Congratulations on completing your academic journey! With your last paper submitted, exams aced, and graduation cap tossed in the air, it’s time to embark on a new chapter. Whether you studied out of province or secured an exciting job opportunity in different moving provinces, it’s essential to understand how your tax situation might be affected.
Recently Graduated and Moving Provinces? Here’s How Your Tax Bill Could Change.
While the federal education/textbook amounts are no longer available since 2017, you can still claim your tuition fees. Additionally, depending on the province, you may be eligible for provincial tax credits related to education. These amounts vary from one province to another, making it crucial to familiarize yourself with the specific rules and benefits applicable to your situation.
Stay informed about how your taxes could be impacted as you transition to a new province post-graduation or for your job relocation.
Unraveling Carry Forward Amounts and Tax Implications
When you finally complete your academic journey, submit your last paper, ace your exams, and proudly wear your graduation cap, it’s time to embrace new adventures. Whether you studied in a different province or secured an exciting job opportunity elsewhere, it’s crucial to understand how your tax situation might be affected.
While the federal education and textbook amounts were eliminated in 2017, you can still carry forward unused tuition fees. These carry forward amounts allow you to offset future tax bills. Additionally, if you have remaining education or textbook amounts from previous years, you can still carry them forward, even though they were eliminated in 2017.
As you prepare to file your taxes after moving provinces, there are a few key points to consider.
Each province has its own basic personal amount, which affects the size of your unused tuition and education amounts available for carry forward. The provincial carry forward amount typically matches the federal carry forward amount, but the generosity of provincial systems can vary. This disparity can significantly impact your tax bill.
For example, let’s meet Jack. He completed his studies at the University of British Columbia and has $20,000 in unused federal tuition and education amounts, along with $15,000 in unused provincial amounts. Jack moved to Alberta for work in 2017. Since his carry forward amounts are from a different province, they are considered the same as his federal carry forward amount ($20,000). With a higher provincial non-refundable tax credit rate of 10% in Alberta compared to British Columbia’s 5.06%, Jack’s $20,000 in provincial carry forward amounts results in a tax savings of $2,000. If he had stayed in British Columbia, his provincial carry forward amounts would have only saved him $759.
Now, let’s consider Jill. She completed her studies at the University of Alberta and has $20,000 in unused federal tuition and education amounts, along with $25,000 in unused provincial amounts. Jill moved to British Columbia for work in 2017. Similarly, her carry forward amounts are deemed to be $20,000 (matching the federal carry forward amount). With British Columbia’s lower provincial non-refundable tax credit rate of 5.06%, Jill’s $20,000 in provincial carry forward amounts generates tax savings of $1,012. If she had stayed in Alberta, her $25,000 in carry forward amounts would have earned her $2,500 in tax savings.
These examples illustrate how the interaction between carry forward amounts and provincial tax systems can significantly impact your tax liability when moving provinces.
It’s important to note that if you move to Ontario, Prince Edward Island, or Quebec, the rules differ slightly:
- Ontario: When moving to Ontario, you can claim the same carry forward amount as the province you moved from, except if you moved from Quebec. In that case, it will match the federal carry forward amount.
- Prince Edward Island: If you move to Prince Edward Island, the amount you can claim is the lesser of the federal carry forward amount or the carry forward amount calculated in the province you moved from, except for Quebec, which matches the federal carry forward amount.
- Quebec: In Quebec, unused tuition fee carry forwards will match the federal carry forward amount. The provincial return in Quebec does not include education or textbook amounts; it only considers tuition fees.
As you embark on your journey to a new province, it’s crucial to understand how your tax situation and carry forward amounts will be affected. Ensure you are well-informed and prepared for any tax implications that may arise.