CC: Hi, and welcome to Taxology, the official podcast of the Canada Revenue Agency. I'm your host, CC, and on today's episode, it's all about what you need to know as you start university or college, or your very first job. So if this is you, Congrats on the big life moves.

I'm sure you're wondering, “How does this affect my taxes?”

Haha okay, maybe not. It's important to know that these changes can affect your taxes, and if you haven't already, you may have to do your taxes for the very first time. But don't worry, we're here for you!

After today's episode, you'll realize it's not just about owing money. You could actually get more money in your pocket with a refund and be eligible for some benefit and credit payments.

This time we're meeting remotely with Revathy, a subject matter expert at the CRA who works to help Canadians learn about their taxes. So let's welcome Revathy to the show, and start learning.

Thanks for coming Revathy! Tell us a little bit about who you are and what you do at the Agency.

Revathy: Hello. It's nice to be here. I work in headquarters for a team that developed learning materials for youth and anyone interested in learning about taxes. And our team creates learning materials like “Learn about your taxes” online learning tool, for anyone interested in learning about taxes.

CC: That's awesome, because taxes can be really overwhelming. So thanks for making some products like that to help. I'm really interested in seeing them, tell me more about them.

Revathy: So “Learn about your taxes” is an online learning tool to help youth understand taxes from all aspects, and ensure they get the benefits and credits they are entitled to. It's a great resource for anyone interested in learning about taxes.

It's written at a Grade 8 comprehension level with easy-to-understand format. It also includes 3 minute videos and infographics.

CC: That's perfect because that is all the attention span that I have. I can only pay attention to a video for like three minutes.

Why is it important for youth and students to file a tax return? Like is it law? What benefits would students even have by filing a return?

Revathy: In Canada, we file an income tax and benefit return every year to report our income for the year.

We do our taxes to calculate the income tax we owe based on our income, and to find out if we have an amount owing or if we will get a refund. It is very important for students to file their taxes, which actually has its own benefits.

If they want to receive benefit and credit payments like the GST/HST credit, then they should file their taxes. If they want to claim tuition credits or transfer the unused tuition credits to their parents or carry them forward, they should do their taxes.

If they want to start generating contribution room for registered plans like the RRSP, then they should do their taxes.

CC: Oh I am interested in saving for my future. I do not want to work anymore. So what can I do to prepare for my future? I mean, I'm not going to retire for a long time, but what can I do?

Revathy: So, when you start working and you file an income tax return, you may be getting a refund, or you may be getting a benefit and credit payment. You should start saving those, put them aside in a tax-free savings account or savings account, so that you save it for your future.

CC: And you said something about transferring my tuition credits to my parents. What do you mean by that?

Revathy: So when you start post-secondary education, your school will provide you with the T2202, which is the Tuition and enrollment certificate, which actually provide you with the total tuition fees you paid for that year. And they will also tell you whether you are registered in a full-time or part-time post-secondary course.

You use that form to claim your tuition credits, and if you don't have to pay taxes on that income that you earned that year, you can transfer your unused tuition credits to your parents.

CC: Okay, so I just started to work. I started a new job in Canada and I got a form from my employer called the TD1 form. What is it? Can you explain what it is and why it's important, and why do I need to complete that correctly?

Revathy: Sure! TD1 form, it's an important form to fill out when you start your job. It ensures that the correct amount of taxes are being taken off your paycheques based on your personal situation, so you don't get a surprise at tax time with an amount owing or get a huge refund.

You will be asked to fill out a federal TD1 form, as well as a provincial or territorial TD1 form. Your employer will use this form to calculate and take off the right amount of deductions.

Most employers just send the form to their employees. They don't explain what it is or why you need to fill it out, so it's up to the employees to learn more about those forms. If the form is not filled out properly, then you may have less amount of taxes being taken off from your paycheques or no taxes at all.

This could happen when you work for more than one employer, so you make sure to fill out a TD1 form for each employer, and you should do it properly. If you want to learn more about how to fill out the TD1, you can check out the lesson “When to fill out a TD1 form” on the “Learn about your taxes” online learning tool. It also has two-minute videos that fully goes into the TD1, it's importance, and the individual boxes you need to fill out based on your personal situation.

