On your pay statement you will notice that there is a difference between what you make and your actual take-home pay. Your pay is broken down into a number of components:
- Gross and total earnings
- Legislated deductions such as Canada Pension Plan, Employment Insurance and Income Tax
- Other deductions such as benefits and pension
- Net pay
Here is an example of a typical pay statement and what each components means:
Gross Earnings & Total Earnings
Your earnings, including regular pay (i.e., your base salary or your hourly rate times the number of hours worked in the pay period); overtime pay; and vacation pay.
The total of all of your gross earnings before legislated and other deductions are taken.
An employer has a legal obligation to withhold statutory deductions, which are: Canada Pension Plan contributions (CPP Employee Contribution), Employment Insurance premiums (EI Employee Premiums) and federal and provincial income tax (Income Tax/Regular). As provincial tax is collected as part of the federal income tax deduction you will see only one line, i.e. Income Tax/Regular, on your pay statement.
Total Legislated Deductions
The total of all of your legislated deductions to be deduction from your pay.
Other Payments / Deductions
The legislated deductions are an employer’s first priority. You may also have legal deductions (e.g. Garnishments and family support deductions); company compulsory deductions (e.g., union dues), your portion of benefit plan premiums and voluntary deductions (e.g., Canada Savings Bonds, charitable donations).
Total Other Payments / Deductions
The total of all of your ‘other’ deductions to be deducted from your pay.
Total of all of your legislated and other deductions, subtract them from your gross earnings, and you’re left with your net pay. That’s what you’re actually taking home.