Author Segal LLP

Back to University: Money and Tax Lessons for Your Students

When your kids leave for university or take on some other post-secondary educational endeavor, you want to do your best that they succeed both with their grades, taxes and money as they take on more adult responsibilities.

Help them understand how to manage credit and money as well as give them a solid background on their tax obligations and the deductions and credits that are available to them and to you.

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Living at Home

Not all students head off to live on campus. In fact, as costs of education and housing rise, increasing numbers of students and their parents are deciding it’s a lot less expensive to live at home and commute when possible.

If you decide commuting is the best way to go, here are some tips.

For the student:

  • Spend lots of time on campus. It will help meet other students, make friends and become more familiar with the school.
  • Join clubs or sports teams. This involvement is crucial, particularly in your freshman year.
  • Pinch pennies. One of the main reasons you’re living at home is to save money. Don’t lose sight of this.

For the parents:

  • Be supportive. You and the student would probably prefer that he or she live on campus. Living at home may not be ideal, but it’s financially smart.
  • Treat your student like an adult. This can help maintain a stable relationship and minimize conflict.
  • Make sure your student makes an effort to meet other students and becomes involved with campus life.

Understanding Taxes

As your children assume more responsibility they may also be taking on jobs. You can help them understand their tax obligations and the credits and deductions that are available to them.

First, students — as well as their parents or other supporting adults — should have a clear understanding of what sorts of income is taxable. Of course money earned from a full-time or part-time job that exceeds the basic personal amount in a year is taxable.

Of course students may have other income sources, some of which is tax-exempt some not:

  • Scholarships, fellowships, bursaries, and achievement prizes are tax-free as long as the students are enrolled in programs eligible for the education amount. Otherwise, only the first $500 is exempt.
  • Money earned as a teaching assistant and research grants, on the other hand, are taxable. In the case of grants, students may deduct certain costs related to the research, such as travelling expenses, lodging and fees they may pay to assistants.

Reducing Tax Liability

Once you have the taxable earnings issue down, you’ll want to know how to lower those taxes. Here is a guide to the credits and deductions that can help you and your student lower your tax bills:

Tuition Credits. Full-time and part-time students can claim a federal tax credit on eligible tuition fees, which generally include all mandatory amounts charged by post-secondary institutions. The costs of room and board or student association fees are not eligible. Most territories and provinces offer similar tax credits. The textbook credit is being eliminated as ofeffective January 1, 2017. Unused  textbook credit amounts carried forward from years prior to 2017 will remain available.

Education Amount. On top of the tuition credit, students can claim an education amount of $400 a month for each month that they are enrolled full-time. Most territories and provinces also offer an education amount.

Students enrolled part-time may be entitled to an education amount of $120 a month. The program must last at least three consecutive weeks and involve a minimum of 12 hours of courses a month.

Students can claim the full $400 federal education amount if they can attend qualifying courses only part-time because of a mental or physical impairment and are eligible for the disability tax credit.

Textbook Credits. Students can claim a federal tax credit on the costs of post-secondary textbooks. The credit is based on $65 for each month the student qualifies for the full-time education amount and $20 for each month the student qualifies for the part-time education amount. Nunavut and Yukon also offer textbook credits.

Transferring Credits. Students who don’t claim tuition, education and textbook credits can either carry them forward indefinitely to use later or transfer as much as $5,000 in unused credits to a supporting person such as a spouse, parent or grandparent. Those individuals can claim the credits on their own tax returns. Transferred credits must be claimed in the year they were incurred. Provinces and territories also allow credit transfers.

Moving Expenses. Full-time students can deduct certain expenses for moving to and from school for each academic period — as well as moving to and from a summer job — if the distance is at least 40 kilometres. The deduction can be made only against employment income in the new location or against research grants. The tax break can be taken in the year of the move or the following year.

Transit Expenses. Students can claim a tax credit for the cost of transit passes with durations of a month or longer. Money spent on electronic payment cards and weekly passes are also eligible under certain conditions. Keep the receipts. Parents or spouses of students under the age of 19 can claim the credit.

Rent. Some provinces offer either refundable property tax credits for rent paid or a property tax refund. Consult with your adviser to see if your province offers property-related tax breaks.

