Wrapped up school & moving provinces? Find out how your tax bill could change
You’ve submitted your last paper, written your last exam and rocked the cap and gown at your grad. You might have gone to school out of province, or maybe you’re moving for that cool new job you scored a few provinces over. Although the federal education/textbook amounts have been eliminated for 2017, you can still claim your tuition fees and you may be entitled to provincial amounts as well. These amounts vary from one province to the next, so it’s good to know how your taxes might be affected.
What are carry forward amounts?
Most students end up spending more on educations costs than they earn in a year, so you’re able to offset their tax bill by claiming tuition amounts. You may have invested so much in your education that you have credit left over from one tax year that you can transfer to another. These credits are usually referred to as carry forward amounts, and need to be used as soon as you owe taxes again. If you had unused education/textbook amounts from prior years, you will be able to carry them forward as well even though they have been eliminated for 2017.
I’ve moved provinces and am ready to file. What should I know?
Some provinces have a more generous basic personal amount than others, which can mean you’ll having bigger unused tuition and education amounts to carry forward. Let’s say you have
tuition and education amounts to carry forward from the province you studied in, but moved to a new province for work. Most of the time, the provincial carry forward amount is the same as the federal carry forward amount. It could be that the province that you went to school in has a more generous system than the province that you moved to – or vice versa. Either way, it could mean big changes for your tax bill.
Jack spent three years at the University of British Columbia. He earned $20,000 of unused federal tuition and education amounts and $15,000 of unused provincial amounts. In 2017, he moved to Alberta to work. Because his unused amounts are carried forward from a different province, they are deemed to be $20,000 – the same as his federal carry forward amount.
The provincial non-refundable tax credit rate is higher in Alberta than BC: 10% instead of 5.06%. So Jack’s $20,000 of provincial carry forward amounts get him a tax savings of $2,000 now that he’s in Alberta. If he had stayed in BC, his $15,000 of provincial carry forward amounts would have only saved him $759.
Jill spent three years at the University of Alberta. She earned $20,000 of unused federal tuition and education amounts and $25,000 of unused provincial amounts. In 2017, she moved to British Columbia to work. Because her unused tuition and education amounts are carried forward from a different province, they are deemed to be only $20,000, the same as her federal carryforward.
And just like Jack would tell us, the provincial non-refundable tax credit rate is higher in Alberta than BC – 10% instead of 5.06%. Jill’s $20,000 of provincial carry forward amounts only create tax savings of $1,012. If she had stayed in Alberta, her $25,000 of carry forward amounts would have earned her $2,500 in tax savings.
More often than not, if you’re on the move to another province and plan on using your carry forward amounts when you file, they’ll likely be the same as the federal carry forward amount.
But if you’re headed east, get in the know – because the rules are different in Ontario, Prince Edward Island and Quebec.
Let’s start with Ontario. Let’s say you moved to Toronto with carry forward amounts from another province. The amount you can claim is the same as it is in the province you moved from, with one exception: if you moved from Quebec, it will be the same as the federal carry forward amount.
Let’s check in with Jill again. Turns out she changed her plans and moved to Ontario instead of BC, so her provincial carry forward amount is now $25,000 instead of $20,000 because her provincial amount stays the same. But because the provincial non-refundable tax credit rate in Ontario was 5.05% in 2017 (lower than Alberta’s), it generated a tax savings of only $1,263, which is less than what she would have saved if she had stayed in Alberta.
Let’s hop over to Prince Edward Island. If you happen to move here and claim your carry forward amounts when you file, the amount you’ll claim is whichever is less: the federal carry-forward amount or the carry-forward amount that was calculated in the province you moved from – again, the exception here is Quebec, which would be the same as the federal carry forward amount.
Let’s end our carry forward journey with a stop in Quebec. Unused tuition-fee carry forwards claimed here are going to be the same as the federal carry forward amount. Since Quebec doesn’t have an education or textbook amount on its provincial return, it’s tuition fees only. They’ll say non merci to any other unused education amounts from the province you moved from.
So after our whirlwind Canadian tour of carry forward amounts across our great country, make sure you look into how your next out-of-province move will affect your taxes.
A tax expert at H&R Block can help you determine how moving provinces will affect your taxes. Find an office near you, or if you’re ready to file, do it yourself with our free online software.