As a medical student, you may have little or no income. But it’s still worthwhile to file an income tax return.
You may qualify for the GST/HST credit, a quarterly payment to people with low or modest incomes. You’ll also be able to carry forward certain other tax credits into future years and use them to reduce your taxable income then.
Here are some tax deductions and tax credits you might have that would reduce the amount of tax you pay, either now or in future.
1. Tuition tax credits
With medical school tuition fees reaching thousands of dollars a year, the tuition tax credit is a valuable one. Apart from tuition fees themselves, you may also be able to claim fees paid for admission, application, use of library or laboratory facilities, diplomas, and mandatory computer service fees.
Exam fees may also qualify for the tuition tax credit. According to the MCC website, the Medical Council of Canada Qualifying Examination Part I exam fees are eligible. (Part II was eliminated as of June 2021.) Certain related fees, such as centre change request fees (for a change of exam location) or late fees — up to a maximum total of $250 — are also eligible.
To claim your tuition fees, you must get one of the following forms from your educational institution:
- Form T2202 Tuition and Enrolment Certificate
- Form TL11A Tuition and Enrolment Certificate – University Outside Canada
- Form TL11C Tuition and Enrolment Certificate – Commuter to the United States
- Form TL11D Tuition Fees Certificate – Educational Institutions Outside Canada for a Deemed Resident of Canada
Tip: If you can’t use all your tuition fees in the current year because you haven’t earned enough income, you can transfer them to an eligible person (such as your spouse or common-law partner or, under certain restrictions, a parent or grandparent) or carry them forward to a future year.
2. Interest on student loans
Do you have a student loan from the government? This could be a loan under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a similar provincial or territorial loans program.
In April 2021, the federal government announced that no interest will accrue until March 31, 2023, on the federal portion of Canada Student Loans. That said, you may nonetheless have student loan interest paid that is eligible for a tax credit on your 2021 tax return.
If you paid interest during 2021 or during the five preceding five years on loans negotiated and still existing under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or a similar provincial or territorial loans program, you can claim a 15% federal non-refundable tax credit on that interest (if not previously claimed). Provincial non-refundable tax credits may also apply.
Note that interest paid on a personal loan or line of credit does not qualify for the tuition tax credit.
Tip: If you have no taxes payable for this year, do not claim the interest paid on your current tax return. Instead, claim it on any of your tax returns in the next five years. Unlike other tax credits, such as the tuition tax credits, CRA does not keep track of the carry forward amounts for you.
3. Moving expenses
If you moved at least 40 kilometres for full-time post-secondary school in 2021, you may be able to claim a tax deduction for your moving expenses. These expenses can only be deducted, however, from taxable scholarship or grant income. In other words, if your scholarship, fellowship or bursary income at your new location is entirely tax-exempt, your moving expenses cannot be deducted.
Moving expenses can include things like transportation and storage costs, travel expenses, temporary living expenses, and the cost of cancelling a lease.
Tip: If you have moving expenses that you can’t deduct in the current year because you haven’t earned enough income, you may be able to carry them forward to another tax year. Keep your receipts in case the CRA asks for them.
4. Medical expenses
If you incurred any medical expenses (including dental and eye care expenses) that aren’t covered by an insurance plan, you may be able to apply them against your taxable income.
For 2021, you can claim a 15% federal non-refundable tax credit on qualifying medical expenses in excess of either $2,421 or 3% of your net income, whichever is less. There is a long list of eligible expenses, including medical cannabis, tutoring services (learning disability), travel expenses to get medical services and fertility-related procedures.
5. Child-care expenses
If you have children, the cost of daycare, babysitters and full-time caregivers is deductible, to a maximum of $8,000 a year for children under 7 and $5,000 a year for kids age 7 to 16. Of course, you or your partner would need to have an income to deduct child-care expenses, which can’t be carried forward to another year. Generally speaking, the lower-income spouse or common-law partner must claim this deduction (unless that person is at school or disabled or the two of you are separated).
Tip: In practice, the CRA generally does not attach specific child-care expenses to specific children. That is, as long as total child-care expenses do not exceed the defined limits per child multiplied by the number of children, all eligible child-care expenses are generally allowed. To maximize your base for child-care deductions, make sure to report on your tax return all your children who are 16 years and under, and any with infirmities.
If you are a medical student with a basic tax return, you can get your income tax return done for free through the accounting firm MNP.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice, nor is it intended to replace the advice of independent tax, accounting or legal professionals.