A question about housing and rent

[TakeruK]

Scholarships don't count right?

 

Nope, scholarships that are meant to support your graduate studies are not taxable income as long as you are a full-time student.

[reinhard]

Nope, scholarships that are meant to support your graduate studies are not taxable income as long as you are a full-time student.

That includes fellowships too right? The only thing they can tax you is your TA work, none of the research scholarships are in anyways taxable? Because I just found out in my letter of admission, I was given an internal entrance scholarship (I don't know how I missed that...)

 

Also I am not sure if you missed it, but I made replies to your answer at the end of the first page in the thread.

[TakeruK]

That includes fellowships too right? The only thing they can tax you is your TA work, none of the research scholarships are in anyways taxable? Because I just found out in my letter of admission, I was given an internal entrance scholarship (I don't know how I missed that...)

 

Also I am not sure if you missed it, but I made replies to your answer at the end of the first page in the thread.

 

Yes, in the eyes of the Canada Revenue Agency, there is no difference between fellowships and scholarships. In fact, it's just a naming difference.

 

In addition, the name of the award does not determine whether or not the income is taxable. Your money that you make while TAing might be titled a "Teaching Assistant Fellowship" but you will still pay taxes on it. The simple definition of taxable income is what I said above--an award granted to support you while a full time graduate student is not taxable. The precise definition is slightly more complex, if you are filing a T2202A that lists you as a full time post-secondary student, then income that appears in Box 105 of the T4A will not be taxable. 

 

So, my internal fellowships/scholarships and external fellowships/scholarships all came with T4As with amounts listed in Box 105. You do pay tax on any income due to employment as a TA or an RA, so if you are paid for research through an RAship, then yes, that income is taxable. You will get a T4 for this income instead. At some schools, you may choose to be considered "self-employed" if you are an RA as long as your employment meets certain conditions, such as NOT being directly related to your thesis / plan of study. This is really only useful in a small number of cases. I would not worry about it.

 

One easy way to gauge whether or not the income is taxable is whether or not taxes were withheld when you first get your paycheque. This doesn't always work since it's your responsibility to get it right, not the school, but the school has a lot of experience doing this. 

 

I did miss your other questions, I'll answer them below:

 

So there are health care insurance companies? Do you know a few? What was the one you were on?

 

 Basic medical care in BC and Ontario are covered by MSP and OHIP, respectively. This means doctor visits, some vaccinations, checkups, etc. People often choose to purchase additional health insurance coverage through companies to cover things like vision, dental, prescriptions, physiotherapy, etc. Many schools will require its students to enroll in the student plan, usually run by the student government, because more people enrolled = cheaper and better coverage for all students. However, if you are covered by another plan (e.g. a parent's or spouse's plan) then you can opt-out of this fee, which is about $200 to $500 per year. As a student, it makes no sense for an individual to get their own plan unless they have high enough needs that the student plan offered by the school is not good enough. Some companies I know in Canada are GreenShield and Pacific BlueCross. It's much much more expensive to get private plans through them than through your school. 

 

Before I got married, I was on my parents' plan and they used GreenShield. Afterwards, I used my school's plan, which was also a GreenShield plan.

 

I see, so if you are self-employed, then you don't have to pay as well?

 

I am not 100% certain because I have never been self-employed. But for other tax related purposes, being self employed means you are BOTH the employer and the employee so you definitely pay as well. You also would normally pay twice as much into other benefits like EI and CPP because usually the employer pays a portion and the employee pays the other portion. This is just an educated guess based on how governments treat self-employment for things like EI and CPP. If you do end up being considered self-employed for some reason, then you should probably seek additional advice from the actual sources.

 

So then doesn't this seem like the most advantageous move for anyone moving to Ontario?

 

I was wrong about OHIP being completely free (as lewin pointed out). So it really depends on your situation. If your income is low enough that you won't pay any (or much) MSP premiums, then there is no financial benefit to switch to OHIP. 

[PeterH]

 

Yes, in the eyes of the Canada Revenue Agency, there is no difference between fellowships and scholarships. In fact, it's just a naming difference.

