Guide
Canada paycheck deductions: what employers fund vs withhold
Updated
Every pay run has two kinds of lines: amounts withheld from the employee's pay, and amounts the employer pays on top. Confusing the two is the classic first-hire budgeting mistake.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
How this calculator works
- Employer CPP at 5.95% of pensionable earnings between the $3,500 basic exemption and the 2026 YMPE of $74,600, matching the employee's contribution. Maximum $4,230.45 each (canada.ca: CPP contribution rates).
- Employer CPP2 (second additional CPP) at 4% on earnings between the YMPE ($74,600) and the 2026 YAMPE of $85,000; maximum $416.00 each (same canada.ca source).
- Employer EI at 1.4 times the employee premium. The 2026 employee rate is $1.63 per $100 of insurable earnings up to the $68,900 maximum. The employer pays up to $1,572.30 per employee (canada.ca: EI premium rates). Some employers with approved wage-loss plans qualify for a reduced multiple.
- Federal-only model, outside Quebec. Quebec employers pay QPP (6.30% in 2026: 5.3% base plus 1% additional, Retraite Québec), QPIP and the Health Services Fund instead of parts of this model. Quebec's employee EI rate is lower.
- Provincial payroll taxes elsewhere (Ontario's Employer Health Tax, Manitoba's Health and Post Secondary Education Tax Levy, BC's Employer Health Tax, Newfoundland and Labrador's HAPSET) are not included. Nor are workers' compensation premiums; they vary by province, payroll size and industry.
- Figures are for the 2026 contribution year. The CRA publishes new CPP and EI maximums each autumn for the following January; verify the current year's figures on canada.ca before budgeting.
- Vacation pay is not an extra line for salaried staff: it is inside the salary. For hourly staff, provincial minimums of roughly 4% of wages apply and should be added to the wage figure you enter.
The two sides of a pay run
| Line | Withheld from employee | Employer pays on top |
|---|---|---|
| Federal and provincial income tax | Yes | No |
| CPP (5.95% to $74,600) | Yes | Yes, matched |
| CPP2 (4%, $74,600–$85,000) | Yes | Yes, matched |
| EI (employee 1.63% to $68,900) | Yes | Yes, at 1.4 times |
| Workers' compensation | No | Yes (provincial board) |
Income tax is the biggest withheld line but costs the employer nothing beyond administration: it comes out of the employee's gross pay. The employer's own money goes on the CPP match, the CPP2 match, EI at 1.4 times, and workers' compensation.
So this site's calculator models the employer side only. For the employee's net pay, the CRA's Payroll Deductions Online Calculator (PDOC) is the authoritative tool.
Remitting CRA payroll deductions
- Withheld amounts plus employer contributions are remitted together to the CRA, monthly for most new employers (by the 15th of the following month), with quarterly and accelerated schedules by remitter type (canada.ca: payroll).
- New employers need a payroll program account (RP) on their business number before the first remittance.
- Late or short remittances attract graduated penalties from 3% to 10%; the CRA treats withheld amounts as held in trust.
Quebec employers remit provincial withholdings, QPP and QPIP to Revenu Quebec separately. This page is general information, not tax or accounting advice; confirm your remitter type and schedule with the CRA or your accountant.