More students are beginning their financial journeys earlier than previous generations, in part because access to financial education has expanded significantly. Online investing platforms, podcasts, social media, and personal finance blogs have made topics such as saving, investing, and wealth-building far more visible than in the past.
As a result, many students are earning, saving, and even investing while still in school. Income may come from part-time jobs, summer internships, co-op programs, research positions, or financial support from parents and family. While starting early can be a meaningful advantage, those early decisions are most effective when they are made with an understanding of how the tax system works.
For students, tax planning does not need to be complicated. It is primarily about awareness and ensuring that available credits and deductions are not overlooked. Below are several key considerations students may want to keep in mind as part of their tax planning.
Make the Most of Tuition Credits
Students who pay eligible tuition fees for post-secondary education may qualify for a federal non-refundable tuition tax credit. This credit can reduce taxes payable; however, many students do not earn enough income during school to fully use it in the year incurred.
Eligible tuition amounts are typically reported on a T2202 Tuition and Enrolment Certificate, issued by the educational institution. This form outlines the tuition paid and the months of enrolment and is commonly used when calculating tuition tax credits.
Any unused tuition credits are not lost. After reducing taxes owing to zero, remaining amounts may be carried forward and used in future years when income is higher. In certain cases, a portion of unused tuition credits may also be transferred to a parent or grandparent, within prescribed limits.
Claim Eligible Student Loan Interest
Interest paid on government student loans may qualify for a non-refundable tax credit. Similar to tuition credits, student loan interest credits that cannot be used in the year they are incurred may generally be carried forward and applied in future years.
As most students expect their income to rise after graduation, this can provide meaningful tax relief down the road.
Eligible for Canada Employment Amount and Moving Expenses
Many students earn employment income while completing their studies. Income from part-time jobs, internships, or co-op placements may qualify for the Canada employment amount, a non-refundable tax credit intended to recognize work-related income.
Students who relocate at least 40 kilometres closer to school or to a work location may also be able to deduct eligible moving expenses. This is particularly relevant for students, who often move to live in residence, rent accommodation near campus, or temporarily relocate for co-op terms and internships. In some cases, unused moving expenses may be carried forward and applied against income in future years.
Understand Scholarships, Bursaries, and Grants
Many scholarships, bursaries, and grants received by students enrolled in qualifying programs are tax-free. In situations where amounts are taxable, the inclusion is often limited and depends on the student’s enrolment status and the nature of the award.
Keeping clear records of awards received and related education expenses can make tax reporting more straightforward.
For parents, supporting a student’s education often comes with financial decisions of your own. Understanding how tuition credits, transfers, and education savings interact with your family’s broader financial plan can help ensure these resources are used efficiently.
A common misconception is that students do not need to file a tax return if their income is low. In practice, filing is often beneficial even when little or no tax is payable. Filing allows students to establish tuition credit balances, claim student loan interest, and maintain eligibility for government benefits such as the GST/HST credit. This tax-free quarterly payment is income-tested, and eligibility is determined through the annual tax return. Consistent filing also creates a clean tax history, which can simplify matters as finances become more complex over time.
Tax planning for students is about building a solid foundation. By understanding available credits, filing income tax return consistently, and keeping good records, students can reduce future tax burdens and gain confidence as they move into the next stage of their financial lives.