Child-Care Costs. Students or spouses can claim a child-care deduction if at least one spouse attends school full-time or part-time.

Student Loan Interest. Credits are available for interest paid on qualifying student loans. Some provinces have eliminated interest on provincial student loans. Check with your province.

Besides taxes, your student should learn about managing credit. Here are some tips:

  • Help your children select an appropriate card. Explain how having a credit card increases the risk they will make impulse purchases and try to persuade them to get a debit card instead. Help them analyze offers and compare interest rates, annual fees, grace periods, and penalties.
  • Make sure your children, or grandchildren, understand that significant interest is charged if a balance isn’t paid in full each month. Explain late fees, “teaser” interest rates, annual fees, and credit ratings.
  • Advise your students to use credit only for essential purchases such as books and car repairs and not for entertainment, electronics, and expensive clothes.
  • Show your children how to compare receipts to credit card statements and tell them it should be done regularly.
  • Warn your children to keep their cards secure to avoid unauthorized use and identity theft.

Keep in mind that this may be the first time your children will handle money without parental supervision. Help them out by developing a budget that takes into account all expenses, such as travel, food, entertainment, clothing, cell phone, computer costs, and medical expenses.

Ask the child to keep track of spending for a couple of weeks and then go over the budget to see if there are ways to cut expenses of if you forgot to factor in certain items.

College and University Aren’t Just for Young People

081216_Thinkstock_515263028_lores_KKAh, those hallowed walls of academia! Ah, those unwashed dishes and unrelenting schedules!

Many people who have successful careers or have raised their kids to adulthood — or both — consider going back to school. And you may be one of them. Perhaps you want the degree you postponed, or a second one. Perhaps you want to improve your prospects for a promotion, earn more money or start a second career you’ll love. Or maybe you just want a different perspective on the world.

Whatever the reason, going back to school demands time, money and commitment, so it isn’t a decision you should take lightly. Here are a few tips that may help ease your journey back into the world of colleges and universities:

Find the right fit. A student handbook is an essential tool. Read it before you apply to a college or university. The handbook provides details of the range of services and support available to students as well as the school’s educational policies and regulations. The handbook is also often available online from the school’s website. The handbook can help you determine if the school meets your needs, with factors such as affordability, easy access, childcare, expanded degree options, well-developed online learning programs or seamless credit transfers.

Map your degree. Compile a detailed list of requirements for completing a degree within your time frame. It will help you stay on track and understand where you are, where you’re going and how long it will take to get there. You don’t want to be signing up for many costly classes that wont’ help you accomplish your goal. That said, however, consider taking some classes just for the fun of it. While sticking to the requirements can save time and money, you run the risk of burnout if they stop energizing you.

Find an adviser. Find someone you trust and meet before you apply (and at least once each school term). Make sure the adviser is aware of your goals. Discuss all your options. Your adviser can also show you how to obtain financial aid, where to register and explain the rules for withdrawing from or switching courses.

Other resources for advice are professors as well as faculty and staff members who’ve been at the school for some time. Also, people you may know who attended the school can be a source of valuable information, particularly if they know you well.

Sources of Financing

Research your financial options. Just because you’re an adult returning to school doesn’t mean you aren’t eligible for scholarships or other forms of financial aid. While your adviser can help, do some research on your own.

If you’re working, you might want to discuss your plans with your employer, especially if you want to continue in your current field. Employers may have programs in place to subsidize employees looking to continue their education.

Many universities and colleges have scholarships and bursaries. Scholarships are generally based on academic achievement, but some also focus on community involvement (such as volunteering) or work in a specific field.

Scholarships typically have particular criteria you must meet to qualify, and many students might compete for the same scholarship. Many scholarships are open to international students as well as domestic students. You must apply for some, but others are awarded automatically.

Bursaries are usually based on both financial need and academic achievement. Bursaries and grants can also be offered through governments and private organizations.

And of course you can take out student loans and perhaps get help from family.

Make sure you completely understand any financial aid you receive. First, determine how much it costs to attend each school that awards you money. To find out, locate the Cost of Attendance (COA) breakdown in the award material (if it’s not provided or not broken down, contact the financial aid office and ask for a breakdown). Typically, the COA is the amount of tuition, books and supplies, miscellaneous fees and expenses and room and meal plans (most adult students don’t require these last two).

