Co-op Pay and Taxes: What a Work Term Changes: CampusWage

The offer email arrives: four months, full-time hours, a real salary line. Then comes the second thought: what actually lands in my account, and does a co-op work term change my taxes? In short, co-op pay is employment income like any other job, so your employer takes off CPP, EI and income tax, and you will get a T4 slip for the year. What changes is the size of the cheques, the way your school fits in, and, for international students, the permit paperwork.

Rules change, and they differ by school and province. This post is general information. Check the Canada Revenue Agency (CRA) for tax, and your school's co-op office for how your own program works.

How a co-op work term differs from a part-time job

A part-time job fits around your classes. A co-op term replaces them for a few months: you work full-time hours, usually in your field, and your school counts the term as part of your program. That has three practical effects.

Bigger, steadier cheques. Full-time hours mean a larger gross amount every pay period, so more tax and CPP and EI come off in total.
A fixed end date. The job ends when the term ends, so plan your money for the gap before the next term or work term.
Your school is involved. Many schools charge a co-op fee or require a work-term report. Ask the co-op office what is due and when.

Co-op pay: paid versus unpaid terms

Most co-op terms are paid, but not all. Some programs include unpaid or partly unpaid placements, and the rules about them depend on the program and the province. If you are offered an unpaid term, ask the co-op office how it is arranged and read what the province says about employment standards on ontario.ca. Get the pay terms in writing: the rate, the hours per week and the pay dates.

Co-op taxes: what comes off each cheque

Your employer deducts three things before you are paid. Our guide to what comes off your paycheque in Ontario explains each one, and the short version is:

CPP (Canada Pension Plan), a contribution towards a pension you build over your working life.
EI (Employment Insurance), insurance for certain kinds of job loss.
Income tax, taken as an advance on what you will owe for the year.

Gross pay is the amount before these. Net pay is what you receive. Your pay stub shows both, and the first pay stub checklist shows what to check on it.

A worked example: one four-month term

Here is an example with made-up numbers, only to show the arithmetic. Suppose a student has a 16-week work term at $20 an hour, 35 hours a week.

Weekly gross: 35 × $20 = $700
Term gross: 16 × $700 = $11,200

That is the number before deductions. The actual amounts for CPP, EI and tax depend on your pay period, your other income and the current rates, which change, so use your pay stubs for the real figures. The point of the example: a work term can be a big share of your income for the year, which is why a tax return matters.

Your tax return after a work term

Your employer sends you a T4 (the slip that shows your pay and what was deducted) for each calendar year, normally by the end of February. In the spring, you file a return with the CRA. If you also paid tuition, your school issues a T2202 tuition slip, which belongs on that return. A work term that straddles New Year's means two T4 years, each with part of the term. Keep every pay stub, so you can check that the T4 matches.

If you want a quick habit, record each cheque the week it arrives. Our post on tracking your wages as a student shows how.

If you are an international student

If the co-op work term is a required part of your program, you usually need a co-op work permit in addition to your study permit, and you must get it before the work term starts. Rules and processing times change, so read the current guidance from Immigration, Refugees and Citizenship Canada (IRCC) and ask your school's international office. You will also need a SIN (Social Insurance Number) to be paid. Also see our post on study-permit work hours for how the weekly limits work when you are not on a co-op term.

How CampusWage helps

CampusWage, a free shift and wage tracker for students, lets you set your co-op job's rate and pay calendar, see each pay period as a pay cheque with its pay date, and check it against what actually lands. It can show deductions with optional CPP, EI and income tax estimates based on Ontario rates, and if you keep a part-time job alongside, it keeps both in one week. It estimates; your pay stub is the final word.

Questions people ask

Do I pay tax on co-op earnings?

Yes, co-op pay is employment income and is taxable like any other job's. Whether you owe more or get money back depends on your whole year, which you settle when you file your return.

Will I get a T4 for a co-op term?

If you were an employee, yes. If a pay stub says something different, ask your employer or the CRA how it is reported.

Do I still pay tuition during a work term?

It depends on your school. Many charge tuition or a co-op fee for the term. Check your fee statement and ask the co-op office.

Can I work a second job during my work term?

Possibly, but check your employment contract and, if you are an international student, your permit conditions first.

This is general information, not tax, legal or immigration advice. Rules and amounts change, and your school's co-op program may work differently. Check the CRA, IRCC and ontario.ca for the current rules.