Canadian payroll, source deductions, CPP contributions, EI premiums, or employer obligations in Canada.
Accountant-authored. Written and published by Nathan Wiebe, an accountant approved on OpenAccountants. Their licence number (1009081) is published on their profile, so you can check it against the register yourself. No second accountant has attested to this version yet. General reference material, not advice on your specific facts; don't file, pay, or take a position on it without a professional reviewing your situation.
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Every figure is drawn from this Guide and cited to its source.
$0–$58,523
14%Bill C-4; CRA — 2026 payroll deductions tables (T4032) — verify on canada.ca
$58,523–$117,045
20.5%CRA T4032 2026
$117,045–$181,440
26%CRA T4032 2026
$181,440–$258,482
29%CRA T4032 2026
$258,482+
33%CRA T4032 2026
BPA (2026)
$16,452 (up to $181,440); $14,829 (above $258,482)CRA — Basic personal amount 2026 — canada.ca (verify)
CPP employee rate
5.95%CRA — CPP rates — canada.ca
CPP employer rate
5.95% (matches employee)Canada Pension Plan Act s.9
YMPE (2026)
$74,600CRA — CPP contribution rates — canada.ca (verify 2026 announcement)
CPP2 employee rate
4.00%CRA — CPP rates — canada.ca
YAMPE (2026)
$85,000CRA — CPP contribution rates — canada.ca (verify 2026 announcement)
Basic exemption
$3,500Canada Pension Plan Act s.20
Max CPP contribution (EE, 2026)
$4,230.45CRA — CPP contribution rates — canada.ca (verify 2026 YMPE)
Max CPP2 contribution (EE, 2026)
$416.00CRA — CPP contribution rates — canada.ca (verify 2026 YAMPE)
EI employee rate (non-QC)
1.63%ESDC — EI premium rates — canada.ca (verify 2026)
EI employer rate
2.282% (1.4× employee)Employment Insurance Act s.68
Max insurable earnings
$68,900ESDC — EI premium rates — canada.ca (verify 2026)
Max EE premium
$1,123.07ESDC — EI premium rates — canada.ca
Max ER premium
$1,572.30ESDC — EI premium rates — canada.ca
EI QC employee rate
Quebec EI rate 1.30% for 2026ESDC — EI premium rates — canada.ca (verify 2026 Quebec rate)
Ontario EHT threshold
$1,000,000Employer Health Tax Act (Ontario)
Ontario EHT rate
0.98%–1.95%Employer Health Tax Act (Ontario) s.2
BC EHT threshold
$1,000,000Employer Health Tax Act (BC)
BC EHT rate
BC EHT rate is 1.95% if remuneration exceeds $1,500,000. If remuneration is between $1 million and $1.5 million, the rate is 5.85% of remuneration exceeding $1,000,000.Employer Health Tax Act (BC)
Federal
Federal minimum wage $18.15/hr as of April 2026. Indexed to CPI and updated each April.Canada Labour Code s.178; ESDC — Minimum wage — canada.ca
Ontario
Ontario minimum wage $17.60/hr As of October 1, 2025Employment Standards Act, 2000 (ON); Ontario Ministry of Labour
British Columbia
BC minimum wage $18.25/hr as of June 1, 2026Employment Standards Act (BC); BC government
Alberta
$15.00/hrEmployment Standards Code (AB); Alberta government
Federal — after 1 year
4% (2 weeks)Canada Labour Code s.184
Federal — after 5 years
6% (3 weeks)Canada Labour Code s.184
T4 slips to employees
T4 slips: last day of February following the calendar year. Next business day if falls on weekend.ITA s.153(1); CRA — T4 guide
ROE
Within 5 calendar days of earnings interruptionEmployment Insurance Act s.19; Service Canada
Late T4 penalty
Minimum $100, maximum $7,500 (ITA s.162(7.01)). Graduated by NUMBER of slips, per day up to 100 days: 1-50 slips $10/day (max $1,000); 51-500 $15/day (max $1,500); 501-2,500 $25/day (max $2,500); 2,501-10,000 $50/day (max $5,000); 10,001+ $75/day (max $7,500). CRA small-filer administrative policy: 1-5 slips flat $100; 6-10 slips $5/day (max $500).ITA s.162(7.01)
Lowest bracket rate change
The lowest bracket rate was reduced from 15% to 14% effective for the 2026 tax year (enacted via 2025 tax reform).
Basic exemption
$3,500/year (pro-rated per pay period)
CPP age eligibility
CPP applies to employees aged 18--69 (mandatory 18--65; elective 65--70)
CPP2
CPP2 is a second tier introduced in 2024 on earnings between the first and second ceilings
Employer CPP matching
Employer CPP contributions mirror the employee amount exactly (1:1 match).
Employer EI multiplier
The employer pays 1.4 times the employee EI premium. Employers may apply for an EI premium reduction if they have a qualifying short-term disability plan.
Federal minimum wage
$18.15/hour (as of April 2026, indexed annually to CPI). Applies to federally regulated industries only (banking, telecom, interprovincial transport).