You’ll also want to know any student loan percentage rates and payback requirements on student loans.

Bottom line: Be sure you know just how much you’re getting and that it will be sufficient to finance your studies.

More Tips for Success

Start slow. Unlike more traditional college students, adults returning to school tend to have significant responsibilities, including families and careers. Juggling work and family is difficult on its own, but doing so with post-secondary course work is even harder. Taking things slowly can help you and your family adjust to the new schedules and demands. Many schools offer online courses, which can be especially beneficial for working professionals. They also can help you test the waters before the big plunge.

Make connections. It’s tempting to isolate yourself in order to keep on top of a busy schedule, but resist it. One of the side benefits of going back to college as an adult is being exposed to people you might otherwise not interact with. These new relationships will add to your experience and the quality of your life.

Ask for help. If there’s an area in which you’re struggling, at home or at school, ask for help. Enlist your family’s assistance with chores and errands. Tell friends what they can and can’t do to encourage you. Reach out to fellow students for lecture notes and homework help. Talk to professors and faculty about assignments and coursework, especially if you have questions or don’t understand. Contact student services to help to improve study habits or test taking.

Devise a study routine. It works for kids, and it’ll work for you. Establish your own routine at the beginning of every school term to help you keep up with your coursework, improve your time management and help ensure you meet other commitments. And create a comfortable, well-lit, designated study space that’s all your own. Not only will it keep your study time separate from your home or work life, it will serve as a physical reminder to others to let you focus without interruption or distraction.

Schedule some downtime. You know what they say about all work and no play. Resist the urge to overfill your schedule.Leave some margin in your day for exercise, sleep, helping others or just relaxing and having fun. It will help boost your mood and productivity.

Make your first few days easier by exploring the campus before you start classes. You’ll gain comfort with your surroundings and improve your chances of getting to class on time.

CRA Reminder: Tax Instalments Are Due September 15

081816_Canadian_dollar_lores_KKCanada Revenue Agency (CRA) is reminding people who pay their income tax by installments that their next payment is due on September 15.

In a message posted on its website, the CRA pointed out that taxpayers can go online to see what they owe and make payments. And if you pay in instalments, you can sign up for email reminders one month before your taxes are due.

But first, you must determine if you’re among those required to pay their tax obligations in intalments. If tax isn’t withheld from your earnings or not enough was withheld for more than one year, you may have to pay tax in instalments. This can happen if you earn rental, investment, or self-employment income, certain pension payments, or have income from more than one job.

The instalments are to cover tax you would normally have to pay in a lump sum on April 30 of the following year. Instalments aren’t paid in advance; they’re paid during the calendar year in which you’re earning the taxable income.

Factors to Consider

Take into account three factors when determining if you must pay instalments:

  1. Where you reside,
  2. How much tax you owe, and
  3. Whether you’re a farmer or fisher.

The province or territory where you live determines the threshold used to determine if you must pay instalments. If your total tax liability, minus any amount withheld at source, is more than $3,000 for both the current year and either of the two preceding years, you must make instalments for the current year. (In Québec where provincial tax is collected by the province, the threshold is $1,800 for both federal and provincial tax.)

If you farm or fish for a living and are self employed, the rules are slightly different. You’ll receive a reminder in November and must make a single payment on December 31, 2016, if in each of the years 2014, 2015 and 2016 your total tax obligation exceeded the thresholds.

Instalment payments are calculated using your total tax owed plus any Canada Pension Plan (CPP) contributions owed and voluntary Employment Insurance (EI) premiums payable on self-employment and other eligible earnings.

(In Québec, instalment payments cover income tax plus the health contribution, contributions to the Québec Pension Plan and the Health Services Fund as well as premiums to the Québec Prescription Drug Insurance Plan and the Québec Parental Insurance Plan.)

If you received an instalment reminder from the CRA that shows an amount to pay, you may have to pay by instalments, unless your total tax owed for 2016 will be at, or less than, the thresholds.

Instalment Reminders

The CRA determines who’s required to pay instalments from previous years’ tax returns and sends reminders. But keep these factors in mind and discuss with your advisor:

You need only make an instalment payment if the CRA sends you a reminder. If you don’t receive one, you don’t have to make instalments, even if your tax liability exceeds the thresholds.

