Student Loan Interest Tax Credit in Canada

A Smart Way to Reduce Your Taxes After Graduation

If you’ve taken out student loans to finance your education, there’s some good news: the interest you pay on eligible student loans can help reduce your income taxes.

At Toro Accounting, we regularly help students and recent graduates maximize their tax refunds by properly claiming the Student Loan Interest Tax Credit. Here’s everything you need to know.

🔹 What Is the Student Loan Interest Tax Credit?

The Student Loan Interest Tax Credit is a non-refundable federal tax credit that allows you to claim the interest paid on eligible student loans.

It helps reduce the amount of income tax you owe, though it will not generate a refund by itself if you have no taxes payable.

You can claim:

• Interest paid in the current tax year, plus
• Any unused interest from the previous five years

🔹 What Loans Qualify?

To be eligible, the loan must be received under:

• The Canada Student Financial Assistance Program
• A provincial or territorial student loans program (such as Ontario Student Assistance Program (OSAP))
• Similar government programs

🚫 What Does NOT Qualify?

• Lines of credit (even if used for school)
• Bank loans
• Credit card interest
• Loans from family members

Only government-issued student loans qualify.

🔹 How Much Is the Credit Worth?

Federally, the credit equals:

15% of the interest paid

If you paid:

• $1,000 in student loan interest
  You receive:
• $150 in federal tax credit

You may also receive an additional provincial credit, depending on your province of residence.

🔹 Where Do You Find the Amount?

You can find your student loan interest paid in:

• Your National Student Loans Service Centre (NSLSC) account
• Your provincial student loan portal
• Your online CRA My Account (if reported)

🔹 Can You Transfer It to a Parent?

No. Unlike tuition amounts, student loan interest cannot be transferred to a parent or spouse.

However, if you don’t need it this year, you can carry it forward for up to five years.

🔹 Important Planning Tip

If your income is low this year and you don’t owe much tax, it may be smarter to carry the interest forward to a future year when your income is higher and the credit provides more value.

Strategic tax planning makes a difference.

🔹 Common Mistakes to Avoid

• ❌ Claiming interest on a bank student line of credit
• ❌ Claiming loan principal instead of interest
• ❌ Forgetting to claim prior-year unused interest
• ❌ Missing the 5-year carryforward limit

💼 How Toro Accounting Can Help

Whether you're a student, recent graduate, or young professional, we make sure you:

✔ Claim every eligible tax credit
✔ Optimize your carryforward strategy
✔ Avoid CRA reassessments
✔ Maximize your refund

📞 Ready to File Smart?

If you paid student loan interest and want to make sure you’re claiming it correctly, let’s talk.

👉 Book your personal tax appointment today Book a consultation