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:
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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.)