If you do receive a reminder, it’s based on the past. If you and your advisor are certain your current tax liability won’t exceed the threshold, you aren’t required to make an instalment payment. (The rules are similar in Québec.)

Instalments are due quarterly, on the 15th day of March, June, September and December. Reminders are sent out twice a year — in February for March and June payments and in August for September and December instalments.

Your final tax obligation is known only when you file your annual income tax return. If you owe more than the instalments, the balance must be paid by April 30. So plan ahead.

There are three calculation options when it comes to instalment payments:

  1. No-calculation option. The CRA provides this amount on the reminder, calculated using information on your income tax and benefit return for the two previous years.
  2. Prior-year option. You use this option when your current year (2016) income, deductions, and credits will be similar to your previous year but significantly different from those two years ago (2014). Your accountant can calculate the amount based on the information from your income tax and benefit return for 2015.
  3. Current-year option. Generally, this option is preferred when current year income deductions and credits will be significantly different from those in the previous two years.

If you use the latter two options, and make the payments in full by their due dates, the CRA won’t charge instalment interest or a penalty unless the total instalment amount you use is too low.

Single August Reminder

If you receive a reminder only in August, your payment depends on your calculation option. If you opt for the CRA, no-calculation method, pay the amount in the reminder on the 15th day of September and December.

If you choose prior-year calculation, your accountant can determine your 2015 tax obligation and add any CPP contributions and voluntary EI premiums payable. You’ll pay 75% of the total on September 15 and 25% on December 15. The same holds for the current-year option except your accountant will estimate your 2016 tax obligation.

As with all tax payments, if the due date falls on a Saturday, Sunday or public holiday the CRA recognizes, your payment is considered on time if it is received or postmarked on the next business day.

Bear in mind that the CRA’s method of calculating instalments may result in an overpayment. This may happen if your income has been decreasing over the past two years.

You may also receive a reminder if your income jumped in a year from a one-time event, such as a capital gain without tax being withheld or if your sources of income changed from employment to retirement fund withdrawals without arranging for tax withholdings.

Substantial Penalties

If you fail to pay the required amounts on time, you could be charged substantial interest and penalties. First, there’s instalment interest calculated at the CRA’s prescribed rate. For overdue taxes that amounts to 5% in the current quarter.

Second, instalment interest charges are compounded daily, so the 5% interest rate is effectively an annual rate of 5.13%.

Third, there is a steep penalty for making late instalments or paying less than the required amount if instalment interest for 2016 is more than $1,000. To calculate the penalty, your accountant will determine which of the following amounts is higher:

  • $1,000, or
  • 25% of the instalment interest that would be payable if you hadn’t made any instalment payments for 2016

Then he or she will subtract the higher amount from the actual instalment interest charges for 2016. Dividing the difference by two is the penalty amount.

(In Québec, additional interest of 10% a year compounded daily is applied when the amount of the payment is less than 75% of the amount you’re required to pay. This brings the effective annual interest rate to approximately 17%. The current interest rate charged in Québec is 6%).

Clearly it’s advisable to pay instalments on time, even if you must borrow to do so. Because the CRA rates currently are higher than short-term borrowing rates, you should be able to get a better rate at a financial institution.

You can reduce or eliminate the interest charges and penalties on late instalments by overpaying subsequent instalments or paying them before their due dates. Interest earned on early or excess payments will be offset against any interest charges on late payments. Since instalment penalties are charged on the net interest, they’ll also be reduced.

Avoid the Lump Sum

Receiving an instalment payment reminder lets you know taxes aren’t being withheld from income at source. It may be necessary to make provisions for those taxes if you want to avoid having to come up with the entire amount when you file your income tax return in the spring. Consult your accountant to come up with the best way you can stay on top of your tax obligations.

How Corporations Pay Tax

Generally, corporations have to pay their taxes in instalments.

Instalment payments are due on the last day of every complete month of your tax year or of every complete quarter if you’re an eligible small CCPC.

The first payment is due one month or one quarter less a day from the starting day of your tax year. The rest of the payments are due on the same day of each month or of each quarter that follows.

The balance of tax is paid two or three months after the end of the tax year — depending on your corporation’s balance due day — after making deductions for instalments paid during the year.

