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This guide reflects some income tax changes recently announced which, if enacted as proposed, would be effective January 1, 2021. At the time of publishing, some of these proposed changes were not law. We recommend that you use the new payroll deductions tables in this guide for withholding starting with the first payroll in January 2021.
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- This information is available in 2 formats
- Payroll topics
- Table of contents
- Is this guide for you
- What’s new
- Remittance due dates
- Footnotes
- Chapter 1 – General information
- Chapter 2 – Canada Pension Plan contributions
- Chapter 3 – Employment insurance premiums
Complete web version: Option 1
Go to the full version which has been optimized for online reading. Review payroll topics
HTML version of PDF guide: Option 2
Scroll down to read the publication: T4001, Employers’ Guide – Payroll Deductions and Remittances.
Open or manage a payroll account
Determine if you need to open a payroll account and make payroll deductions depending on your status (or the worker's employment status), and the methods to use to open, modify and close an account
Set up and manage employee payroll information
Get the employee’s social insurance number, determine the province of employment, get the completed TD1 forms before you pay an employee, determine how to increase or reduce income tax deducted at source
Calculate payroll deductions and contributions
Learn about CPP contributions, EI premiums and income tax deductions, how to calculate the deductions on the amounts you pay, includes how to determine if you need to deduct CPP, EI and income from benefits and special payments
•Is this guide for you
•What’s new
•Remittance due dates
•View remitting requirements
•Chapter 1 – General information
•Do you need to register for a payroll program account
Use this guide if you are one of the following:
•a Canadian resident employer
•a trustee
•a payer of other amounts related to employment
•an estate executor, a liquidator, an administrator, or a corporate director
•a non resident employer
Canada Pension Plan Enhancement
The Canada Pension Plan enhancement was introduced through a 7 year gradual phase-in starting on January 1, 2019. The CPP contribution rate for 2023 is 5.95%. For more information, see CPP contribution rate and maximum.
Electronic remittance or payments above $10K
As of January 1, 2024, payments or remittances to the Receiver General of Canada should be made as an electronic payment if the amount is more than $10,000. Payers may face a penalty, unless they cannot reasonably remit or pay the amount electronically. For more information, go to Payments to the CRA.
Employee reports to your establishment
Starting January 1, 2024, a new administrative policy on province of employment will come into effect. Where a full-time remote work agreement was made, an employee will also be considered to report to your establishment where they are reasonably considered "attached to an establishment of the employer". For more information, go to Determine the province of employment (POE).
In Chapter 8, you will find more information on remitting payroll deductions, including the different remitter types and due dates, how to make a remittance, and the forms to use.
When a due date falls on a Saturday, Sunday, or public holiday recognized by the CRA, your payment is considered on time if the CRA receives it on or it is processed at a Canadian financial institution on or before the next business day.
