How to handle taxes on co-op income and get every refund you're entitled to.
Co-op students in Canada earn real employment income during their work terms — and must pay tax on it. But they also have access to valuable tax credits (tuition, education amounts) that can offset much of what they owe. Understanding how co-op income is taxed helps you plan your finances, maximize your refund, and avoid surprises at tax time.
Yes. Co-op employment income is fully taxable in Canada. Your employer deducts income tax, CPP contributions, and EI premiums directly from your paycheques. At the end of the year, you receive a T4 slip showing your total earnings and deductions — which you report on your tax return.
| Slip | What It Shows | From Whom |
|---|---|---|
| T4 | Employment income, tax withheld, CPP, EI | Your co-op employer |
| T2202 | Tuition paid during school terms | Your university/college |
| T4A (Box 105) | Scholarships, bursaries if received | School or award provider |
If you had multiple co-op employers in the same year, you get a T4 from each. All must be reported on your return.
Co-op wages are taxed like any employment income. The federal basic personal amount for 2025 is approximately $15,705 — meaning income up to this threshold is effectively taxed at 0% federally. Most co-op students earn $20,000–$50,000+ depending on the field, so some income will be taxed.
| Co-op Annual Income | Approx. Federal Tax (before credits) |
|---|---|
| $20,000 | ~$645 |
| $30,000 | ~$2,145 |
| $40,000 | ~$3,645 |
| $50,000 | ~$5,395 |
These are before applying tuition tax credits from your school terms, which significantly reduce or eliminate your tax bill.
Most co-op programs alternate school and work terms. During school terms, you pay tuition. That tuition generates a 15% federal tax credit that can be applied against the tax owing on your co-op income. This often results in a significant refund even for students who earned $30,000–$40,000 in co-op wages.
Co-op students contribute to the Canada Pension Plan (CPP) just like regular employees. In 2025:
Unlike EI, CPP contributions you make as a student count toward your future retirement benefits. Even small contributions during co-op terms add up over a career.
Employment Insurance premiums are also deducted from co-op wages. The EI premium rate for employees in 2025 is approximately 1.66% of insurable earnings. Like CPP, you get a 15% federal tax credit on your EI premiums paid.
Note: Most students will not collect EI between school terms, but they do pay into the system. After graduation, if you lose your job, you may qualify for EI benefits if you have enough insurable hours (typically 420–700 hours depending on your region's unemployment rate).
If you moved for a co-op work term that is at least 40 km closer to your employer than your previous residence, you may be able to deduct eligible moving expenses from your co-op employment income. Eligible moving expenses include:
Moving expenses are claimed on Line 21900 of your T1 return and deducted from the income earned at the new location. You cannot create a loss with moving expenses — deductions are limited to income earned at the new location.
If you completed a co-op term in a different province than your school, you are generally taxed based on your province of residence on December 31 of that tax year. For most students, this is the province where your school and primary residence is located. Keep good records of where you lived and worked each month in case CRA has questions.
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Open KOHO Free — No Fees — Code 45ET55JSYACo-op income is fully taxable, but the tuition tax credits you accumulate during school terms significantly offset what you owe. Most co-op students either break even or get a refund at tax time once credits are applied. Collect all your T4 and T2202 slips, file by April 30, and check for moving expense deductions if you relocated for your work term.