Top-up / waiting period
Employers are not required to top up EI benefits, though many do contractually. The one-week EI waiting period is currently waived (suspended).
ROE issuance
Must be issued within 5 calendar days of an interruption in earnings (layoff, leave, termination, etc.). Filed electronically via ROE Web.
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
Reviewed against the cited tax authorities by Nathan Wiebe on 2026-06-21.
Items flagged for further clarification are tracked separately and excluded here.
This block is generated from verified skill_facts — edit the facts, not the prose.
Quick Reference
| Field | Value |
|---|---|
| Country | Canada |
| Currency | CAD ($) only |
| Tax year | Calendar year (1 January -- 31 December) |
| Primary legislation | Income Tax Act (federal); Canada Pension Plan Act; Employment Insurance Act; Canada Labour Code (federal employees) |
| Tax authority | Canada Revenue Agency (CRA) |
| Reporting system | T4/T4A information returns; PD7A remittance voucher |
| Pay frequency | Biweekly (most common), semi-monthly, monthly, weekly |
| Employer registration | Business Number (BN) + payroll program account (RP) via CRA |
| Provincial variation | Each province/territory has its own income tax brackets, ESA, and minimum wage |
| Validated by | Verified by Nathan Wiebe on 2026-06-21 |
| Skill version | 1.0 |
Employers withhold both federal and provincial/territorial income tax from each pay. CRA publishes payroll deduction tables (T4032) and formulas (T4127) annually.
Federal Tax Brackets (2026)
| Taxable Income (CAD) | Rate |
|---|---|
| 0 -- 58,523 | 14% |
| 58,523 -- 117,045 | 20.5% |
| 117,045 -- 181,440 | 26% |
| 181,440 -- 258,482 | 29% |
| 258,482+ | 33% |
Federal Basic Personal Amount (BPA) -- 2026
| Income Level | BPA (CAD) |
|---|---|
| Up to $181,440 | $16,452 |
| $181,440 -- $258,482 | Claws back to $14,829 |
| Above $258,482 | $14,829 |
Each province has its own tax brackets applied on top of federal tax. The employer determines the applicable province based on the employee's province of employment (where they physically report to work). Employees complete a federal TD1 and a provincial TD1 form.
Key Provincial Top Marginal Rates (Combined Federal + Provincial, 2026)
| Province | Top Combined Rate (approx.) |
|---|---|
| Ontario | ~53.5% |
| British Columbia | ~53.5% |
| Alberta | ~48.0% |
| Quebec | ~53.3% |
| Manitoba | ~50.4% |
| Saskatchewan | ~47.5% |
Canada Pension Plan (CPP) -- 2026
| Component | Rate (Employee) | Ceiling | Maximum Contribution |
|---|---|---|---|
| CPP base + first additional | 5.95% | YMPE $74,600 (less $3,500 basic exemption) | $4,230.45 |
| CPP2 (second additional) | 4.00% | Earnings between YMPE $74,600 and YAMPE $85,000 | $416.00 |
Employment Insurance (EI) -- 2026
| Item | Rate | Maximum Insurable Earnings | Maximum Annual Premium |
|---|---|---|---|
| Employee (Canada except Quebec) | 1.63% | $68,900 | $1,123.07 |
| Employee (Quebec -- reduced for QPIP) | 1.30% | $68,900 | $902.59 |
Quebec employees pay QPP instead of CPP (rate 6.40% for 2026) and QPIP (Quebec Parental Insurance Plan) at 0.494%. These are deducted separately.
CPP Employer Contributions -- 2026
| Component | Rate | Maximum |
|---|---|---|
| CPP base + first additional | 5.95% (matches employee) | $4,230.45 |
| CPP2 | 4.00% (matches employee) | $416.00 |
EI Employer Contributions -- 2026
| Item | Rate | Maximum |
|---|---|---|
| Employer (Canada except Quebec) | 2.282% (1.4× employee rate) | $1,572.30 |
| Employer (Quebec) | 1.834% (1.4× employee rate) | $1,264.03 |
Provincial/territorial requirement. Premiums vary by industry classification and province. Typically $0.50--$3.00 per $100 of insurable earnings for office workers; higher for construction/manufacturing.
Employer Health Tax (Select Provinces)
| Province | Threshold | Rate |
|---|---|---|
| Ontario (EHT) | $1,000,000 | 0.98%--1.95% |
| British Columbia (EHT) | $1,000,000 | 1.95% (above $1,500,000); 5.85% of remuneration exceeding $1,000,000 (between $1M–$1.5M) |
| Manitoba (HE levy) | $2,250,000 | 2.15%--4.3% |
| Quebec (HSF) | All payroll | 1.65%--4.26% |
Select Provincial Minimum Wages (2026)
| Province | Rate (CAD/hour) |
|---|---|
| Ontario | $17.60 |
| British Columbia | $18.25 |
| Alberta | $15.00 |
| Quebec | $16.10 |
| Manitoba | $15.80 |
| Saskatchewan | $15.00 |
Rates are approximate and subject to annual adjustments.
