Are Internships and Student Work Placements Taxable?

Types of student work placements

There are many ways for young Canadians to gain work experience. While definitions vary between schools and employers, here's a broad breakdown:

• Internship: A short-term paid or unpaid position, where you gain hands-on experience in your field.
• Student internship: Completing an internship as part of a degree or diploma program, though sometimes arranged by the student.
• Co-op: A paid work term that alternates with your school semesters, arranged through your post-secondary institution.
• Practicum: A supervised, unpaid placement required to complete your degree or diploma. Practicums are common in health care, education, and social work.
• Apprenticeships: A training program in a regulated skilled trade, like electrical or plumbing, completed under a licensed journeyperson to earn certification. 
• Trainee: A broad term for someone learning on the job, often in a corporate setting. A trainee position may or may not be part of a school program.
• Work-study placement: An optional, paid, part-time job arranged through your school, often on campus, to help you cover education costs. Unlike a practicum or co-op, it's not tied to completing a program.
• Residency program: Some professions require completion of a paid post-graduate residency program, such as medical specialties and veterinary specialties.

For more information on how schools define these placements, visit Co-operative Education and Work-Integrated Learning Canada (CEWIL Canada), the national association for work-integrated learning.

Do interns get taxed in Canada?

Interns are taxed in Canada if they're getting paid.

The Canada Revenue Agency (CRA) treats income from paid internships, student placements, and work-study roles as employment income, regardless of how the role is labelled. That means internships are subject to the same income tax rules as any other job. 

But how your compensation is structured affects how taxes are handled:

• Hourly wages and salaries: Taxed like standard employment income, with deductions taken directly from your paycheque.
• Stipends and honorariums: Paid as a lump sum but still taxable. 
• Allowance: May be partially or fully non-taxable if it reimburses specific work-related expenses, like transportation or meals. A general living allowance is taxable.
• Trainee and creator economy roles: Whether you're a corporate trainee or earning through social media, brand deals, or content creation, you'll owe tax on the income you earn.

Paid vs. unpaid internship placements: What is taxable?

The income you earn from internships and placements is taxable. Unpaid internships, as you may guess, have no earnings to tax, but these positions are only permitted in Canada under specific circumstances. 

Under the Canada Labour Code, a “student intern” is not required to be paid if the placement is required as part of their school program, and the activities you do at your internship aren't considered work. Your employer could, voluntarily, give you money that's not connected to the activities you perform – such as a monthly allowance, a stipend, or reimbursement for expenses – but they don't have to.

Interns who are not student interns are employees who must be paid at least minimum wage, which varies by province or territory. Federally regulated industries also have a minimum wage. See current and upcoming minimum wages across Canada.

Not sure where your placement falls? The Government of Canada's federal labour standards for interns lay out the rules clearly, along with details about working hours, breaks, shift changes, holidays, and rights.

What if your internship is unpaid and you're not doing it for school? Many unpaid internships are actually illegal. Your employer may have misclassified you as a student intern (or another title, such as trainee or volunteer). This may be an honest mistake, but unfortunately, some employers exploit students and recent graduates, taking advantage of their desire to gain experience in their field. 

If you think you're in this situation, bring it up with your employer, if you feel safe doing so, or file a claim with the provincial or territorial labour department or employment standards branch. You may be entitled to retroactive pay, including back wages and vacation pay. 

To prepare for making a claim, collect relevant documents you may need, such as contracts, a record of hours you've worked (such as calendars and time sheets), any pay statements you have, notes about discussions with your employer, and screenshots of texts or other messages. 

Is an internship counted as employment?

Yes, if it's a paid internship. And how your employer classifies your role has a direct impact on your taxes and paycheque deductions.

• Classified as an employee: Most standard co-op and student intern roles are treated as employment. If your paycheque seems smaller than you expected, that's because your employer withholds income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums directly from your pay. At tax time, you'll receive a T4 slip summarizing your earnings and deductions. (Read more tax tips for your first job.)
• Classified as self-employed or a contractor: Tax, CPP, and EI aren't deducted automatically. You may receive a T4A slip, or no slip at all if you're earning casual income. That means you're responsible for calculating and paying your own taxes and tracking any expenses related to your work.

