Should I do no income tax deductions for a student employee? This is Canada not USA

Hello @mary63 ,

You are supposed to use the tax tables and deduct taxes, which are based on what earnings there are in a specific pay period.  You and I know, that any tax deducted from that student is likely to be refunded to the student at income tax time, but that is not a reason to not deduct the taxes if the payroll tax tables call for it.  In fact, if you don't withhold taxes according to the tax tables, that is cause for penalties for failure to deduct.

If a student employee is making less than the annual basic exemption, divided by the number of pay periods in a year (12, 24, 26, or 52), no income tax deductions will be triggered, but CPP & EI will always be triggered.  Where the student is making a good wage, the tax tables assume that the employee will be making the same amount of money for all pay periods in the year.  The fact that the student will not be making that amount of money for the entire year is irrelevant as far as the tax tables are concerned.  You must still make the deductions and the student will recover them when they file their tax return.

Some student employees have more than one job.  The problem with that is the tax tables are deducting amounts according to only that one job so income tax deductions are likely to be minimal, or non-existent.  If that happens for both jobs, the employee could be in trouble at tax time, as the combination of earnings from both jobs will be used to calculate federal tax payable.  If this is the case, you might advise your employee to request a flat amount of additional tax to be deducted each pay period so they are not short at tax time.  As long as earnings from both jobs remain under the basic exemption there wouldn't be a problem. 

You could have a situation, however, especially if the student has irregular earnings each pay period, of under deducting CPP premiums.  The link to the thread below addresses this.  The OP was using desktop version, but the principles are the same so it may help you.  This was a post from 2019, so the CPP rate referred to would have to be updated to current 2020 rate.

https://quickbooks.intuit.com/learn-support/en-ca/employees-and-payroll/cpp-short-on-part-time-emplo...

Good luck!

Hi there, 

The QuickBooks Online payroll module is designed to make your life easier. I'd be happy to steer you in the right direction with making sure your student employee is set up correctly.

To make sure you don't run into any issues with the CRA I recommend checking with your accountant on whether you should apply income taxes or not. Once you've made a decision, I encourage you to check out this helpful article which shows you how to set up employees and employee taxes in QuickBooks: Set up your payroll service

In case you have other questions, feel free to contact our support team using this link here.

We have a staff member that works about 7 hours per week, grossing on average $900 per month, how can I deduct taxes on the payroll

Hi JaynieR. Making sure the correct deductions are being applied is an important task for keeping your payroll accurate. To ensure accuracy, I recommend consulting an accounting professional for expert advice. If you're not in contact with one I suggest searching for one on our site. I'll leave this question open in the community so other members can chime in and share their advice. In the meantime, check out this helpful article with info on how to: Set up and add deductions and contributions to an employees' payroll. Let me know if you have other questions.