You can also resubmit a TD1 to update your personal information. Like when you start post-secondary education, or if your marital status changes, or you have a child, so that these additional credits can be factored into your payroll deductions.

CC: So when I'm starting to work and I'm getting a pay stub, what is all of that information that's on that paycheque, and why am I losing money? Like why are you taking money off my pay?

Revathy: So a pay stub is something that your employer will give it to you. It shows your gross income and the deductions like Canada Pension Plan (CPP) or, Quebec Pension Plan (QPP) contributions, Employment Insurance contributions and income taxes.

So that's a statement that will show you how much taxes and CPP and QPP and EI are being taken off of each paycheque.

CC: What are CPP and QPP?

Revathy: So Canada Pension Plan or Quebec Pension Plan is an insurance plan that provides income for you in the future.

CC: Ooh, like when I retire.

Revathy: Yes. When you retire, you can receive money from the CPP or QPP plan, or when you stop working due to disability, you can receive income from that plan as well. Or, it will be paid to the spouses or family members if someone passes away.

CC: And I have to contribute to the CPP as soon as I start working, like even when I'm a teenager?

Revathy: So your employer will automatically deduct CPP from your paycheques, and it's a portion of your income is contributed to these plans. And these are like mandatory contributions that your employer must deduct from your paycheque.

One thing to note is, individuals under 18, they are not required to contribute to CPP. So you won't see any deductions if you are under 18 and working for an employer.

CC: I see that Employment Insurance is on my pay stub too, but I'm working. Why do I need to contribute to EI?

Revathy: So that's another insurance plan, Employment Insurance plan you contribute while you work. But if you lose your job due to no fault of your own and are available to work, then you can receive money from that insurance plan while you wait, or you look for jobs until you find another job.

CC: Any there any other circumstances where I might need to claim EI?

Revathy: So EI, you can also receive EI when you give birth to a child.

CC: Oh!

Revathy: Or you adopt a child.

CC: Okay, is there anything else I need to know about my pay stub?

Revathy: So any overcontributions to income tax, CPP or QPP or EI, you can get it as a refund if you have overpaid those amounts, or you will reduce your income tax you have to pay. But ultimately, you have to file a tax return to receive these amounts back.

It is important to look at your pay stub every time you get paid and verify the right amount of taxes are being deducted, especially if you know big discrepancies between pays. Make sure to reach out to your employer and let them know.

If you believe there's too much taxes being deducted or less amount of taxes being deducted from your pay, you can always submit an updated TD1 form with your employer as well.

CC: So near tax time, our employer will give us maybe the most important slip for filing called the T4 slip. What is it and what do I do with it?

Revathy: So T4 slip is the most important slip that your employer will give to you. It's basically a statement that has your total income for that year, and all the different deductions that they, the employer, has taken off for that year. You use that slip and the information on, from that slip to do your taxes.

You should always compare your last pay stub to the T4 slip. So the amount should always align with each other. If there's a big discrepancy then you should get in touch with your employer. If you don't have the T4 slip, not to worry, you can still do your taxes using your last pay stub, which has your up-to-date income and deductions.

And you should still do the tax returns by the due date, which is mostly April 30th of each year. And once you get the T4 afterwards, you can always submit an adjustment to update the amounts.

CC: Where can I find my T4?

Revathy: You can find your T4 on My Account. Your employer will also issue the T4 to you if you have an online account with your employer, you will be able to download it from the online account.

CC: Everything's in My Account.

Revathy: It is! Everything is available in My Account.

CC: We talked a little bit before about tuition. If I'm starting post-secondary studies at a college or trade school or university, what other impacts are there to my taxes?

Revathy: So when you start post-secondary education, it is important to ensure you've given your social insurance number to your school. So it ensures that any tax slips they issue are properly linked to you by your social insurance number.

When you attend post-secondary education, your university will issue the T2202 form, which has the tuition fees you paid for that school year, which can be claimed as a non-refundable tax credit on your tax return.

CC: Okay. Are there any other expenses that I might be able to claim as a student?

Revathy: If you move closer to your school, 40 kilometres closer to your school to start the post-secondary education as a full time student, you can claim your moving expenses against your scholarships or bursaries you receive.

CC: Oh cool. So when I move to another city…like more than 40 kilometres and I'm changing my address, do I change my address with the CRA to let them know that I live on-campus now? Or do I keep my permanent address as my parents’ address?

