When you receive your first pay, you will see there is a difference between what you make and what your “take – home pay” is.
Employees who are not residents of Canada, but are in regular and continuous employment in Canada, are subject to the same tax deductions as Canadian residents.
The first priority for your employer is to withhold your Canada Pension Plan contributions, Employment Insurance premiums, and federal and provincial income tax. Those are the basic statutory deductions for any worker.
Eligible professional and managerial staff can expect to have some or all of the following deductions taken from their pay each month:
- Statutory Deductions – Employment Insurance (EI), Canada Pension Plan (CPP), Income Tax
- Canada Savings Plan
- Charitable donations
- Long Term Disability
- Joint membership
- Dental premiums
- Group Life Insurance
- Employee Paid Health premiums (Extended Health or UHIP)
- Parking Fees
New: For Canada Pension Plan (CPP), Employment Insurance (EI) and other legislative rates, please visit the CRA website.
Employment Insurance (EI)
Employment Insurance provides financial assistance when you’re unemployed and looking for work, and to Canadians who are sick, pregnant, caring for a newborn or adopted child, or caring for a relative who is critically ill.
Both employees and employers pay EI premiums. Employers must pay employment insurance (EI) premiums for each dollar of insurance earnings up to the yearly maximum. As an employer, the University pays a certain amount of EI premiums based on the EI deductions from an employee’s renumeration.
There is no age limit for deducting EI premiums.
For more information on Employment Insurance, see Service Canada – Employment Insurance (EI): http://www.servicecanada.gc.ca/eng/sc/ei/index.shtml.
Canada Pension Plan (CPP)
Canada Pension Plan contributions are deducted from your employment income if you:
- Are 18 years or older, but younger than 70; and
- Are in pensionable employment during the year.
Both employees and employers contribute to CPP/QPP. Your portion is deducted directly from your pay cheque, and your employer matches your contributions and these are remitted to the Canada Revenue Agency.
The Canada Pension Plan contribution amount is calculated based on your gross pensionable earnings up to a ceiling for the given year. The ceiling is called your maximum pensionable earnings (YMPE). In addition, you’re allowed to earn a certain amount of money before CPP must be deducted. This amount is called the year’s basic exemption (YBE).
If you have reached the age of 65 and are in receipt of a CPP pension, and you do not wish to make CPP contributions, you must file a CPT30 with the CRA in order to stop the contribution. For more information, please contact Central Payroll Services.
For more information on Canada Pension Plan, see Canada Revenue Agency – Canada Pension Plan (CPP).
Income tax will be deducted from your employment income based on the total claim amounts stated on the Federal and Provincial TD1 Forms – Personal Tax Credit Return and remit them to the Canada Revenue Agency.
The Personal Tax Credit TD1 Forms:
The federal and provincial Personal Tax Credits Return TD1 forms must be completed by new employees and submitted to their department. The information on these forms is used by the payroll department to determine the amount of federal and provincial or territorial income tax to deduct from an employee’s income.
You do not have to complete a new TD1 every year unless you claim extra tax credits, or additional taxes to be taken off on each pay at the beginning of each taxation year.
For more information, please contact Central Payroll Services.
Some of the deductions are legal requirements, while others have to do with company policy, but all are legitimate deductions from your pay cheque.
Company-compulsory deductions are part of your employment contract. Paying these deductions is a condition of your employment.
Your employer might offer programs to make it easy for you to put aside for savings or investments, with the amount deducted right off your pay cheque. Similar programs could provide easy ways to make donations. These are voluntary programs, put in place for your convenience, so you have the choice of whether to participate. Some common programs involve deductions to pay towards charitable donations.
Canada Savings Bonds Payroll Savings
The University of Toronto offers staff the Canada Savings Bonds – Payroll Savings Program.
The CSB Online Services offer a single point of access to employees’ online transactions such as registration, changes to existing accounts, purchases and redemptions.
The CSB Payroll Savings Program sales campaign will begin on October 1 and end on November 1 at 8:00 p.m. (ET) each year. The required organization ID is: 12212 – GOVERNING COUNCIL OF THE UNIVERSITY OF TORONTO
Employees will need to enter/confirm the Organization ID to access CSB Online Services to:
- Enrol in the Program
- Set up a new Plan
- Make changes to existing contributions
Remember – throughout the year you can:
- check your plan activity
- receive annual statements online
- find out everything you need to know about Canada Savings Bonds
- redeem your bonds by going to csb.gc.ca/employees and by selecting CSB Online Services
- manage your Payroll Savings Plan by going to csb.gc.ca/employees and by selecting CSB Online Services
If you have any questions, please visit the Canada Savings Bonds’ Website at: http://www.csb.gc.ca/payroll-savings-program/employees/. You can also call with questions at 1.877.899.3599