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Payroll deductions split a pay run three ways: what the employee takes home, what you hold back for the government, and what you add on top as the employer. On a $3,000 monthly pay in Ontario, the engine behind our calculators shows $2,497.58 net to the employee and $732.02 owed to the CRA. That $732.02 is income tax, CPP and EI from the employee, plus your own CPP and EI.
Bookkeeping here is mostly about not spending that $732.02. It’s money you hold for someone else until the due date.
What comes off each pay cheque?
Three things come off: income tax, Canada Pension Plan contributions and Employment Insurance premiums. Our 2026 figures for CPP and EI are in the table. Quebec works differently, with QPP and its own rules, so this page is for the rest of Canada.
| Item | 2026 figure |
|---|---|
| CPP employee rate | 5.95% of pay above $3,500 a year |
| CPP upper earnings limit | $74,600 |
| Second CPP tier | 4% from $74,600 to $85,000 |
| EI employee rate | 1.63% up to $68,900 of pay |
| EI employer share | 1.4 times the employee premium |
Employers match the employee’s CPP dollar for dollar. They pay 1.4 times the employee’s EI premium. Income tax withheld is the employee’s own money and adds nothing to your cost.
How do you book one pay run?
Take $3,000 gross in one month, Ontario. The payroll remittance calculator gives these amounts.
| Line | Amount |
|---|---|
| Income tax held back | $292.37 |
| CPP held back | $161.15 |
| EI held back | $48.90 |
| Employer CPP | $161.15 |
| Employer EI (1.4 times) | $68.46 |
| Total to remit | $732.02 |
Wages expense is $3,000. Your employer CPP and EI, $229.61, is a second expense, so the full cost of the month is $3,229.61. The credits go to two places: $2,497.58 to the employee’s bank account, and $732.02 to a payable account for source deductions.
One rule.
Keep that payable account separate from everything else. When you pay the CRA, the account goes back to zero. If it doesn’t, something was missed. (The two sides differ by a cent in the tool’s rounding.)
Real pay stubs can differ from the estimate by a few dollars, because payroll software works in steps through the year. The employee’s side is on the payroll deductions calculator, and take-home pay calculator shows a full year.
When do payroll deductions have to reach the CRA?
Your remitter type sets the date. The CRA assigns it from your average monthly withholding amount (AMWA) two calendar years back.
Check which one you are before you set any reminders.
| Remitter type | AMWA | Due |
|---|---|---|
| Quarterly (small employer) | under $3,000 | 15 April, 15 July, 15 October, 15 January |
| Regular | under $25,000 | 15th of the next month |
| Accelerated, threshold 1 | $25,000 to $99,999.99 | 25th of the month and 10th of the next |
| Accelerated, threshold 2 | $100,000 or more | Up to four times a month |
Quarterly remitting also needs a payroll account open at least 12 months and a clean compliance record.
Late remittances are charged 3% if one to three days late, 5% for four to five days, 7% for six to seven days and 10% beyond that. A repeat knowing failure is 20%. Those penalties apply to amounts over $500, or smaller amounts withheld knowingly.
Where do payroll deductions go wrong?
Forgetting the employer share is the favourite. The cheque to the CRA is bigger than what you took off the employee’s pay, and a books-only view of the net pay misses it.
Next comes the year-end limits. CPP and EI stop when the maximums are hit, so late-year pay runs can be heavier on take-home. Our estimate tools can be off in those months, and the calculators say so.
And the third is treating the source deductions balance as your cash. It’s the CRA’s money. Bonus runs and overtime change the amounts too, so if you want to see how a one-off payment changes the math, the bonus tax calculator is quick. Note that the tool leaves out benefit premiums and union dues.
We didn’t cover vacation pay accruals, workers’ compensation or provincial payroll taxes. They vary by province and have their own rules.
Where do these numbers come from?
CPP and EI rates and limits for 2026 come from the CRA’s CPP and EI pages. The remitter types, due dates and penalties come from the CRA’s page on when to remit. The $3,000 example comes from our payroll remittance tool, read in September 2026.
Frequently asked questions
What are the main payroll deductions in Canada?
Income tax, CPP contributions and EI premiums come off each paycheque outside Quebec. Employers add their own CPP and EI share.
How much is the employer share of EI?
The employer pays 1.4 times the employee premium. The employee rate for 2026 is 1.63% up to $68,900.
When do I remit payroll deductions?
It depends on your remitter type. Regular remitters pay by the 15th of the following month.
What is the penalty for remitting late?
The CRA charges 3% for one to three days late, 5% for four to five, 7% for six to seven and 10% beyond that, on amounts over $500.
Where do source deductions go in the books?
Keep them in a separate payable account until you remit, and record the employer CPP and EI as an extra wage expense.
All payroll and salary calculators
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.