After all monthly or quarterly interim payments are made for the current year, you’ll receive the first Form RC160, Interim Payment Remittance Voucher, for the next year, along with another Form RC160. This additional form will show the tax year-end of the current year. Use this form to remit your balance-due-day payment, if applicable.

Tap into the Pokémon Craze to Augment Revenue

072816_Thinkstock_187957940_lores_KKWhat do U.S. Customs and Border Patrol, Alberta Travel, city libraries and bars, restaurants and tee shirt boutiques have in common?

That would be Pokémon Go, a smartphone video game that uses Google Maps technology. The augmented reality game pinpoints locations in the real world on a map shown on a player’s phone. The app marks different Pokémon that can be captured, “PokéStops,” where users can score in-game items, and gyms where players’ Pokémon can duke it out for control. Across Canada, some businesses are getting in on the fun.

The game is so popular that roughly 3 in 10 Canadian players, called “trainers,” say it’s taking over their lives, according to a recent Global News Ipsos poll. The poll found that the same number of players admitted to skipping day-to-day activities, such as working out, in order to hunt Pokémon.

On the other hand, they are getting exercise. The poll showed that the average player has walked about 13 kilometres. It isn’t unusual to walk 5 kilometres to hatch one egg. (Trainers place Eggs in an incubator and walk a specific distance in order for them to hatch into a Pokémon.)

Luring Them In

People aged 18 to 34 years are by far the most likely to have downloaded the app, followed by those aged 13 to 17. So it seems a good idea for businesses to target Pokémon-related marketing at Millennials, whose spending power continues to grow (by 2017, they are expected to spend more than $200 million a year.)

If you run a business, this newest global craze can work to your advantage. Some businesses, as well as government agencies and libraries, are using the smart phone game as an inexpensive marketing tool. Pokémon puts its critters in the real world and you may be able to use this to attract customers.

Here are a few examples of how the game has worked its magic for various entities:

  • An Alberta travel agency offered a free Pokémon tour of Calgary. The guided trip let players explore the city using Pokémon Go, taking them to six pieces of public art and a stop at an ice cream shop.
  • A Saskatchewan restaurant hosted a lure party with Pokémon themed drinks, another offered discounted drinks if trainers placed lures at its location for the night and a Toronto apparel boutique uses Pokémon Go signs to direct customers into its store.
  • City libraries around the country are PokéStops, where trainers collect essential Pokémon Go items such as Pokéballs and Eggs. The Ottawa Public library notes that not only is the library a one-stop shop for your information needs, it has free Wi-Fi to save your phone’s data plan, charging stations to save its battery (the game is a big drain) and air conditioning to escape the heat.

There was even a small international incident when U.S. Border Patrol Agents apprehended two juveniles crossing the border illegally while playing the game. The agents found them wandering into the state of Montana, apparently unaware of where they were. The kids were later reunited with their mother at a nearby Border Patrol Station.

How the Game Works

So how can your business take advantage of this inexpensive marketing powerhouse? Here’s a primer to help you get your feet wet:

  1. Pokémon Go players take on the role of a trainer who travels about searching for little critters, called Pokémon, and capturing them with the Pokéballs (trainers are the people you see walking around town, staring at their mobile phones and tapping the screens).
  2. The captured Pokémon can battle with each other.
  3. Digital lures are dropped to attract Pokémon to a specific location.
  4. PokéStops generate PokéBalls and Eggs and are typically located at select places near your business, such as historical markers, monuments and art installations.
  5. PokéGyms are the battleground of Pokémon and are usually at places where people generally congregate, such as churches, parks and monuments.

Some Business-Generating Ideas

As an owner, you’ll want to find out if your business is at, or near, a PokéStop. To do this, download the free app, open it at your business and look for a big blue circle in your immediate vicinity.

If you have the good fortune of being situated in or around a PokéStop or Gym, you have a major marketing tool at your fingertips. Take advantage of it and drop a lure. These increase both the rate of Pokémon generation and foot traffic around your establishment.

The lures last for half an hour and cost around $1.39. You also can let trainers know on your social media outlets that your business is near a PokéStop and lure them with discounts if they drop a lure at your business.

Trainers rush to active lures and while they’re waiting for Pokémon to show up they may become bored, tired, hungry or thirsty. You can see the advantage there.

