You counted the hours. You worked your shifts. You did the math on the bus home: 25 hours at $17.50 is $437.50.
Then the pay stub shows up. The number says $368.
That moment of confusion is universal. Every working teen in Canada has been there. The first thing to understand: nothing went wrong. This money was withheld legally, for real reasons, and you actually have more control over some of it than you think. Here is where it went.
Three Deductions, Three Different Things
Your paycheque gets reduced by three main categories: income tax, CPP, and EI. Your employer has no choice about any of these. They are required by law to withhold them and send them to the government on your behalf.
Each one works differently. Each one matters in a different way.
CPP: The Money Your Future Self Will Thank You For
CPP stands for Canada Pension Plan. It is a federally-run retirement program. When you work, both you and your employer contribute a percentage of your earnings to it. The employee contribution rate is approximately 5.95% of your eligible earnings. (The exact figure updates annually. Check the CRA website for the current rate.)
The catch: you won't see this money for decades. CPP builds up over your working life and pays out when you retire. Every year you contribute, you earn a bit more future benefit.
For a teen working part-time, CPP deductions are small because of a basic annual exemption: the first $3,500 you earn in a year is not subject to CPP at all. If you earn $10,000 working summers and weekends, you'd contribute roughly $385. Not huge. But it does come off your paycheque.
Worth knowing: if you only work a few months and don't cross that exemption threshold, you may pay almost nothing in CPP for the year. Your stub will show you exactly what was withheld.
EI: The Job-Loss Insurance You Hope to Never Use
EI stands for Employment Insurance. The employee premium rate is around 1.66% of your insurable earnings. On $10,000 of annual income, that works out to about $166 for the year, or a few dollars per paycheque.
EI is an insurance pool. If you lose your job through no fault of your own (a seasonal layoff, a store closing, hours cut to zero), you can potentially collect EI benefits while you look for new work. The program pays roughly 55% of your average insurable earnings, up to a weekly maximum.
The tricky part for teens: you generally need between 420 and 700 insurable hours worked to qualify for EI, depending on where you live and the regional unemployment rate. Most parts of Ontario sit on the higher end of that range. Part-time students often don't accumulate enough hours. So you'll pay into EI and may not be able to collect if your job ends before summer.
That feels unfair. It is the trade-off of a shared insurance pool. You are paying for a system that protects you if you do qualify someday, and protects other workers right now when they need it.
Income Tax: The Big One, and the Most Misunderstood
Your employer also withholds federal and provincial income tax from every paycheque. In Ontario, that means two layers: federal (CRA) and provincial.
Here is the number that matters most for you: the federal basic personal amount. This is the income you earn each year before you owe any federal income tax. In recent years it has been around $15,000 to $16,000, and it adjusts upward slightly each year. Check the CRA website for the exact current figure.
Most teens working part-time don't earn anywhere near that amount in a year. Which means most teens working part-time shouldn't owe any federal income tax at the end of the year.
But your employer doesn't automatically know your full situation. Unless you fill out a TD1 form, also called a Personal Tax Credits Return, your employer may withhold tax from every paycheque as if you are earning a full-time salary all year. That means money gets taken off your cheque that you don't actually owe.
Fill out a TD1 form when you start a job. Claim your basic personal amount on Line 1. Your employer uses that number to calculate how much to withhold. If you never submitted one at your current job, ask your employer for it today.
Ontario has its own version of this, called the Ontario TD1ON. Fill that out too. Both forms together tell your employer to withhold the right amount, not the maximum.
The T4: February's Best Piece of Mail
Every February, your employer sends you a T4 slip. It shows how much you earned in the previous calendar year and how much was withheld in tax, CPP, and EI. This is the document you need to file your taxes.
File your taxes even if you think you don't have to.
This matters more than it sounds. If you earned less than the basic personal amount and your employer withheld income tax anyway, filing a return is the only way to get it back. The government does not automatically send you a cheque. You have to claim it.
For most teens filing their first return: the CRA's Netfile system is free. Wealthsimple Tax is free for basic returns and is the cleanest option for a first-timer. H&R Block has a student-priced option if you want more guidance.
A refund of one or two hundred dollars landing in April is common for teens who worked part-time. That money belongs to you. Do not leave it sitting with the government.
A Quick Note If You Are Self-Employed
Babysitting, lawn care, selling things online, freelance work: if no one is automatically withholding deductions from your payments, different rules apply. Self-employed Canadians are responsible for setting aside their own tax and CPP, and they pay both the employee and employer share of CPP (about 11.9% total instead of the normal 5.95%).
If this is your situation, set aside at least 25% of every payment you receive in a separate savings account. Look up the CRA's self-employment page before your first tax season. You do not want to discover in March that you owe the government money you already spent.
One Thing to Do This Week
Go find your TD1 form.
If you started a job recently and never filled one out, ask your employer for it today. It takes about five minutes. Fill in your name, your Social Insurance Number, and claim your basic personal amount on Line 1. Then do the provincial version too.
That one step could mean a few more dollars per paycheque now, and a larger refund next spring.
The paycheque will still be smaller than the number you calculated in your head. That is just how it works in Canada. But understanding why, and knowing how to recover the money that is actually yours, puts you ahead of most people who just stare at the stub and move on.