Depending on your employment situation, you may receive payments in addition to your regular pay. Similarly, you may be employed in a special employment situation.
Canada Pension Plan (CPP) contributions
If you are 18 years old or older, but younger than 65, you are employed in pensionable employment, and you do not receive a CPP retirement or disability pension, your employer will deduct CPP contributions from your pay.
If you are at least 65 years of age but under 70 and you work while receiving a CPP or QPP retirement pension, your employer will continue to deduct CPP contributions from your pay, unless you elect to stop paying CPP contributions. You cannot elect to stop contributing to the CPP until you are at least 65 years of age. For more information, see Canada Pension Plan (CPP) contributions for CPP working beneficiaries.
The CPP provides basic benefits when you, a contributor to the plan, become disabled or retires. In the event of your death, the plan provides benefits to your survivors.
Your employer will calculate how much CPP to deduct with approved calculation tools, using the annual CPP contribution rates and maximums.
Your employer remits these deductions to the Canada Revenue Agency (CRA), along with his or her share of contributions, through payroll remittances.
Employment Insurance (EI) premium
If you are employed in insurable employment your employer will deduct EI premiums from your pay. There is no age limit for deducting EI premiums.
EI provides you with temporary financial assistance while unemployed and looking for work or if you’re upgrading your skills. You may receive EI assistance in the following situations:
- caring for a newborn or adopted child; or
- caring for a seriously ill family member with a significant risk of death.
Your employer will calculate how much EI to deduct with approved calculation tools, using the annual EI premium rate and maximum.
These deductions are remitted to the CRA, along with your employer’s share of premiums, through payroll remittances.
Income tax deducted
If you receive employment income or any other type of income, your employer or payer will deduct income tax at source from the amount paid.
Your employer or payer will calculate how much income tax to deduct by referring to your total claim amount on Form TD1, Personal Tax Credits Return and using approved calculation methods.
There is no annual limit as to the total amount of income tax your employer or payer can deduct in a year.
If you expect to be making less than the total claim amount indicated on Form TD1 for an entire year, you can ask your employer or payer to not make any deductions.
Your employer or payer will remit these deductions to the CRA through payroll remittances.
There may be other amounts, such as pension plan contributions or union dues, that your employer deducts from your pay.
Look at your pay stub to see what other amounts are deducted. Your employer should be able to explain these deductions to you.
Tax time is just around the corner. If you would like more information on various programs, deductions and credits that can help save you money, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.