Is co-op income taxable in Canada?

Yes. Co-op placement income (whether called an internship, practicum, co-op, or placement) is employment income if you receive a T4 from your employer. It is taxed exactly like regular employment income: federal and provincial income tax is withheld at source; CPP contributions are deducted; EI premiums are deducted. The fact that the placement is part of your academic program does not change its tax treatment if it constitutes an employment relationship. If you received co-op funding from your school rather than directly from an employer (e.g., a school-administered bursary for an unpaid placement), that is treated differently — likely as scholarship income which may be exempt.

What tax slip do I receive for a co-op placement?

For a standard co-op placement where you are employed by a company, you receive a T4 (Statement of Remuneration Paid) from your employer by the last day of February following the calendar year. The T4 shows: Box 14 (employment income); Box 22 (income tax deducted); Box 24 (EI insurable earnings); Box 26 (CPP/QPP pensionable earnings); and associated CPP and EI deduction amounts. Report this T4 on Schedule 1 of your T1 return as employment income. If you did multiple co-op placements with different employers in one year, you receive a separate T4 from each employer.

Can co-op students still claim the T2202 tuition credit?

Yes, if your school issues a T2202 for the academic term associated with your co-op. Most universities that have formal co-op programs count co-op terms as registered academic semesters and issue a T2202 covering those months. However, whether the T2202 covers your co-op semester depends on the institution. Schools like University of Waterloo, co-op programs at McMaster, Queen's, and others generally do issue T2202 slips for co-op enrolled terms. If you are not sure, check your student portal or contact your co-op office. If a T2202 is issued for co-op terms, the tuition credit claimed applies to any fees paid for that co-op term (co-op fees charged by the university, not wages).

Can I deduct moving expenses for a co-op placement?

Yes, if you move at least 40 kilometres closer to your place of employment (measuring by the shortest usual route). The moving expense deduction under Section 62 of the Income Tax Act allows students to deduct eligible moving costs when they move for a co-op, temporary work, or summer job — even when returning to school afterward. Deductible expenses include: transportation and storage of household goods; travel costs for the move; temporary accommodation up to 15 days; cost of meals during the move; lease-breaking penalties; real estate commissions (if selling a home — rarely applies to students). The deduction is claimed against the co-op income earned at the new location. Keep receipts for all claimed moving expenses.

What is the 40-km rule for student moving expenses?

To claim moving expenses, your new home must be at least 40 kilometres closer to your new work location (the co-op employer's office) than your old home was, measured by the shortest normal route. This is measured from your old home to the new work location versus from your new home to the new work location — not from old home to new home. Example: if your parents' house is 55 km from the co-op employer and you rent a room 3 km from the employer, your new location is 52 km closer → you meet the 40 km rule. Example 2: parents live 20 km from employer, new room is 4 km from employer → only 16 km closer → rule not met.

Do co-op students get EI benefits if a placement ends early?

Possibly, but rarely in practice. Co-op placements that end at the scheduled completion date do not qualify for EI because the separation is not involuntary. If a placement is terminated early by the employer against your wishes, you may have accumulated enough insurable hours (420–700 hours qualifying threshold) to apply for EI — but whether you're approved depends on the specific circumstances and your insurable hours accumulated. Most 4-month co-op terms produce enough hours (~640) to clear the threshold. The complication: you must be available for full-time work to receive EI benefits. If you are returning to school full-time immediately after the placement, you are generally not considered available for work and would be disqualified from regular EI benefits.

How does co-op income affect OSAP for the next academic year?

OSAP considers your pre-study income (income earned before your academic year begins, including the previous summer or co-op term) as a contribution you are expected to make toward your education. All of your pre-study income above the allowable amount is counted as an expected contribution that reduces your assessed need. This means a high-earning 8-month co-op can significantly reduce your OSAP entitlement for the following academic year. For example, a student earning $24,000 gross on two consecutive 4-month co-op semesters may see their next-year OSAP award reduced by several thousand dollars. Plan your finances around this: save a portion of co-op earnings specifically for the reduced-aid academic year.

Co-op Placement Tax Guide Canada: Reporting Income, CPP/EI, and Deductions

A co-op placement is treated as employment for tax purposes. File a T1, claim all available credits, and take advantage of deductions most co-op students miss.

Your co-op placement: tax basics

When you complete a co-op term with a real employer:

You receive a T4 slip in February after the year end
Your income is employment income on Line 10100 of your T1 return
Your employer withheld CPP, EI, and income tax during the placement
You file this income exactly like any other employment income

When co-op income is NOT a T4: If your placement is an unpaid volunteer role or a school-funded bursary for unpaid work, you may receive a T4A instead (scholarship/other income). See the next section.