Lures may currently be one of your most important purchases. Coffee shops, ice cream parlours, restaurants with patios, pizza places and other places catering to impulse buyers have been successful with this strategy.

But these aren’t the only businesses that can benefit. In New York City, for example, a realty group has started listing properties with the power of Pokémon. One ad reads, in part: $9,500/5br – 1500ft2 – near major pokestop**.

Word of advice: As the radius of a lure is extensive, players can catch Pokémon without entering your business. Consider putting up some signage, such as, “Catch a Pokémon inside and get a 10% discount.”

Gyms can become particularly busy spots, and owners may need to be creative. Trainers often join others to form teams to battle other teams for control of the gym. Battling teams stick around for a while as they win, lose or win the site multiple times. But they tend to be very preoccupied with the game.

Consider a sandwich board to keep score and announce that members of the team currently controlling the gym get discounts. You can also take screenshots of the game and post them on your social media with hashtags, such as #pokemongo and #pokemon to attract trainers who might not otherwise know about your business.

If you aren’t at either a stop or gym, set up an event, such as a barbecue or a sidewalk sale, and advertise it, noting that there are Pokémon nearby. Both the Edmonton Eskimos and the Toronto Argonauts hosted pregame events and set off lures to attract fans and Pokémons.

Be aware that not all businesses, homeowners and others are happy with the foot traffic the game creates. The game’s creator did remove at least one PokéStop from a socially sensitive monument and one medical facility reportedly has asked that it be removed from the app and is attempting to ban players.

Can You Attract New Customers?

With this popular augmented reality game, people are getting out of their houses, walking around and socializing. At some point, they’re going to want to make a purchase, get a bite to eat or grab a drink — and they’re going to want to talk about how they’ve been playing. If you’re a business owner, consider taking advantage of this craze.

College and then a Job at a Coffee House? Not Necessarily

080416_Thinkstock_468195645_lores_KKAre you worried that after years of college or university, your kids will wind up as a barista?

That idea has been challenged by recent research showing that those who graduate from post-secondary education tend to land jobs with good salaries that continue to grow significantly over time.

Researchers at the Education Policy Research Initiative at the University of Ottawa looked at income data linked to tax records for 620,000 Canadian college (diploma) and university (bachelor’s) graduates from four provinces. The data studied covered the years 2005 through 2013.

The goal: Gauge the affect of higher education on future employment income. According to the researchers, spending years in post-secondary education is a valuable effort in terms of earning bigger bucks, almost regardless what you study.

“Very few graduates had truly barista-level earnings even to start, and they increasingly moved even further from that level as they gained labour market experience,” the report said. In fact the study, called Barista or Better? New Evidence on the Earnings of Post-Secondary Education Graduates shows that:

  • College diploma graduates who finished their studies in 2005 had mean annual earnings of $33,900 (in 2014 dollars) in the first year following graduation, growing by 59% to $54,000 eight years after graduation.
  • Engineering, Mathematics & Computer Science, and Business graduates generally had higher incomes and greater earnings growth than others, but graduates of almost all other fields of study, including the often-maligned Humanities and Social Sciences bachelor’s graduates, also performed well.
  • Graduates in later years generally had similar earnings patterns and the ranking of fields of study remained consistent as well, although some fields of study did have greater differences in earnings across cohorts than others.

Income Potential

“This study provides much-needed data on graduates’ income potential, and demonstrates the significant value of post-secondary education – including liberal arts degrees – with respect to long-term earnings and career success,” said Paul Davidson, President of Universities Canada, a group that represents the interests of 97 Canadian public and private not-for-profit universities.

Students who graduated from university in 2005 earned $45,200 in inflation-adjusted terms – on average – in their first year after school. Every subsequent year, the figure rose for a total of 66% to $74,900 in 2013, the final year studied.

Students who graduated from college earned a bit lower in the first years, starting at $33,900 in inflation-adjusted terms in 2005, but by 2013, the amount had grown 59% to $54,000.

The study speculates that the reason for this discrepancy could be that Canadian colleges are generally mandated with developing occupation-specific, practical job skills in their students, often catering to local labour market needs. This means that the graduates of some institutions may do considerably better or worse than the graduates of others, depending on local labour market conditions for their graduates in different fields of study.

