Are students eligible for tax breaks?

The financial reality of even “cheap” Alberta can be challenging if you have to pay for tuition and rent at the same time. Most students arrive in Calgary wondering if there are any tax breaks that can ease the burden on their budget. The short answer is yes, but there are several mechanisms, each governed by strict rules set by the Canada Revenue Agency (CRA) and the provincial government. Below is a detailed explanation of how tax credits, deductions, and refunds work for Canadian and international students studying or working part-time in Alberta's capital.

The basis of the system: taxpayer status and basic personal amount

Before calculating benefits, it is important to understand that a student with a study or work permit is considered a tax resident if they live in Canada and have “substantial ties” (housing, bank account, health card). It is the resident who reports their worldwide income, regardless of citizenship. At the start of any tax return, the Basic Personal Amount applies. In 2025, it is CAD 16,129 at the federal level and automatically reduces zero income to the level where no tax is levied. For most first-year students, this means that even part-time work on campus or in a coffee shop up to the BPA limit is almost guaranteed to be refunded after filing a T1 General.

Flagship benefit: tuition tax credit

The T2202 – a statement of tuition fees paid – is where the student-centric part of the tax system begins. The CRA allows 15% of eligible fees (minimum CAD 100 per course) to be taken into account if the institution is federally or provincially recognized. The credit first reduces the student's own tax to zero, and the balance can be:

• carried forward indefinitely to future years as a “carry-forward”;
• or transferred immediately to a parent or partner (up to CAD 5,000 in the federal portion) – the mechanism is documented in Schedule 11.

Since Alberta, unlike some other provinces, does not have its own tuition credit, students in Calgary only benefit from the federal rate, but it is still significant: four thousand dollars in fees save CAD 600 in the year of payment.

Interest expenses on student loans

When repaying federal or Alberta loans, students can deduct the interest paid. Although the federal government has eliminated interest on Canada Student Loans as of April 2023, it remains on the provincial portion (Alberta Student Loan). Payments on this component become another non-repayable loan that can be carried forward for five years.

Canada Training Credit and other current opportunities

Starting in 2024, Canadians aged 26-65 will accumulate 250 CAD in Canada Training Credit each year until the limit reaches 5,000 CAD. If a student works part-time and files a tax return, they will also generate this “deposit.” After the first academic year, it is advisable to pay for part of a future short-term skills upgrading program with this credit.

Separately, there is the Canada Workers Benefit, which is automatically calculated by the CRA for low-income workers, including youth, and the GST/HST Credit, which also requires filing a tax return, even if the tax liability is zero.

Tax implications of scholarships and grants

Scholarships and research grants exceeding the cost of annual tuition plus CAD 500 are taxable. However, most university awards and federal Canada Graduate Scholarships for undergraduate and graduate students are completely exempt. Alberta Student Grants, which are provided to low-income families and students with disabilities, are also non-taxable.

Moving and work experience: when the tax base is further reduced

When moving to Calgary for the first time from another province or a remote part of Alberta, students can deduct transportation and part of their housing costs, but only if their earnings in their new location are considered “income from employment” in a cooperative or other paid internship. A regular move for the purpose of starting studies does not qualify for a deduction.

International students: SIN, taxes, and possible refunds

Foreign students must file a Canadian income tax return, and those from abroad must do so depending on their residency status. Obtaining a Social Insurance Number, even one that starts with “9,” gives you access to the same tuition credits and BPA refunds. It is recommended to file a return even if you have no income: this starts the “counter” for transferred credits and allows you to claim the GST Credit after your first year of residence.

How to get a refund for overpaid taxes on part-time wages

Part-time employment with hourly pay usually involves standard tax deductions by the employer. If a student waitress's annual earnings were, say, CAD 14,000, then after taking into account the BPA, tuition credit, and interest paid on the equity loan, the tax liability would be zero, and the entire amount of deductions would be returned to her bank account within two weeks after electronic filing.

Non-tax but vital city “benefits”

The tax system is only part of the picture, but inexpensive municipal programs also help students save money. Calgary allows you to apply for a subsidized monthly transit pass, a 75% discount on sports centers, and free library membership through a single Fair Entry application, which is especially useful after the cancellation of the university UPASS during the summer semester. Although these discounts do not affect tax returns, they effectively free up money that would otherwise be spent on transportation or recreation.

What else to look out for before filing your T1

Students should ensure that the TD1 forms submitted to their employer include their estimated tuition amounts and credits—this will immediately reduce the amount of deductions and keep funds “live” throughout the year. It is also important to register with CRA My Account to monitor the use and transfer of tuition credits. Undeclared scholarships or incorrect conversion of foreign income at the Bank of Canada rate may result in additional charges and penalties.

Summary

Students in Calgary can receive significant tax benefits when they correctly combine the federal tuition credit, the basic personal amount, loan interest deductions, and ancillary benefits such as the Canada Training Credit and GST Credit. The unused balance does not disappear but accumulates for future years or can partially support the family budget through transfers to relatives. The main thing is to file your return on time, even if your income is minimal, because only then will the CRA “activate” student benefits and send the money back to your card.

With high rents in Calgary, these tax measures, together with the municipal Fair Entry program, are becoming just as important as the well-established life hack of “buying coffee with a student discount.” A smart strategy can turn the benefits system from abstract rules into a real tool for survival and development while studying.