Basic payroll information for employers

As an employer, you are responsible for making regular deductions from your employees’ remuneration. You have to remit the deductions along with your share of contributions to the Canada Revenue Agency (CRA). And you have to report your employees’ remuneration and deductions on the T4 slips.

What are payroll deductions?

You have to deduct the following for each pay cheque from your employees:

  • Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)
  • Employment Insurance (EI) premiums
  • Income Tax

Employers’ share of CPP and EI

You have to contribute the same amount of the CPP on your employees’ behalf. You have to make your own contribution to EI on behalf of your employees. The amount is 1.4 times of your employees’ amount. These are the extra cost for your business.

Payroll remittance

As an employer, you are responsible for remitting the payroll deductions when they are due. Late remittance will result in penalties and interest charge.

Vacation pay and Holiday pay

As an employer, you have to pay minimum 4% of the employee’s salary as vacation pay. And you have to pay your employees on statute holidays even though they don’t need to come to work.

How to report payroll deductions

Generally, you report your employees’ salary, wages, and taxable benefits, as well as deductions, on the T4 slips, Statement of Remuneration Paid.

You have to file the T4 slips to CRA and give your employees their copies of the T4 slips no later than the end of February following the calendar year to which the slip relates.

The Payroll steps – an employer’s responsibilities with the CRA

CPP Rates and maximums

EI Rates and maximums

Canada Pension Plan (CPP) for the self-employed 

Employment insurance (EI) for the self-employed

Additional information