Tax time: Textbook credit new this year
Students are preoccupied with final papers and exams, but they’ll barely have time to catch their breath before taxes are due April 30. When they are ready to crunch numbers, they will want to know about some recent changes.
The federal government recently announced a flat textbook credit available to all students enrolled in post-secondary education. As of 2006, full-time students can claim $65 per month ($20 per month for part-time students).
“It has nothing to do with the number of books you bought,” explained Mike Castelino, who has been a practicing tax accountant for just under two decades. He has lectured in the Accountancy Department off and on since 1988, most recently with the diploma program.
This amount is in addition to the education credit available ($400 per month for full-time students and $120 per month for part-time). Students are also able to deduct tuition and a small portion of other ancillary fees. This amount is calculated by the university, which issues a T2202A and Relevé8 for Quebec that students can access online through the portal.
The federal government has also exempted scholarships and awards from tax for 2006. Previously, these amounts were taxed over an initial $3,000 exemption. “Quebec has had this policy for some time, so the change is only federal,” Castelino said. Like the other student deductions, they only apply to eligible CEGEP and university students.
Amounts paid for public transit passes can now be claimed as credits. The credit only applies to monthly or longer passes (not weekly passes or tickets in any form), and only those purchased for July 2006 onwards are eligible. You are not required to attach your receipts or passes to your tax return when filing on paper. However you should keep them in the event you are audited. The pass itself should be sufficient proof provided the back of the pass is completed.
All of these credits are calculated at 15.25 per cent in addition to, among others, the basic personal credit. Students who have no taxes to pay are able to transfer any unused tuition, education and textbook credits to a supporting spouse, parent or grandparent up to a maximum of $5,000 at 15.25 per cent. Students can also carry forward unused credits to a future year.