Overtime
| Jurisdiction | Threshold | Rate |
|---|---|---|
| Federal | 8 hrs/day or 40 hrs/week | 1.5× regular rate |
| Ontario | 44 hrs/week | 1.5× regular rate |
| British Columbia | > 8 hrs/day or > 40 hrs/week | 1.5×; > 12 hrs/day = 2× |
| Alberta | > 8 hrs/day or > 44 hrs/week | 1.5× regular rate |
| Quebec | > 40 hrs/week | 1.5× regular rate |
Vacation Pay
| Jurisdiction | After 1 Year | After 5+ Years |
|---|---|---|
| Federal | 4% (2 weeks) | 6% (3 weeks) |
| Ontario | 4% (2 weeks) | 6% (3 weeks after 5 years) |
| British Columbia | 4% (2 weeks) | 6% (3 weeks after 5 years) |
| Alberta | 4% (2 weeks) | 6% (3 weeks after 5 years) |
| Quebec | 4% (2 weeks) initially; 6% after 3 years | 6% (3 weeks) |
| Saskatchewan | 5.77% (3 weeks) | 7.69% (4 weeks after 10 years) |
9 federal statutory holidays. Provincial holidays vary (6--10 per province). Employees are entitled to the statutory holiday with pay or premium pay (typically 1.5× or time off in lieu) if they work on the holiday.
Sick Leave
| Jurisdiction | Paid Days | Unpaid Days |
|---|---|---|
| Federal | 10 paid (after 30 days of service) | -- |
| Ontario | 3 paid | -- |
| British Columbia | 5 paid | 3 unpaid |
| Quebec | 2 paid (after 3 months) | 24 unpaid |
| Alberta | 0 paid | 16 unpaid |
Maternity / Parental Leave (EI Benefits)
| Benefit | Duration | EI Rate |
|---|---|---|
| Maternity (birth parent only) | 15 weeks | 55% of insurable earnings (max ~$695/week for 2026) |
| Standard parental | 35 weeks | 55% of insurable earnings |
| Extended parental | 61 weeks | 33% of insurable earnings |
Not legally mandated, but most Canadian employers provide extended health, dental, life insurance, and short/long-term disability as part of competitive compensation.
The Canada Labour Code (federal) and provincial Employment Standards Acts require employers to provide a pay statement each pay period.
Ontario requires the employer's name and address, the employee's name, and the pay period. Quebec requires similar plus contribution details. Most provinces align with the above minimum.
Remittance of Source Deductions
| Remitter Type | Threshold (Avg Monthly Withholding) | Due Date |
|---|---|---|
| Quarterly | < $1,000 (new, perfect compliance) | 15th of month after quarter end |
| Regular | < $25,000 | 15th of following month |
| Threshold 1 accelerated | $25,000 -- $99,999.99 | Twice monthly (15th and month-end) |
| Threshold 2 accelerated | ≥ $100,000 | Up to 4 times per month (within 3 business days of pay date) |
Year-End Filing (T4)
| Task | Deadline |
|---|---|
| T4 slips to employees | Last day of February (next business day if falls on weekend) |
| T4 Summary to CRA | Last day of February |
| T4A slips (contract/other income) | Last day of February |
| Quebec: RL-1 slips to employees and Revenu Québec | Last day of February |
Penalties
| Violation | Penalty |
|---|---|
| Late remittance | 3% (1--3 days late) to 10% (7+ days late) + arrears interest |
| Failure to deduct | Employer liable for undeducted amounts + 10% penalty |
| Late T4 filing | Min $100, max $7,500; graduated $10-$75/day by slip count up to 100 days (small filers: 1-5 slips flat $100, 6-10 slips $5/day) |
| Failure to issue ROE | Up to $2,000 fine and/or 6 months imprisonment |
Annual salary $75,000. Paid biweekly (26 pay periods).
Employee paid $80,000 semi-monthly ($3,333.33/period). By period 11, cumulative pensionable earnings exceed YMPE $74,600. CPP deductions stop at $4,230.45. CPP2 continues until YAMPE $85,000 is reached (max $416.00). Payroll software tracks cumulative contributions and stops deducting when maximums are reached.
Employee earning $52,000/year with 4% vacation pay. Vacation pay accrues: $52,000 × 4% = $2,080/year. Can be paid on each cheque (added to gross, subject to all deductions) or accrued and paid when vacation is taken.
Employee terminated without cause. Final pay includes:
Issue ROE within 5 days via ROE Web. Code M (dismissal) or other applicable code.
Interaction with Other Skills
| Skill | Interaction |
|---|---|
| payroll-workflow-base | Provides generic payroll processing steps; this skill adds Canadian-specific rules |
| canada-bookkeeping | Payroll journals: salaries + ER CPP/EI + ER EHT/WCB to P&L; net pay + source deductions payable to BS |
| canada-corporate-tax | Employer CPP/EI and provincial health taxes are deductible business expenses |
| canada-gst-hst | No GST/HST on wages; but taxable benefits may trigger GST/HST |
This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.
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