Revathy: So every time you move you should update your address with the CRA so that all your information is sent to the right address. But in this particular situation, if your home address is with your parents’ address and you’re temporary living at the school residence, it's up to you to decide which address you want to use. Because you want your important information to go to an address that, where you can access them easily.

If you live in a residence, you might move out and you might miss the mail and you know, you will miss important information. So it's up to you to decide what address you should be using.

CC: Yeah, I guess like I'm the one that's responsible for my own tax situation, not my parents.

Revathy: That's correct. Yes. You should always register for the CRA Account, so you have access to your income tax account online and you can update your address anytime you want and keep the CRA up-to-date with your personal information.

CC: Oh perfect. Does any of that get muddled if I'm changing provinces? Like if I live in Alberta, but then I go to school in Manitoba?

Revathy: So if you live in Alberta and go to school in Manitoba, you are temporarily living in Manitoba. So when you file your taxes, you should always use the Alberta tax return to file because that's your home address.

If you lived in a province or territory that still has the tuition, education and textbooks amounts, you will be using the proper provincial or territorial form to fill out and claim those credits. So if you live in a province or territory that still has the tuition, education, and textbook amount, you will be filling out the provincial or territorial schedule 11 to claim those amounts.

When you go to canada.ca, and search for “T1 income tax package”, and you choose your province or territory, you will see there will be a provincial or territorial schedule 11. And once you open it up, you will see there is extra lines on those schedules that will tell you if the tuition, education and textbooks amounts are available for that province or territory.

CC: Got it. What if I need help filing? Like I know there's all these resources online to help, but what if it's just so overwhelming?

Revathy: If you need help with filing your taxes, there are free tax clinics that may be organized by your school or the student groups or associations. So most students with simple tax situations, filing situations, are eligible to have their taxes completed by a volunteer for free at these tax clinics.

CC: Okay. And what if I feel confident, I've watched the videos, I'm ready to do my taxes on my own, but I can't afford some of those more expensive tax softwares. Then what?

Revathy: So there are free NETFILE-certified tax softwares available for individuals with lower income.

Certain softwares, as long as you enter a T2202 onto their software, you can use it for free.

CC: Oh, it'll like recognize that I'm a student!

Revathy: That is correct, yes.

CC: That's awesome! If I don't have a job, do I even really need to file?

Revathy: You should still do your taxes if you want to receive a benefit and credit payment, or if you are entitled to a refund, you will only receive the refund if you file your taxes.

I have an example. One of my nephews, he was 16 or 17 at that time. He worked in the summer. He got a T4. His parents told him he doesn't need to file because his income was too low and he wouldn't pay taxes on that income.

I told him he may want to file his taxes. Because if he's entitled to receive a refund, he will only get it if he files his taxes. So, and also he can register for a CRA account. He did his taxes later and got a little bit of money back. He was so happy he got a bit of money back because he could use that towards his post-secondary education. Because that's the year he started university.

CC: Oh that’s so nice. What a nice success story!

Do you have any final tips or resources to share that youth and other students might need to know or better understand and manage their taxes?

Revathy: If you want to learn more about taxes, you should check out the “Learn about your taxes” online learning tool. It has information on why we pay taxes, what are taxes used for, and preparing to do your taxes. Like what documents you need before you start filing your taxes. Also completing a basic tax return information is available on there.

And once you do the tax returns, what to expect. Like you get a notice of assessment, if you need to do adjustments, and so forth. So all the information is available. There are also mini videos and infographics also available, so feel free to check out “Learn about your taxes”.

CC: Nice. I'm so excited to look at these resources because I am a visual learner.

Revathy: Great!

CC: Thanks so much for coming today Revathy. It was really great to hear all about “Learn about your taxes” and the things that you need to know when you're a student.

Revathy: Thank you. It's nice being on the show as well.

CC: A big thank you to Revathy for being on today's show. If you want to learn more, check out our learn about your taxes course at canada.ca/learn-about-taxes. There you'll find short videos, interesting lessons and fun quizzes to improve your knowledge. You can also follow us on Facebook, X, and Instagram @CanRevAgency.

Thanks again for listening. I'm your host, CC. Until next time. Stay safe and do your taxes.