Guide
Payroll deductions in Canada: 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.
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. That is why 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 to the CRA
- 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.