Footnote 1
Average monthly withholding amount
Return to footnote1 Referrer
Footnote 2
This is a monthly withholding amount (MWA), not an AMWA. For more information, go to Chapter 8
Return to footnote2 Referrer
Do you need to register for a payroll program account
You need to register for a payroll program account if you meet any of the following conditions: pay salaries or wages pay tips or gratuities pay bonuses or vacation pay provide benefits or allowances to employees need to report, deduct and remit amounts from other types of remuneration (such as pension or superannuation) If you need a payroll program account and you already have a business number (BN), you only need to add a payroll program account to your existing BN. If you don’t have a BN, you must ask for one and register for a payroll program account before the date your first remittance is due. For more information on the BN and CRA accounts, or to register online, go to Business number registration. Payroll deductions can be complicated. If you are having trouble with them, go to Payroll or call 1-800-959-5525. Contacts and authorized representatives As a business owner, partner, director, trustee, or officer of a business, you can authorize representatives, including your employees, an accountant, a bookkeeper, a lawyer, a payroll provider, or a firm, to act on your behalf. You can authorize a representative (including an employee) by submitting an authorization request online through Represent a Client. For more information, go to Help with representing a Client. Employment in Quebec If the employee has to report to your place of business in Quebec or you pay the employee from your place of business in Quebec, different regulations and employer responsibilities apply. The Quebec provincial government administers its own provincial pension plan called the Quebec Pension Plan (QPP), its own provincial income tax, and the Quebec Parental Insurance Plan (QPIP), which is also called the Provincial Parental Insurance Plan (PPIP). Employers with employees in Quebec have to deduct contributions for the QPP instead of the Canada Pension Plan (CPP), if the employment is pensionable under the QPP. Employers have to take deductions for both the QPIP and employment insurance (EI), if the employment is insurable. Send the QPP, QPIP, and Quebec provincial income tax deductions to Revenu Québec, and send the CPP, EI and federal tax deductions to the CRA. If you need more information, you can get the Quebec Guide TP-1015.G-V, Guide for Employers: Source Deductions and Contributions by visiting Revenu Québec, or you can write to them at: Revenu Québec 3800 rue de Marly Québec QC G1X 4A5
Are you an employer
Employers have responsibilities they must fulfill. For more information about these responsibilities, see What are your responsibilities. Employers who do not comply with the payroll requirements may have to pay a penalty for the deductions not withheld and face other consequences. Employment status directly affects a worker’s entitlement to EI benefits under the Employment Insurance Act. It can also affect how a worker is treated under other legislation such as the Canada Pension Plan and the Income Tax Act. Because of this, it is important that you know whether a worker is an employee or a self-employed individual. The facts of the working relationship as a whole decide the employment status. However, we generally consider you to be an employer if one of the following items applies to you: you pay salaries, wages (including advances), bonuses, vacation pay, or tips to your employees you provide certain taxable benefits, such as an automobile or allowances to your employees Although a written contract might indicate that an individual is self-employed (and therefore working under a contract for services), we cannot consider the individual as self-employed if there is evidence of an employer-employee relationship. This relationship is referred to in this guide as employment under a contract of service. Note You may not have to deduct EI premiums if you hire family members or non-related employees. For more information, see Chapter 3. If you or a person working for you is not sure of the worker’s employment status, either one of you can aks the CRA for a ruling. A ruling indicates whether a worker is an employee or self-employed, and whether that worker's employment is pensionable or insurable. To ask for a CPP/EI ruling you can; Log in to My Business Account if you are a payer and select "Request a CPP/EI Ruling" Log in to My Account if you are a payer or a worker and select “Request a CPP/EI Ruling” Ask your authorized representative to request a ruling for you. They can log in to Represent a Client and select “Request a CPP/EI Ruling” Write a letter or fill out Form CPT1, Request a Ruling as to the Status of a Worker under the Canada Pension Plan and/or Employment Insurance Act, and mail it to the CPP/Rulings Division at the Tax Services Office in the province or territory of your residence or place of business. See the table found on Form CPT1 for the mailing addresses For more information on how we determine a worker's employment status, go to What if you do not know the employment status of the worker. Employment by a trustee A trustee includes a liquidator, a receiver, a receiver-manager, a trustee in bankruptcy, an assignee, an executor, an administrator, a sequestrator, or any other person who does a function similar to the one a trustee performs. A trustee does both of the following: authorizes a payment or causes a payment to be made