Canada

Overview

Canadian payroll operates on a dual federal–provincial structure. The CRA administers income-tax withholding and the two national programs — Canada Pension Plan (CPP) and Employment Insurance (EI) — for every province except Quebec. Each province/territory sets its own employment standards (minimum wage, vacation, holidays, termination) and its own provincial income tax on top of federal rates. Quebec runs a parallel system: employers remit Quebec tax, QPP and QPIP to Revenu Québec while handling reduced-rate federal EI and federal tax through the CRA — i.e., reporting to two tax authorities.

Payroll cycle & pay dates

No single federally mandated frequency; bi-weekly is the norm, with semi-monthly, weekly and monthly also used. Pay frequency and pay-statement contents are governed by provincial employment standards (or the Canada Labour Code for federally regulated employers). Statements generally must itemise gross pay, hours, rate, each deduction (tax, CPP/EI), and net pay — specifics vary by jurisdiction.

Income tax / withholding

Employers withhold combined federal + provincial/territorial income tax using CRA payroll-deductions tables (T4032) or the Payroll Deductions Online Calculator. Amounts depend on the employee's TD1 Personal Tax Credits Return (federal + provincial, e.g. TD1ON). Tax year is the calendar year. Quebec employees complete TP-1015.3-V, and Quebec provincial tax is withheld and remitted to Revenu Québec. CRA — TD1 forms.

Social security & statutory contributions

(All figures as of 2026 — verify at links.)

• CPP: employee and employer each 5.95% of pensionable earnings between the $3,500 basic exemption and the year's maximum pensionable earnings (YMPE $74,600), max $4,230.45 each. CPP2 adds 4% on earnings between the YMPE and the additional ceiling ($85,000), max $416 each. CPP rates · CPP2.
• EI (federal): employee 1.63% on insurable earnings up to $68,900 (max $1,123.07); employer pays 1.4× the employee premium. EI rates.
• Quebec: QPP replaces CPP (combined employee rate 6.4% in 2026; same $74,600 / $85,000 ceilings). QPIP funds parental benefits (2026 employee 0.430%, employer 0.602%, max insurable $103,000). Quebec uses a reduced federal EI rate (employee 1.30%, 2026) because QPIP covers parental benefits. Revenu Québec — 2026 changes.

Mandatory benefits & leave

Set provincially: vacation typically 2 weeks (4% vacation pay), rising to 3 weeks (6%) after set service; statutory holidays generally 9–10 paid, per province; job-protected leaves vary (federally regulated workers accrue paid sick days under the Canada Labour Code); parental paid via EI (QPIP in Quebec) with employer-provided job protection; termination/notice under each province's ESA. Minimum wage is provincial — e.g. federal $18.15/hr (eff. 1 Apr 2026, federally regulated), Ontario $17.60 (eff. 1 Oct 2025), BC $18.25 (eff. 1 Jun 2026).

Employer registration & compliance

Open a payroll program account (RP) under the CRA Business Number before the first remittance. Remit source deductions (tax + CPP + EI) on a schedule set by remitter type from average monthly withholding: quarterly (new/small), regular monthly (< $25k AMWA, due the 15th), accelerated Threshold 1 ($25k–$99,999.99) and Threshold 2 ($100k+). Year-end, file T4 slips + T4 Summary to employees and CRA by the last day of February. On any interruption of earnings, issue a Record of Employment (ROE) via Service Canada (electronic ROEs due within ~5 calendar days of the pay-period end). Late remittances draw graduated penalties 3% / 5% / 7% / 10% (up to 20% for repeat gross negligence) plus interest. CRA — remittance due dates.

Common pitfalls

• Wrong jurisdiction — federally regulated industries (banks, telecom, interprovincial transport) follow the Canada Labour Code, not provincial standards.
• Quebec dual reporting — remit QPP/QPIP/Quebec tax to Revenu Québec and reduced-rate federal EI/tax to CRA.
• Missing CPP2 — the second additional contribution (since 2024) is easy to overlook for higher earners.
• ROE timing — late/inaccurate ROEs delay employees' EI claims.
• Taxable benefits — employer-paid group life, certain allowances and gifts are taxable and must be added before calculating deductions.
• Remitter-type drift — growth can push you to a faster remitter category; the wrong schedule triggers penalties.

Official resources

• CRA — Payroll — deductions, remitting, year-end.
• CRA — CPP/EI rates & maximums — annual figures.
• CRA — Employers' Guide: T4 (RC4120) — year-end T4.
• Service Canada — Record of Employment — ROE rules.
• Ontario — Employment Standards Act guide — example provincial ESA.
• Revenu Québec — Source deductions & employer contributions — Quebec payroll.