 

In addition, the name of the award does not determine whether or not the income is taxable. Your money that you make while TAing might be titled a "Teaching Assistant Fellowship" but you will still pay taxes on it. The simple definition of taxable income is what I said above--an award granted to support you while a full time graduate student is not taxable. The precise definition is slightly more complex, if you are filing a T2202A that lists you as a full time post-secondary student, then income that appears in Box 105 of the T4A will not be taxable.  

 

I find the wording CRA uses for that part especially misleading. The phrasing is income "received in connection with the taxpayer’s enrollment in an educational program." Personally, when I hear that, I think of income granted specifically to alleviate tuition fees. In my case, I have been awarded a couple of research internships over the past couple of years that are reported in T4As (Box 105), but that I would have considered basically employment income. Fortunately though, according to this place (http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f2/s1-f2-c3-eng.html#N101DD): "The CRA will generally consider an award to be intended to support a taxpayer’s enrollment in a program unless it significantly exceeds the taxpayer’s tuition fees, living expenses and other expenses associated with undertaking the program." So unless you're getting some insane mega-scholarships or something, you're quite right that income in Box 105 won't be taxable.

 

Phew. Sorry, I'm just catching up on my taxes now, and it's such a pain....

[TakeruK]

A lot of CRA wording is very confusing. I called the CRA directly and they confirmed that basically what we said above is true. More specifically, if the fellowship is awarded to you because you are/were a graduate student during tenure of the award then it is non-taxable income.

 

For example, I am now at a US school where the stipends work differently. I get a tuition award + stipend package that is valued at $70k (tuition is MUCH more than half of this though). In practice, I do have to perform research work and teach as a TA to get this money, but the school policy specifically says that they are just paying me my stipend because I am a student and the TA and RA work is required as part of my degree requirements. Thus, all of my income is considered "received in connection with my enrollment in an educational program" (since I am getting the money due to my enrollment, not due to my employment).

 

On the other hand, when I was in a Canadian grad program, my internal and external fellowships were awarded just for being a student, without any work required. So this is also not taxable income. But, in order to receive my RA and TA pay, I had to perform work and thus considered an employee so the income was taxable!

 

The CRA has a hotline during tax season that is very helpful!

[PeterH]

Neat! I find the American system you described kind of odd. I mean, from my perspective, TA and RA work is a job, so it should be employment income. Then again, if you have >$30k tuition (egads man...) I can see how it'd be important the income not be taxable. Aaaanyhoo, I'm just glad I'm not studying economics. 

[TakeruK]

Neat! I find the American system you described kind of odd. I mean, from my perspective, TA and RA work is a job, so it should be employment income. Then again, if you have >$30k tuition (egads man...) I can see how it'd be important the income not be taxable. Aaaanyhoo, I'm just glad I'm not studying economics. 

 

 It really depends on the school. Pretty much everyone who went to grad school in Canada is surprised to learn that some US schools do not treat TA/RA as employment at all. Every year, we get a letter that literally says, in legal-ese, that we were paid $X last year for no services whatsoever. This makes it clear that our schools considers us students only. 

 

One reasons that they might do this is to prevent our ability to unionize. If we ever wanted to do so, we would probably first have to challenge their classification of us as students-only. But this is also a very rich private school that is almost purely research driven so while a few minor things here and there might not be aligned with grad student interests, I really do feel that ultimately, the school's goals and grad students' needs/goals are aligned well enough that things work out.

 

And, it's helpful for me that my US income is not taxable in Canada since it's not employment related. 

 

Oh, do you want to know what the "best" part of this is? Even though it's not employment income, our grad stipends are still taxable in the United States! Only the tuition waiver part is non-taxable (otherwise, egads!). And, a young person earning in the 20k-30k range in the US actually pays more taxes in the US than a Canadian earning the same (so much for that stereotype that Canadians pay more taxes). Anyways, I find it funny that last year was the first year of my life that I actually had to pay taxes to any government, and it was all to the US!

