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Workers’ compensation goes into your books as a payroll cost, and the amount you owe is worked out from what you pay your staff. In Ontario, the WSIB formula is insurable earnings times your premium rate, divided by 100. That one line drives the whole entry, so get the payroll right and the premium follows.
What counts as insurable earnings?
It’s more than base pay. According to the WSIB, insurable earnings include wages, bonuses, commissions, overtime, vacation pay, sick pay and the taxable benefits shown in Box 14 of the T4. Some things are left out, such as maternity top-ups and severance where EI has been issued.
There’s also a ceiling. For 2026 the Ontario maximum insurable earnings figure is $121,700 per worker, and pay above it isn’t counted. Other provinces run their own boards and set their own limits, so use the rules of the board that covers you.
If you pay a bonus, it belongs in the total. The bonus tax calculator shows what an employee keeps after tax, but for workers’ compensation you count the gross amount.
How do you work out the premium?
Take the yearly insurable earnings, multiply by your rate, and divide by 100. Rates come from the board and depend on your industry code, so we can’t give you one. To show the mechanics only, assume the rate is $2.00 per $100, a made-up figure.
| Step | Example (rate made up) |
|---|---|
| Pay per period | $3,000 |
| Pay periods a year | 26 |
| Insurable earnings | $78,000 |
| Rate per $100 of payroll | $2.00 (illustration) |
| Yearly premium | $1,560 |
Now the ceiling at work. Say one senior employee is paid $130,000 in 2026. Only $121,700 counts, so at the same made-up rate the premium on that person is $2,434, not $2,600. The extra $8,300 of pay doesn’t add a cent.
If you have more than one business activity code, the WSIB says to work each code out separately. Your real rate is on the notice the board sends you.
Where does it go in the accounts?
Most bookkeepers give it its own line under payroll costs, next to CPP, EI and vacation pay, so you can see the whole cost of an employee at a glance. You can also file it under insurance. Either works, as long as you always do the same thing.
Here’s the part that trips people up. The premium is an employer cost. It isn’t deducted from the employee’s pay, so it never shows on the pay stub. It also isn’t in the payroll remittance you send the CRA, and the payroll remittance calculator says so itself: workers’ compensation and other payroll levies are not included. For one $3,000 pay in Ontario it shows $961.03 to remit and a full payroll cost of $3,228.41 per period, and your compensation premium sits on top of both.
How do you record what you owe versus what you paid?
Split it in two. The expense is what the payroll has earned so far. The payment is what you’ve actually sent. If you accrue the expense every pay run and pay the board on its own schedule, the gap sits in a liability account until you clear it. When a statement arrives, compare its balance to yours and chase down any difference while it’s still small.
Keep the board’s notices and statements with your records. The CRA asks you to keep business records for six years, and it makes sense to file the board’s paperwork alongside them.
Is the premium tax deductible?
We couldn’t confirm the tax treatment on an official CRA page, so we won’t state a rule. Treatment can also differ from the books, especially for late payments, penalties or coverage for the owner. Ask your accountant, and have the board’s statement in hand when you do.
Common mistakes with workers’ compensation in the books
- Leaving bonuses, overtime or taxable benefits out of insurable earnings.
- Counting pay above the yearly maximum.
- Booking the premium only when it’s paid, so the expense lands in the wrong month.
- Deducting it from employee pay. It’s the employer’s cost.
- Forgetting contractors. The WSIB tells employers to check that they’re insuring every eligible worker, including some contractors and, sometimes, owners.
That last one is worth a phone call. Who counts as a worker isn’t always obvious, and the board decides, not you. To see what each employee costs in total, the payroll deductions calculator and the take-home pay calculator give the employee side, which you can compare against your compensation premium.
Common questions
Do I owe premiums if I only have part-time staff? Coverage depends on your industry and the board’s rules, not on hours. Part-time pay counts as insurable earnings where coverage applies.
What if my payroll changes during the year? Your estimate can be updated with the board. Adjust your accrual to match, so the books don’t surprise you at reconciliation.
Our sources
The formula, the list of insurable earnings and the 2026 maximum come from the Workplace Safety and Insurance Board of Ontario. Payroll figures come from this site’s calculators, which use 2026 Canada Revenue Agency rules. Rates, limits and reporting dates differ between provinces and territories, and the premium rate in the table is invented for the example. This site isn’t connected to the WSIB or any government.
Frequently asked questions
Is workers' compensation deducted from employee pay?
No. The premium is an employer cost, so it doesn't appear on the pay stub.
What counts as insurable earnings in Ontario?
Wages, bonuses, commissions, overtime, vacation pay, sick pay and taxable benefits from Box 14 of the T4, up to the yearly maximum.
What is the 2026 maximum insurable earnings in Ontario?
The WSIB lists $121,700.
Is the premium part of my CRA payroll remittance?
No. It goes to the workers' compensation board, and the remittance calculator on this site leaves it out.
Which account should I use?
Many bookkeepers use a payroll cost line, others use insurance. Pick one and keep it consistent.
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