What if your employer misclassifies you?

Some employers, particularly startups, may label you as a contractor when your role is actually more like a regular job. Misclassification means you could miss out on CPP and EI contributions, as well as work benefits and protections. 

You might also get stuck with an outsized bill at tax time because your employer didn't withhold anything at source.

If you (or your employer) are unsure of your employment status, you can request a ruling from the CRA.

Read more about the differences between employees and contractors.

Can international students have internships in Canada?

Yes, international students can participate in internships and work placements in Canada, but the placement must be a required part of your study program, approved by your school, and meet the terms of your study permit. 

For full details on eligibility, see the Government of Canada's resources on intern work permits and working as an international student. If you're an international student earning income in Canada, you'll also need to file a tax return. 

Maximizing tax breaks for students

Even if you don't expect to have to pay additional income tax, it's important to file your taxes to ensure you're not missing out on any benefits or a potential tax refund. Here are a few of the tax breaks that may apply:

• Basic Personal Amount: Every Canadian taxpayer can earn a base amount of income before paying federal tax. If your internship income is above that amount, the difference is subject to federal income tax. As an employee, that tax has likely already come off your paycheque; filing your return tells you whether you get a refund or owe a small balance.
• Tuition tax credit: If you paid tuition, your school will issue a T2202 slip, typically mailed out by the end of February. Use it to claim your tuition tax credit and lower your tax bill by 15% of your eligible tuition amount.
• Carry-forward tuition credits: If your income is low enough, you may not need to use your full tuition credit this year. Any unused amounts can be carried forward to reduce your taxes in future years.
• Government benefits: Filing your taxes is how the CRA determines whether you're able to claim benefits like the Canada Groceries and Essentials Benefit, a quarterly payment that helps low- and middle-income Canadians with everyday costs, and the Canada Workers Benefit (CWB), a refundable tax credit for low-income workers. Eligibility depends on your income and situation. Note that full-time students enrolled for more than 13 weeks are generally not eligible for the CWB unless they have an eligible dependant.
• Medical expenses: If you paid out of pocket for things like prescription drugs, dental care, or vision care, you may be able to claim a tax credit for eligible costs above a minimum threshold based on your income.
• Moving expenses: If you moved at least 40 kilometres to be closer to your school or new job, you may be able to deduct eligible moving costs.
• Internship-related expenses: Contractors and self-employed interns can deduct eligible expenses required to do their work, like a home office, supplies, or software, as long as the expense wasn't reimbursed by their employer. Employees can claim some deductible expenses, too, but only with a signed T2200 form from their employer.

For a full breakdown of student tax credits and deductions, visit the CRA's student tax page and TurboTax's student tax guide.

Taxable benefits at work

If your employer pays for or gives you, or someone close to you (like a family member), a good or service that's personal in nature, that's a taxable benefit. An allowance or a reimbursement of your personal expenses is also a taxable benefit. That means the benefit will be added to your taxable income and reported on your T4. It could also affect your income tax and other paycheque deductions, such as  CPP and EI. 

Here are a few examples: 

• Company car: If your employer provides an automobile to use for work duties, any personal driving you do with it (such as personal errands and road trips) is taxable. A portion of operating expenses such as gas, maintenance, and repairs, will be added to your taxable income, based on your mileage. You must keep a driving logbook and give it to your employer. 
• Housing or utilities: If your employer gives you an allowance or benefit to pay for rent or utilities, that's a taxable benefit. That includes below-market rent or free housing; you will be taxed at the accommodation's fair market value. There are some exceptions, such as lodging in special work sites and remote locations. 
• Meals: Free and subsidized meals, or an allowance or reimbursement for meals, provided your employer are a taxable benefit. There are several possible exceptions, including meals provided as a travel expense, meals provided during social events, some overtime meals, and subsidized meals in an employee cafeteria.  
• Gifts and bonuses: Gifts, gift cards, awards, and rewards are taxable, with some exceptions. Learn more about gifts and taxes.

Benefits related to your health and welfare, such as medical and dental coverage, and work necessities such as tools, uniforms, and training courses, are usually non-taxable.