T4 from co-op: what each box means

T4 Box	What it shows	Where it goes on T1
Box 14	Total employment income	Line 10100
Box 22	Income tax deducted	Line 43700 (tax already paid)
Box 24	EI insurable earnings	Used to calculate EI premium on T1 Schedule 1
Box 26	CPP pensionable earnings	Used to calculate CPP contribution credit
Box 16	Employee CPP contributions	Line 30800 (CPP credit)
Box 18	Employee EI premiums	Line 31200 (EI credit)
Box 40	Other taxable allowances and benefits	Added to income
Box 52	Pension adjustment	Not directly tax — reduces RRSP room

If your T4 shows only income and withholdings with no unusual boxes, your filing is straightforward: enter Box 14 as employment income, enter Box 22 as taxes already paid, enter CPP and EI amounts from their respective boxes.

CPP and EI on co-op placements

CPP contributions

Co-op students are subject to standard CPP rules:

Detail	2025
Employee CPP rate	5.95%
Basic exemption (annual)	$3,500
Contribution on a $20,000 co-op income	5.95% × ($20,000 – $3,500) = ~$982

You cannot opt out of CPP as a student employee. However, you can claim a 15% non-refundable federal credit on your CPP contributions (Line 31000) — on $982 in contributions, that’s a $147 tax credit.

EI premiums

Detail	2025
Employee EI rate	1.66%
On $20,000 co-op income	1.66% × $20,000 = $332

You cannot opt out of EI. The $332 generates a small non-refundable credit at 15% = $50.

T2202 and co-op terms: the tuition credit interaction

At many universities with structured co-op programs, co-op semesters count as registered academic terms. If your university issues a T2202 covering co-op semesters, you can:

Claim the T2202 credit on any co-op administration fees charged by the university (not the wage itself)
Count co-op months as enrolled months for purposes of scholarship income exemption

Common at Waterloo, Guelph, McMaster, Queen’s, and others: The co-op office charges a co-op fees amount each work term. This appears on your T2202 as tuition paid. It generates a tuition credit (15% federal × those fees).

What is NOT eligible: Your wages/salary from the employer are not tuition and do not generate T2202 credit. Only amounts paid to the institution qualify.

Moving expense deduction for co-op

The moving expense deduction is one of the most underused benefits available to co-op students.

The 40-km rule (detailed)

You can deduct moving costs if you move for a co-op placement AND your new home is 40+ km closer to the employer than your old home.

How to measure 40 km:

Measure from old home to new work location (by shortest usual route)
Measure from new home to new work location
If (old home to work) minus (new home to work) ≥ 40 km → you qualify

What you can deduct

Expense type	Deductible?	Notes
Moving truck or van rental	Yes	Keep receipt
Gas for your own vehicle	Yes	Use CRA per-km rates or actual gas
Hotel during move	Yes	Up to 15 days of temporary lodging
Meals during move	Yes	Use simplified method: $23/meal, ≤ $69/day
Storage unit	Yes	While between homes during move
First/last month rent at new place	Partially	New place lease deposit — keep records
Lease-breaking fee at old place	Yes if applicable	Keep documentation
Real estate agent commission	Yes if applicable	Rarely relevant for students

Cannot deduct: New furniture, renovations, personal clothing and items damaged in move, costs not directly related to the physical move.

How to claim moving expenses

File Form T1-M (Moving Expenses Deduction) with your T1 return
The deduction is claimed against income earned at the new location (your co-op income)
If your deductible moving expenses exceed your income at the new location, you can carry forward the excess to the following year

Example:

Moved 200 km for co-op placement earning $22,000
Moving costs: U-Haul $350, gas $80, one night hotel $120 = $550 total
Deduction: $550 off your co-op income
Income for tax purposes: $22,000 – $550 = $21,450

Can you deduct work-from-home expenses on a remote co-op?

If you worked remotely for your co-op placement from a home office, you may be eligible for the employment expenses deduction under Form T777 — but only if:

Your employer provides a signed Form T2200 (Declaration of Conditions of Employment) confirming you were required to work from home
You use a dedicated space in your home exclusively for work (not your bedroom desk used for school too)

For most students on remote co-op placements, the T2200 is typically not issued for a 4-month term, making this difficult to claim. The simplified $2/day home office method was eliminated after 2022. Without a T2200, you cannot claim home office expenses.

What to do when you receive multiple T4s from co-op and school jobs

If you worked at a co-op placement AND had a part-time campus or off-campus job in the same year, you receive multiple T4s. File all of them:

Enter each T4’s income, deductions, and withholdings separately in your tax software
All income stacks on Lines 10100/10400 in total
All withholdings apply toward your total tax payable
If too much CPP was withheld across multiple employers (exceeding the annual maximum), you receive a refund of the excess via Line 44800 (CPP over-contribution)

OSAP impact of co-op income

Co-op term timing	OSAP classification	Impact
Pre-study (summer before academic year)	Pre-study income	Reduces next-year OSAP in full above allowance
During-study co-op (formally enrolled)	In-study income	Partial reduction — less impact than pre-study
Post-study (after graduation)	N/A	Does not affect OSAP

Students in alternating work/study programs (Waterloo, Guelph, etc.) who have formal work terms built into their academic program may have special OSAP rules for co-op income. Check with your institution’s financial aid office for program-specific rules.