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The Great Canadian Guide to Small Business Payroll

Free Payroll eBooks for Small Business Owners and Startup Founders in the United States & Canada

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The definitive guide is called T4001 Employers' Guide — Payroll Deductions and Remittances and is available in HTML or as a PDF. (See the Helpful Resources section at the end of this book to find a handy link to this guide.) On the first read through, it's kind of like putting together Swedish furniture. But, don't worry, our job as payroll experts is to help you get your payroll remittances (source deductions) completed correctly and on-time in order to keep you and the government happy. What Are Payroll Deductions and Remittances? "As an employer, you have to remit the CPP contributions, the EI premiums, and income tax deducted from your employees' income, along with your share of CPP contributions and EI premiums." – CRA What does this mean? In English, it means that as an employer, an entity that pays salaries and provides benefits to employees, you are required to calculate, deduct and remit the following source deductions each time you issue payroll: Deductions (withholdings) based on the income earned by each employee, including: 14 | www.wagepoint.com Canadian Pension Plan (CPP) contributions — 4.95% up to a yearly maximum. Employment Insurance (EI) premiums — up to a yearly maximum. Income tax — based on provincial or territorial rates, which are determined by whether or not the employee reports to your business establishment. (For more information, see the important notes in the next section.) Your share (the employer's portion) of: Employer CPP contributions — must match the amount deducted from each employee's contribution. Employer EI premiums — 1.4X the amount deducted from each employee's premium. Important Notes on CPP, EI and Income Tax Deductions There are no age requirements or restrictions for EI or income tax. Employers may be able to reduce their employer EI premiums by offering short-term disability coverage. CPP must be deducted for any employee: Aged 18-70 (Employees aged 65-70 may submit Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election to be considered exempt.)

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