If your clients are the parents of post-secondary students, you can now reassure them that the kids benefit when they pay tuition themselves.
That’s because an RBC survey finds that students who receive less than 25% of their school funding from parents feel more confident making financial decisions and are more likely to make and stick to budgets compared to those who receive more parental support.
Further, students who receive more financial support are twice as likely to expect help from parents post-graduation (21% compared to 11%).
Student tips from CRA
Since the survey finds that 61% of students earn tuition money through summer jobs, families might need a reminder that students must file taxes. And CRA notes that income from the sharing economy must be claimed. Eligible expenses students can claim include tuition fees, interest paid on student loans and eligible moving expenses.
Students are also potential victims of wages-to-loan tax schemes, warns CRA. Such schemes are often promoted as a way to pay down debt by freeing up cash.
Promoters tell students they don’t have to pay tax if they turn their wages into non-taxable loans. Promoters then lease the students’ services, keep a percentage of the pay and give the remaining balance to students as a loan.
The loan isn’t non-taxable. Says CRA: “Those who choose to participate in these schemes, as well as those who promote these schemes, face serious consequences, including penalties, court fines and even jail time. Also, as a participant, you could end up being assessed additional taxes in addition to paying a fee to the promoter.”
About the RBC survey: Research company Maru/Matchbox conducted the survey among a nationally representative sample of post-secondary students between July 8 and July 13, 2017, and 1,011 complete surveys were gathered.