for another person administers, manages, distributes, winds up, controls, or otherwise deals with another person’s property, business, estate, or income The trustee is jointly and severally, or solidarily, liable for deducting and remitting the income tax, CPP, and EI for all payments the trustee makes. Trustee in bankruptcy Under the Canada Pension Plan and the Employment Insurance Act, the trustee in bankruptcy is the agent of a bankrupt employer in the event of an employer’s liquidation, assignment, or bankruptcy. If a bankrupt employer has deducted CPP contributions, EI premiums, or income tax from amounts employees received before the bankruptcy but has not remitted these amounts to us, the trustee must hold the amounts in trust. These amounts are not part of the estate in bankruptcy and should be kept separate. If a trustee continues to operate the bankrupt employer’s business, the trustee must get a new business number. The trustee has to continue to deduct and remit the necessary CPP contributions, EI premiums, and income tax according to the bankrupt employer’s remittance schedule. The trustee should prepare and file T4 information returns (slips) in the usual way. Note Amounts a trustee pays to employees of a bankrupt corporation to settle claims for wages that the bankrupt employer did not pay are taxed as “other income.” However, this income does not require CPP, EI, and income tax withholdings. The trustee has to report these payments on T4A information returns (slips). For details, go to T4A slip – Information for payers. All other trustees If a trustee continues to operate the employer’s business, the trustee needs a new business number. The trustee has to continue to deduct and remit the necessary CPP contributions, EI premiums, and income tax according to the employer’s remittance schedule. The trustee should prepare and file T4 information returns (slips) in the usual way. Fees paid to executors, liquidators, or administrators are either income from office or employment or business income, depending on whether the executor or administrator acts in this capacity in the regular course of business. For more information about fees paid to an executor, liquidator, or administrator of an estate and whether they should be included in insurable employment, go to Tenure of office. Payer of other amounts A payer of other amounts can be an employer, a trustee, an estate executor, a liquidator, an administrator, or a corporate director who pays other types of income related to an employment. This income can include pension or superannuation, lump-sum payments, self-employed commissions, annuities, retiring allowances, or any other type covered in this guide or in Guide RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary. These amounts have to be reported on a T4A slip, with the exception of retiring allowances that are reported on the T4 slip. For more information, go to T4 slip – Information for employers.
What are your responsibilities
You are responsible for deducting, remitting, and reporting payroll deductions. You also have responsibilities in situations such as hiring an employee, when an employee leaves or if the business ceases its operations. The following are the responsibilities of the employer and, in some circumstances, the trustee and payer: Open and maintain a payroll program account. If you meet the conditions in Chapter 1 for opening an account, you must register for one Get your employee’s social insurance number (SIN). Every employee must give you their SIN to work in Canada. For more information, see Social insurance number Get a completed federal Form TD1, Personal Tax Credits Return, and, if applicable, a provincial or territorial Form TD1. New employees or recipients of other amounts such as pension income must fill out this form. For more information, see Chapter 5 Deduct CPP contributions, EI premiums, and income tax from remuneration or other amounts, including taxable benefits and allowances, you pay in a pay period. You should hold these amounts in trust for the Receiver General and keep them separate from the operating funds of your business. Make sure these amounts are not part of an estate in liquidation, assignment, receivership, or bankruptcy Remit these deductions along with your share of CPP contributions and EI premiums. The CPP and EI chapters of this guide explain how to calculate your share of contributions and premiums. Chapter 8 explains how and when to remit these amounts Report the employee’s income and deductions on the appropriate T4 or T4A slip. You must file an information return on or before the last day of February of the following calendar year. For more information, go to T4 slip – Information for employers, and T4A slip – Information for payers Prepare a Record of Employment (ROE) when an employee stops working and has an interruption of earnings. For more information, see Record of employment (ROE) Keeping records of what you do because our officers can ask to see them. For more information, see Keeping records Notes If you are an employer who is resident outside of Canada and you do not have a place of business in Canada, you still have the same responsibilities as Canadian employers, regardless of whether the Canadian resident employee carries out the services in Canada or outside Canada. For more information about CPP coverage by an employer resident outside Canada, see CPP coverage by an employer resident outside Canada. You have to deduct CPP on a non-resident employee’s remuneration in the same way you would for a resident