[reinhard]

 
 Basic medical care in BC and Ontario are covered by MSP and OHIP, respectively. This means doctor visits, some vaccinations, checkups, etc. People often choose to purchase additional health insurance coverage through companies to cover things like vision, dental, prescriptions, physiotherapy, etc. Many schools will require its students to enroll in the student plan, usually run by the student government, because more people enrolled = cheaper and better coverage for all students. However, if you are covered by another plan (e.g. a parent's or spouse's plan) then you can opt-out of this fee, which is about $200 to $500 per year. As a student, it makes no sense for an individual to get their own plan unless they have high enough needs that the student plan offered by the school is not good enough. Some companies I know in Canada are GreenShield and Pacific BlueCross. It's much much more expensive to get private plans through them than through your school.

 

Oh I don't mean dental, vision, or prescriptions. I just mean basic checkups. So those ones are covered by the government MSP/OHIP? So the premium rates actually go to the MSP in BC instead of other companies like Greenshield?

 

 

I was wrong about OHIP being completely free (as lewin pointed out). So it really depends on your situation. If your income is low enough that you won't pay any (or much) MSP premiums, then there is no financial benefit to switch to OHIP.

 

But once you become a full Ontario resident and if you want to move back to BC, you just have to ask MVP to cancel the coverages in Ontario right? Doesn't this seem more advantageous?

[TakeruK]

Oh I don't mean dental, vision, or prescriptions. I just mean basic checkups. So those ones are covered by the government MSP/OHIP? So the premium rates actually go to the MSP in BC instead of other companies like Greenshield?

 

To be honest, I am not 100% sure where the money goes. For basic doctor visits, you go to your doctor (or walk in clinic) and show them your ServiceCard (if in BC) or OHIP card (if in Ontario) and you see the doctor. You don't pay anything and I am assuming the doctor will get paid by the government at some point.

 

When you pay your OHIP or MSP premiums, the money goes to the government. Greenshield and other companies are not involved at this level at all.

 

But once you become a full Ontario resident and if you want to move back to BC, you just have to ask MVP to cancel the coverages in Ontario right? Doesn't this seem more advantageous?

 

Yes that is correct. Is that more advantageous? I don't see why there is an advantage to doing this since if you don't make enough to have to pay premiums for OHIP, you won't have to pay premiums for MSP too. I found the MSP premiums page: http://www.health.gov.bc.ca/msp/infoben/premium.html -- basically you need to earn more than $22,000 per year to pay MSP premiums (and more than $30,000 to pay the full rate of $70/month). Since I was wrong about having to pay zero premiums for OHIP, there is actually no advantage at all, unless you want to get Ontario residency. 

 

To be clear, there is neither a clear advantage nor disadvantage. If you know you will change back to BC MSP after your degree, then it makes sense to just keep BC MSP so you don't have to change from MSP to OHIP then back to MSP. 

[reinhard]

Yes that is correct. Is that more advantageous? I don't see why there is an advantage to doing this since if you don't make enough to have to pay premiums for OHIP, you won't have to pay premiums for MSP too. I found the MSP premiums page: http://www.health.go...en/premium.html -- basically you need to earn more than $22,000 per year to pay MSP premiums (and more than $30,000 to pay the full rate of $70/month). Since I was wrong about having to pay zero premiums for OHIP, there is actually no advantage at all, unless you want to get Ontario residency. 
 

To be clear, there is neither a clear advantage nor disadvantage. If you know you will change back to BC MSP after your degree, then it makes sense to just keep BC MSP so you don't have to change from MSP to OHIP then back to MSP.

 

The advantage I was speaking of means that if one day I decide to reside in Ontario, then I can immediately restart the plan without waiting for 3 months. I can also change back without any risks and losses. In other words, I save time. I don't make enough at the moment, so I don't pay premiums for either MSP or OHIP, that's the advantage.

 

Also, is it legal in Ontario for landlords to lease a home without a company?

[TakeruK]

The advantage I was speaking of means that if one day I decide to reside in Ontario, then I can immediately restart the plan without waiting for 3 months. I can also change back without any risks and losses. In other words, I save time. I don't make enough at the moment, so I don't pay premiums for either MSP or OHIP, that's the advantage.

 

Also, is it legal in Ontario for landlords to lease a home without a company?

