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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 as the employer. On a $3,000 monthly pay in Ontario, our calculators show $2,497.58 net and $732.02 owed to the CRA, which is the employee's income tax, CPP and EI 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. For 2027 the CRA has confirmed new ceilings: $76,700 and $87,400 for CPP, and $70,800 of insurable earnings for EI at a 1.64% employee rate. Our 2026 vs 2027 tax numbers page lists them next to the 2026 figures. 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.)
Over twelve months, the same pay run adds up to $8,784.24 sent to the CRA, which is a big number to find if it was never set aside. 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. A brand new employer starts as a regular remitter, according to the CRA’s page on what to expect after you register, and sends money monthly unless told otherwise.
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 is for small employers with a perfect compliance record. The CRA also lets some new small employers with monthly withholding under $1,000 remit quarterly.
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. On the $732.02 above, six days late means 7%, or about $51.24, for no reason other than a missed reminder.
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.
Vacation pay accruals, workers’ compensation and provincial payroll taxes aren’t covered on this page. They vary by province and have their own rules.
What should the monthly routine look like?
Keep it short and the same every month. Run payroll, post the wages and the employer share, move the withheld amounts into the payable account, and pay the CRA before the due date. Then match the CRA’s receipt to the payable balance, which should be zero again.
Some owners also move cash into a separate savings account on payday. Whether or not you do, treat that $732.02 as spoken for the moment the pay run is approved. Spending it on a good month’s supplies is how a small firm ends up paying penalties, and those hit harder than the interest on a short loan.
What this page is based on
CPP and EI rates and limits for 2026 come from the CRA's CPP and EI pages, and the 2027 ceilings from the same pages as summarized on our 2026 vs 2027 page. The remitter types, due dates and penalties come from the CRA page on how and when to remit source deductions, which showed no 2026 or 2027 change. All re-checked in November 2026. The $3,000 example comes from our payroll remittance tool.
Frequently asked questions
What are the main payroll deductions in Canada?
Income tax, CPP contributions and EI premiums come off each paycheque outside Quebec, which has QPP and its own rules. Employers then add their own CPP, matching the employee dollar for dollar, and their own EI at 1.4 times the employee premium. Income tax withheld is the employee's money and adds nothing to your cost.
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% on insurable earnings up to $68,900. For 2027 the CRA has confirmed $70,800 of insurable earnings at a 1.64% employee rate. On a $3,000 monthly pay in Ontario, the employer EI works out to $68.46.
When do I remit payroll deductions?
It depends on your remitter type, which the CRA assigns from your average monthly withholding amount two calendar years back. Regular remitters, under $25,000, pay by the 15th of the following month. Quarterly remitters pay on 15 April, July, October and January. Accelerated remitters pay more often. A new employer starts as a regular remitter.
What is the penalty for remitting late?
The CRA charges 3% for 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%. These apply to amounts over $500. On a $732.02 remittance, six days late means 7%, or about $51.24.
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. On a $3,000 pay, wages are $3,000 and the employer share is $229.61. When you pay the CRA, the payable account should return to zero, and if it doesn't, something was missed.
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