employee unless they come from a country with which Canada has signed a social security agreement. For more information, see Non-resident employees who carry out services in Canada. Keeping records You have to keep your paper and electronic records for at least six years after the year to which they relate. If you want to destroy them before the six-year period is over, fill out Form T137, Request for Destruction of Records, and send it to your tax services office. For more information, go to Keeping Records. Social insurance number As an employer, you have to ask your employees for their social insurance number (SIN) within three days of when they start to work for you, and record their number. If an employee does not give you their SIN, you must be able to show that you made a reasonable effort to get it. An example of a reasonable effort would be if, after asking your employee for their SIN many times, you decide to contact them in writing to request their SIN. Make note of the dates you asked for the SIN verbally, and keep copies of any written requests. If you do not make a reasonable effort to get a SIN, you may have to pay a penalty of $100 for each number you don’t try to get. Employees who are in pensionable or insurable employment also have to give you their SIN within three days of starting to work for you and they can be penalized $100 for each time they don’t provide it. Under the Department of Employment and Social Development Act, an employee who does not have a SIN when they start working for you has to apply for one and give it to you within three days after they receive it. As an employer, you must inform Service Canada within six days of your employee starting to work for you that this individual did not give you their SIN. If your employee needs a SIN, refer them to their Service Canada Centre. To find the nearest Service Canada centre, visit Service Canada. Make sure the employee gives you their correct name and SIN. You may ask for other types of identification, such as a birth certificate or a certificate of citizenship or permanent residence, before finalizing their employment documents. An incorrect SIN can affect an employee’s future Canada Pension Plan benefits if their record of earnings is not accurate. Also, if you report an incorrect SIN on a T4 slip that has a pension adjustment amount, the employee may receive an inaccurate registered retirement savings plan (RRSP) deduction limit statement and the related information on the employee’s notice of assessment will be inaccurate. When an employee has an interruption of earnings, you have to record the correct SIN on an ROE for employment insurance purposes (for details on the ROE, go to Record of Employment (ROE)). If you don’t provide a correct ROE, you could be fined up to $2,000, imprisoned for up to six months, or both. Notes Even if you have not received your employee’s SIN, you still have to make deductions and remit them, and file your information returns on or before the last day of February of the following calendar year. If you don’t, you might get a penalty for remitting or filing late. If you filed a T4 slip without a SIN but received it after, file an amended T4 slip and include the SIN. Go to Amend, cancel, add, or replace slips and summaries. For more information, see Information Circular IC82-2, Social Insurance Number Legislation that Relates to the Preparation of Information Slips, or visit Service Canada. SIN beginning with the number 9 An eligible person who is not a Canadian citizen or a permanent resident of Canada and who applies for a SIN will get one beginning with the number 9. If you hire a person whom you know is not a Canadian citizen or permanent resident, make sure you confirm all of the following: the person’s SIN begins with 9 the SIN has not expired the person has a valid work permit issued by Immigration, Refugees and Citizenship Canada Notes Social insurance numbers beginning with a 9 are valid only until the expiry date shown on the Immigration, Refugees and Citizenship Canada document authorizing the person to work in Canada. You must see the employee’s existing immigration document authorizing them to work in Canada (for example, work permit, study permit) and verify that it has not expired. If the immigration document has expired, ask the employee to contact Immigration, Refugees and Citizenship Canada to get a valid document. If the person has a SIN that begins with the number 9 and it does not have an expiry date, the SIN is not valid. Refer the person to the nearest Service Canada Centre. Your employees have to inform you of any new expiry date for their SIN within three days after they receive it. If the eligible person then becomes a Canadian citizen or permanent resident of Canada, they will receive a permanent SIN.
For Canada Pension Plan (CPP), contributions are not calculated from the first dollar of pensionable earnings. Instead, they are calculated using the amount of pensionable earnings minus an exempt amount that is based on the period of employment.
As of 2019, the Canada Pension Plan is being enhanced over a 7-year phase-in. For more information, go to Canada Pension Plan enhancement.
You have to deduct employment insurance (EI) premiums from each dollar of insurable earnings up to the yearly maximum. After you have deducted the maximum for the year, do not deduct any more premiums, even though the excess remuneration is still considered insurable. For 2023, the maximum annual insurable earnings are $61,500.
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