Student Loan Interest Tax Credit claimed on Line 31900

Tax Credit for Interest Paid on Government Student Loans in Canada

If you've been paying off a government student loan in Canada, you could be eligible for a 15% tax credit on the interest paid each year. This credit applies to interest payments made on both federal and provincial or territorial student loans. It's a valuable way to reduce the financial burden of your student loan and potentially increase your tax refund.

How the Tax Credit Works

The tax credit for interest paid on student loans is provided through the income tax system. This means that the value of the tax credit will either:

Increase the tax refund you receive

Reduce the amount of tax you owe if you have any outstanding taxes

However, it's important to note that if the total value of the tax credit exceeds your income tax liability, you will not receive a refund for the difference. The credit only works to reduce your tax amount due, not as a cash refund.

How to Claim the Tax Credit

Each year, you will receive an interest-paid statement from your student loan provider in your secure inbox. This document will show the amount of interest you paid on your government student loans, which you will need for tax filing.

To claim the credit, you need to:

1. Enter the eligible amount of interest paid on student loans on line 31900 of your tax return.
2. Claim the corresponding amount on line 58520 of your provincial or territorial Form 428.

Taxpayers also have the option to carry forward any unused amount of the tax credit for up to five years. This means if you don't have enough tax to apply the credit against in a given year, you can use it in future years when you have income tax to offset it against.

Interest Paid on Student Loans for Someone Who Has Died

If the taxpayer who paid the interest on the student loan has passed away, the tax credit can still be claimed. In this case, you may be able to claim interest paid on the student loan in the current year or the preceding five years. The loans must have been made under:

The Canada Student Loans Act

The Canada Student Financial Assistance Act

The Apprentice Loans Act

Similar provincial or territorial government laws

To claim the credit for interest paid by someone who has died, enter the total amount of interest shown on the receipts. Be sure to attach the receipts to the final return.

For more information on this tax credit, visit the official Canada Revenue Agency page: Canada Revenue Agency - Interest Paid on Your Student Loans