 

Yes, this is true--if you stay in Ontario after your PhD then you will have the advantage of not having to go through all of the OHIP changes later on. But that doesn't "save you time" since you would have to do all the changes when you first move. Also, the waiting 3 months thing is not a huge deal because you can use your BC MSP plan until the 3 months is up. It's only a big deal for people like me--since I now live in the US, I am not covered by any provincial plan and when I move back to Canada, I will need to purchase a separate medical plan for the first 3 months. Note that if you switch to OHIP now then move out of Ontario, and then back to Ontario, you will still need to wait 3 months. 

 

It's perfectly legal for a person to lease a home without a company. Either way, they must follow the rental laws that lewin posted near the beginning of this thread.

[reinhard]

Yes, this is true--if you stay in Ontario after your PhD then you will have the advantage of not having to go through all of the OHIP changes later on. But that doesn't "save you time" since you would have to do all the changes when you first move. Also, the waiting 3 months thing is not a huge deal because you can use your BC MSP plan until the 3 months is up. It's only a big deal for people like me--since I now live in the US, I am not covered by any provincial plan and when I move back to Canada, I will need to purchase a separate medical plan for the first 3 months. Note that if you switch to OHIP now then move out of Ontario, and then back to Ontario, you will still need to wait 3 months.

And this doesn't happen with the MSP?

[TakeruK]

It happens with MSP too. I can't speak for the other provinces, but it would make sense that this is true for every provincial plan. The general rule is that you have to have lived in that province for the last 3 months (unless you are away for temporary reasons such as school) in order to use it. However, to facilitate changes in province, you are also allowed to use MSP and OHIP for the first 3 months you are away from BC or Ontario too.

 

In your case, if you keep MSP in Ontario because you are there only for school purposes, then you can move back to BC after school and continue MSP without interruption. If you go anywhere else in Canada other than BC after you finish school, then you will have to switch to that province's plan and use MSP for the 3 months while you are switching.

 

Or, you can switch to OHIP and use MSP for the first 3 months in Ontario. After you finish school, if you stay in Ontario then no further changes are necessary. But if you move anywhere else, including back to BC, then you have to wait 3 months before you can get back on MSP. But during this time, you can use OHIP.

 

This is why I mean there are no advantages/disadvantages unless you know for certain where you will be after you finish school. No matter what you choose, you will not have a gap in coverage!

[Imaginary]

Can someone tell me a little more about the Ontario leasing laws, particularly the part about month-to-month defaulting after one year.

[TakeruK]

Can someone tell me a little more about the Ontario leasing laws, particularly the part about month-to-month defaulting after one year.

 

In most cases, you will initially sign a one year lease with the landlord, which means you promise to stay there for one year. This means you will owe them rent for 1 year and if you wish to move out early, you may be able to negotiate some kind of settlement that gets you out of paying rent for the remaining year. You will have to pay at most the remaining rent for the year. However, if the landlord finds a replacement tenant and collects rent from the replacement tenant, then they cannot also charge you rent for those months.

 

After 1 year, you and the landlord automatically go onto a month-to-month lease. The landlord does not have the option of ending the lease, only the tenant has the right to do so. The landlord must accept the tenant on a month-to-month basis if the tenant chooses to stay. The landlord is also not allowed to require you to resign for another year or any length of time. That is, the only time Ontario laws allow the landlord to cause the tenant to commit to staying for any amount of time is when the lease is signed.

 

At all times during the lease (whether in the initial 1 year period or month-to-month), the landlord can only ever evict you if they have legal grounds to do so (e.g. not paying rent, causing a nuisance, illegal activity etc.). This means renting is very very secure in Ontario because once you find a place, you can stay there for as long as you like. Only the tenant can ever end a lease--the landlord would have to legally evict the tenant to get rid of the tenant.

 

Finally, this is all for the usual case of a tenant renting an apartment from a landlord company. There are special exceptions that might apply if you are renting a room in a house or the landlord is renting the unit to a school (which in turn rents it to you). One example of a special case is that a landlord is renting a house divided into a few apartments and the landlord wishes to now live in the apartment themselves--then they are allowed to displace a current tenant that is on month-to-month.

 

Reference: You can find a lot of this here: http://www.ontariotenants.ca/index.phtml 

Edited August 18, 2014 by TakeruK

[Imaginary]

Thanks so much!