find on a T4 slip? Employment income can be
amounts you receive as salary, wages, commissions,
bonuses, honorariums, and research grants. Employment income
is usually shown in box 14 of your T4 slips. Add together the amounts in box
14 of all your T4 slips and put the total on line 101 of your
income tax and benefit return. In a previous segment, I learned
that tips and gratuities and occasional
earnings are taxable. Where do I report these? Income such as tips, gratuities,
or occasional earnings may or may not be shown
on your T4 slips. If they’re not included on
box 14 of your T4 slips, report them on line 104 of your
income tax and benefit return. It is your responsibility to
keep track of the earnings you receive from
your employment. For more information, go
to the CRA webpage called Employment income not
reported on a T4 slip. Thank you, Peter. This concludes the
segment called International students
working in Canada, part of the CRA’s
International Students and Income Tax video. Thank you for watching.