Payroll deduction calculator

What a pay run actually owes the CRA

Three statutory amounts come off a Canadian pay cheque: Canada Pension Plan contributions, employment insurance premiums and income tax. Two of the three cost the employer as well. The corporation matches CPP dollar for dollar, and pays EI at 1.4 times the employee premium unless a reduced rate has been approved. Income tax is withheld only — there is no employer share. Add the employee deductions to the employer contributions and you have the amount that must reach the CRA through your payroll program account.

How the income tax figure is built

The CRA does not tax a pay cheque in isolation. Its published method annualises the pay period — multiply the pay by the number of periods in the year — works out the federal and provincial tax on that annual figure after the basic personal amount and the CPP, EI and Canada employment credits, then divides the answer back by the number of pay periods. That is why moving an employee from biweekly to semi-monthly changes the tax on each cheque even when annual pay is identical, and why a one-off bonus needs its own calculation rather than being dropped into a regular run.

This tool follows the same method, using the rates in CRA guide T4127, Payroll Deductions Formulas, 123rd edition, effective 1 July 2026. It assumes the basic personal amount only. An employee who has claimed tuition, a spouse, or an eligible dependant on their TD1 will have less tax withheld than shown here.

The parts a calculator cannot see

CPP has an annual basic exemption and an annual ceiling, so contributions stop once an employee reaches the maximum — and start again on 1 January. A calculator that assumes a full year at a steady wage cannot know an employee started in September, changed provinces, or already hit the ceiling with a previous employer. Taxable benefits, RRSP contributions taken at source and union dues all move the tax figure too. Treat the result as a check on your payroll software rather than a replacement for it, and reconcile against year-to-date totals before the T4s go out.

What sits outside the CRA remittance

British Columbia employers also carry WorkSafeBC premiums and, above $1,000,000 of annual BC remuneration, the Employer Health Tax. Neither goes through the payroll account. Once you know the total per pay run, the payroll remittance calculator tells you when it is due, and how the RP account works explains the mechanics. If you would rather not run any of it, we run payroll as part of a monthly engagement.