(Colleges of applied arts and technology have full-time and part-time diploma and certificate programs. Many also offer bachelor degrees in applied areas of study. Universities are institutions that can grant degrees. All universities have undergraduate (bachelor’s) degrees, and many have graduate (Master’s and doctoral) programs. Many universities also offer professional programs, such as medicine, dentistry and law. In some cases, you can begin these programs after 2 or 3 years of undergraduate study.)

Ranking of Earnings

The earnings for different courses of study were ranked in this order:

  • Engineering and Health graduates (excluding doctors, dentists, and pharmacists), consistently had the highest average earnings to start, generally in the $60,000 range.
  • Math & Computer Science and Business Graduates (in that order) started between the low $40,000s and as high as $52,700 for the 2007 graduates.
  • Science & Agriculture, the Social Sciences, and the Humanities came in third, earning between the low $30,000s and $40,000 in their first year.
  • Fine Arts came in last, with earnings ranging from around $25,000 to just under $32,000 in their best year (the 2007 graduates, as for most fields of study).

Attaching specific numbers to these patterns, earnings in the first year after leaving school for the 2005 cohort were:

  • Health: $58,800,
  • Engineering: $56,400,
  • Math & Computer Science: $48,500,
  • Business: $43,700,
  • Science & Agriculture: $38,500,
  • Social Sciences: $36,300,
  • Humanities: $32,800, and
  • Fine Arts: $28,800.

Graduates from bachelor’s programs saw their salaries grow by about $4,200 a year, and each new wave of graduates earned about $2,400 more than the grads the year before.

Trends were similar across community colleges, where engineering and health graduates started off making about $40,000 a year and rose as high as $72,000 for engineer grads after eight years.

Gender Gap

The numbers also show a wage gap between the genders that widens over time. The average male university graduate in 2005 earned $46,800 in the first year, while female classmates made $44,000. Eight years later, the gap spread widely. The typical male university student was earning $89,800 in 2013, a 91% surge. His female counterpart, on the other hand, saw earnings rise 42% to $62,500.

So the gender wage gap spread over those eight years from about 6% to almost 30%.

The results were similar for college grads: first-year male grads earned $36,700 on average in 2005 and $65,600 by 2013, while female grads earned $31,200 and $42,000 respectively.

Lead researcher Ross Finnie, in an interview with CBC, said: “To some extent these gaps are because men and women study different things,” noting that, for example, there are few women in engineering. He also suggested that women’s salaries often are reduced over time because they take time off to raise families. The study didn’t go into the discrepancies.

Financial Crisis

A post-secondary education even served as a buffer to the financial crisis of 2008. The popular story has been that regardless of how life was going before 2008, post-secondary education graduates’ employment rates and earnings levels dropped sharply in that year and haven’t recovered.

The data tells a different story. Immediately following 2008, first year earnings of all graduates dipped, after having risen the two preceding years. But earnings stabilized in 2010.

While those who finished their studies in 2005 earned an average $45,200 in their first full year after graduating, earnings rose somewhat for the next two sets of graduates, to $47,100 and $47,600 in 2006 and 2007, respectively.

Earnings turned down for the 2008 through 2010 graduates, to a low of $43,800 for the latter. But this cohort’s earnings were only $1,400 (or about 3%) below the level of the 2005 cohort, while those who finished in 2012 enjoyed a small uptick.

A fair conclusion, the study says, might be that although earnings did decline after 2008, the change was relatively moderate, especially if a longer-run perspective across all cohorts is taken rather than comparing the later cohorts to the peak earnings enjoyed by the 2007 graduates.

Ultimately, the study says, the skills “individuals develop play a pivotal role in determining their labour-market opportunities and life chances in general, and are of vital importance to a country’s economic performance and many social outcomes. Post-secondary education is a primary means by which Canadians obtain the skills that they need.

Informed Decisions

It’s essential to have accurate information so that students, institutions and the general public can make informed decisions. This is especially relevant, the study asserts, when “we are often confronted with the now familiar barista trope – the suggestion (even assumption) that going to university, or college, particularly in a non-STEM (Science, Technology, Engineering, Mathematics) field of study, is a waste of time and will leave graduates stuck in a job with low earnings and little opportunity for career advancement.”