Payroll Deductions-Canada

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Canada Pension Plan

  • The Canada Pension Plan (CPP) is a contributions based state pension scheme that is intended to supplement Old Age Security.
  • Premiums are 4.95% of earnings between $3,500 and $47,200 - a maximum of $2,163.15 a year ($3,500 to $46,300 – a maximum of $2,118.60 in 2009). The employer makes an equal contribution.
  • Self-employed people pay double.

Employment Insurance

  • Employment Insurance (EI) provides benefits if you lose your job, or cannot work, through no fault of your own.
  • Premiums are 1.73% of earnings up to $43,200 ($42,300 in 2009).
  • The maximum contribution is $747.36 ($731.79 in 2009).
  • Employers pay 1.4 times this amount.
  • EI does not apply to the self-employed. However, beginning 2010 self-employed people can chose to opt into Employment Insurance in order to qualify for certain sickness, maternity, and parental benefits. They pay the regular contribution but cannot claim EI if they become unemployed.


  • Employers are required to deduct the approximate amount of income tax, and the exact amount of CPP and EI, due from employees’ wages each period, and remit this to the Canada Revenue Agency (CRA).
  • They do not withhold amounts from self-employed contractors.
  • The rules defining whether someone is an employee or contractor are similar to the UK.
  • If the rules are broken, the fines and back taxes are collected from the employer.

Worker’s Compensation

  • This tax is paid by the employer.
  • If you are injured on the job, the Worker’s Compensation Board (WCB) will pay wage loss benefits and medical expenses.
  • If you are self-employed, you may have to make a contribution.
  • This depends on your occupation, so you should check with your Provincial Worker’s Compensation Board.

Other Wiki articles

This is one in a series of Wiki articles about Taxation.