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Chapter 5: Payroll deductions and remittances
On this page...
- Do you need to register for a payroll deductions account?
- What to deduct from your employees' remuneration
- How to report payroll deductions
If you are an employer, you must make regular deductions from your employees' remuneration.
You are an employer if:
- you pay salaries, wages (including advances), bonuses, vacation pay, or tips to your employees; or
- you provide certain taxable benefits or allowances such as board and lodging to your employees.
An individual is an employee if the employment arrangement between the worker and the payer is an employer-employee relationship. Although a written contract might indicate that an individual is self-employed (working under a contract for services), we may not consider the individual as such if there is evidence of an employer-employee relationship. For more information on employment status, see Guide RC4110, Employee or Self-Employed?
Your responsibilities
As an employer, you are responsible to:
- deduct CPP/QPP contributions, EI premiums, and income tax from amounts you pay to your employees;
- remit these deductions along with your share of CPP/QPP contributions and EI premiums that you have to pay throughout the year on your employees’ behalf; and
- report the employees’ remuneration and deductions on the T4 information return and give information slips to your employees.
Do you need to register for a payroll account?
You need to register for a payroll account if you:
- pay salaries or wages;
- pay tips and gratuities;
- pay bonuses and vacation pay;
- provide benefits and allowances to employees; or
- need to deduct, remit and report amounts from other types of remuneration (such as pension or superannuation).
If you need a payroll account and you already have a business number (BN), you only need to add a payroll account to your existing BN. However, if you don’t have a BN, you must request one and register for a payroll account before your first remittance due date. For more information, see The Business number.
What to deduct from your employees' remuneration
You are responsible for deducting Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions, Employment Insurance (EI) premiums, and income tax from your employees’ remuneration.
To calculate your various deductions, use the Payroll Deductions Online Calculator (PDOC), available at Payroll Deductions Online Calculator – Disclaimer, or see Guide T4001, Employers’ Guide – Payroll Deductions and Remittances, Guide T4032, Payroll Deductions Tables or Guide T4127‑JAN, Payroll Deductions Formulas for Computer Programs. These electronic services and publications can help you determine how much to deduct and what type of income is pensionable, insurable or taxable.
Payroll deductions can be complicated. If you are having trouble with them, go to Payroll or call 1‑800‑959‑5525. We offer an on‑site consultative service to provide any help you may need with payroll deductions. As part of the Employer Visits Program, we can visit you to help with problems you have.
Canada Pension Plan/Quebec Pension Plan
The Canada Pension Plan (CPP) came into effect as a way to provide financial assistance to Canadians when they retire from the workforce. Every person who works in Canada is eligible to get benefits when he or she retires.
If you run a business in Quebec, you deduct Quebec Pension Plan (QPP) contributions instead of CPP. You remit the payments to Revenu Québec instead of the Receiver General for Canada.
Both employees and employers contribute to the CPP or the QPP. But you, as an employer, are responsible both for deducting CPP or QPP contributions from your employees’ pensionable earnings and for matching those contributions yourself.
For information on the QPP, visit the Revenu Québec Web site at Contributions to the Québec Pension Plan (QPP).
Employment Insurance
Employment insurance (EI) is a federally administered insurance program that gives financial assistance to people who are unemployed. It also helps people get training for jobs.
As an employer, you are responsible for deducting EI premiums from your employees’ insurable earnings.
The rates for EI premiums may vary from year to year. Go to Payroll for the most current rates.
Note
You must also make your own contributions to EI on behalf of your employees. Generally, the employer’s contribution will be slightly more than the employee’s.
Income tax
As an employer, you are responsible for deducting income tax from the salaries, wages, or other remuneration you pay your employees.
Since employees fall into various categories (such as fishers, employees who get paid commissions and claim expenses, etc.), you need various forms, such as federal and provincial forms TD1, Personal Tax Credits Return, to help you decide what to deduct from their remuneration. For more information on these forms, see Guide T4001.
Remittances
As an employer, you have to remit the CPP contributions, the EI premiums, and the income tax deducted from your employees’ income, along with your share of CPP contributions and EI premiums.
Remittances are deemed to have been made on the day on which it is received by the Receiver General, and as such, you should choose the appropriate remittance method to meet your due date.
These deductions, along with your remittance form, must be received by us on or before your remittance due dates. Due dates vary depending on the type of remitter you are.
Most employers are required to remit withholding amounts on a monthly basis; large employers remit more frequently. As a small business employer, you may be able to make quarterly remittances of taxes and payroll deductions.
For the different remittance methods you can choose from when remitting your payroll deductions, go to Payroll or see Guide T4001.
You can check your payroll remittance requirements using the “View remitting requirements” service, available at My Business Account.
How to report payroll deductions
Generally, you report your employees’ salary, wages, and taxable benefits, as well as any deductions, on the T4 slip, Statement of Remuneration Paid. You can get a copy of this slip at Forms and publications, by calling 1‑800‑959‑2221, or from the nearest TSO.
You have to fill out and give your employees their copies of the T4 slip no later than the end of February following the calendar year to which the slip relates. Late filing penalties may apply, read Late remitting / Failure to remit.
For more information about T4 reporting requirements and the different filing methods, go to Completing and filing information returns or see Guide RC4120, Employers' Guide – Filing the T4 Slip and Summary.
If you use payroll, commercial or in‑house‑developed software to manage your business, you can submit files up to 150 MB over the Internet using the Internet File Transfer application. To know more about this filing method, go to Internet file transfer (XML). More information on filing information returns electronically is also available at Filing Information Returns Electronically (T4/T5 and other types of returns).
