You can download the CRA tax guide below.

t4001-21e-Payroll-DeductionDownload

What is a payroll remittance?

A payroll remittance is the amount of tax that an employer has to send to the Canada Revenue Agency (CRA) after paying salary or providing a taxable benefit to an employee on their payroll.

A payroll remittance is normally the total of the figures below:

  • Employee CPP contributions are paid by the employee and deducted from their salary by you.
  • Employer CPP contributions are paid by the company and can be claimed as business expenses.
  • Employee EI contributions are paid by the employee and deducted from their salary by you.
  • Employer EI contributions are paid by your company and can be claimed as business expenses.
  • A tax deduction is an amount that an employer deducts from their employee’s salary in order to reduce the taxable income of the employee.

When do I have to deduct CPP contributions?

You must deduct CPP contributions if that employee meets all of the following conditions:

  • The employee is in pensionable employment during the year.
  • The employee is not considered to be disabled under the CPP.
  • The employee is 18 to 69 years old, even if the employee is receiving CPP. Exception: do not deduct the CPP contribution if the employee is at least 65 years of age, but under 70, and gives you Form CPT30, Election to Stop Contribution to the CPP.

Do not deduct the CPP contribution for the following types of employment:

  • Employment in agriculture, horticulture, fishing, hunting or forestry.
  • Casual employment if it is for a purpose other than your usual business.

How to calculate CPP contributions

Each year, the CRA will determine all of the following:

  • The maximum pensionable earning from which you deduct CPP.
  • The year’s basic exemption is a base amount from which you do not deduct a CPP contribution.
  • The amount of CPP contributions to be deducted from employees’ salary is calculated using a specific rate.
Canada Pension Plan – CPP2020
20212022
Max Pensionable Earning58,70061,60064,900
Basic Exemption3,5003,5003,500
Rate5.25%5.45%5.70%
Employee/Employer Max2,898.003,166.453,499.80
Self-employed Max5,796.006,332.906,999.60

For example, if you pay your employee an annual salary of $50,000 in 2022, the employee CPP contribution will be (50,000-3,500) x 5.7% = $2,650.50; and the employer CPP contribution will be same amount, $2,650.50. The total CPP contribution and remittance to the CRA is $2,650.5 x 2 = $5,301.

When to deduct EI premiums

You can deduct the EI premium from each dollar you earn, up to the maximum amount per year, regardless of your age.

Payment for certain types of employment is not insurable, and EI premiums need not be deducted.

  • Causal employment
  • Corporation directors, or a person who controls more than 40 per cent of the corporation’s voting shares.

How to calculate EI deduction

You must subtract EI premiums from your employee’s insurable earnings. As an employer, you are required to contribute 1.4 times the amount of the EI premiums that you subtract from your employee’s pay.

Employment Insurance EI202020212022
Max Annual Insurable Earnings54,20056,30060,300
Rate1.58%1.58%1.58%
Max Annual Employee Premium856.36889.54952.74
Max Annual Employer Premium1,198.901,245.361,333.84

For example, if you pay your employee an annual salary of $50,000 in 2022, the employee EI contribution will be 50,000 x 1.58% = 790. The employer EI contribution will be 1.4 x 790 = 1106. The total EI contribution will be 790 + 1106 = $1,896.