Employer's Guide Payroll Deductions and Remittances

Employers Guide
Payroll Deductions and Remittances
T4001(E) Rev. 12
Is this guide for you?

Use this guide if you are:
an employer;
a trustee;
a payer of other amounts related to employment; or
an estate executor, liquidator, administrator, or corporate director.
For information on taxi drivers and drivers of other passenger-carrying vehicles, barbers, and hairdressers, see page 38.
Do not use this guide if you are self-employed and need coverage under the Canada Pension Plan (CPP) or employment
insurance (EI). For information, see the General Income Tax and Benefit Guide.
If you have a visual impairment, you can get our publications in

braille, large print, etext, or MP3. For more information, go to
www.cra.gc.ca/alternate or call 1-800-959-2221.
La version franaise de ce guide est intitule Guide de lemployeur Les retenues sur la paie et les versements.
www.cra.gc.ca
Whats new?
Current rates available on the
CRA Web site
Temporary hiring credit for small

businesses
This guide was printed before the Canada Pension Plan

(CPP) and employment insurance (EI) rates for 2013 were
released. To obtain the current rates and maximums
for 2013, go to www.cra.gc.ca/payroll, or get the January
edition of Publication T4032, Payroll Deductions Tables.
Under proposed changes, the one-time hiring credit for

small businesses will be extended for 2012. If you are
eligible, the CRA will automatically calculate the amount of
your hiring credit (up to a maximum of $1,000) using the
EI information from the T4 slips you filed with your 2011
and 2012 T4 information returns. For more information, go
to www.cra.gc.ca/gncy/bdgt/2012/qa03-eng.html.
Online services built for businesses

We have added new online services to make it faster,
simpler and more convenient for you to handle your
business tax accounts. For more information, see Online
services built for businesses on page 58.
Payroll videos
If you are a small business owner with questions about
payroll, the CRA has a new video that can help. You can
watch the entire video online, or choose the topics that
interest you, such as opening a payroll account, hiring new
employees, payroll deductions, taxable benefits, and more.
Go to www.cra.gc.ca/payroll and select the video series
called Payroll Information for a New Small Business.
Other helpful business videos are available at
www.cra.gc.ca/videogallery by selecting Videos for
businesses.
Wage loss replacement plans

There are new rules for calculating deductions for wage
loss replacement plan payments. For more information, see
page 36.
Direct deposit for payroll accounts

Direct deposit is now available for payroll accounts. To
choose this option, complete Form RC366, Direct Deposit
Request GST/HST, Payroll and/or Corporation Income Tax.
For more information on direct deposit, go to
www.cra.gc.ca/directdeposit.
www.cra.gc.ca
Remittance due dates

information on remitter types and remitting payroll
Fordeductions,
see Chapter 8.
Threshold 2 (average monthly withholding

amount of $50,000 or more)
For information on remittance methods, see page 47.
As a threshold 2 remitter, you have to remit your

deductions through a Canadian financial institution. We
have to receive your deductions from your Canadian
financial institution by the third working day after the end
of the following periods:
New or regular remitter

We have to receive your deductions on or before the
15th day of the month after the month you made them. If
your remittance due date is a Saturday, a Sunday or a
public holiday, your remittance is due on the next business
day. For a list of public holidays, go to
www.cra.gc.ca/duedates.
Quarterly remitter
If you are eligible for quarterly remitting, we have to
receive your deductions on or before the 15th day of the
month immediately following the end of each quarter.
The quarters are:
January to March;
April to June;
July to September; and
October to December.
the 1st through the 7th day of the month;
the 8th through the 14th day of the month;
the 15th through the 21st day of the month; and
the 22nd through the last day of the month.
We consider all payments made to the Canada Revenue

Agency (CRA) at least one full day before the due date to
have been made at a financial institution, and a penalty will
not be charged.
Payments made on the due date but not at a financial
institution are subject to a penalty of 3% of the amount due.
All payments made after the due date are subject to
graduated penalty rates. For details, see page 11.
View remitting requirements
The due dates are April 15, July 15, October 15, and
January 15.
You can view remitting requirements online at:
www.cra.gc.ca/representatives, if you are an authorized

employee or representative; or
www.cra.gc.ca/mybusinessaccount, if you are the

business owner.
Accelerated remitter
Threshold 1 (average monthly withholding
amount of $15,000 to $49,999.99)
We have to receive your deductions by the following dates:
for remuneration paid before the 16th day of the month,

by the 25th day of the same month;
for remuneration paid after the 15th day of the month

but before the first day of the following month, by
the 10th day of the following month.
www.cra.gc.ca
Table of Contents
Page
Chapter 1 General information .....................................
Do you need to register for a payroll account? ................
Are you an employer? .........................................................
What are your responsibilities? .........................................
Payroll deductions tables....................................................
Changes to your business entity ........................................
Filing information returns ..................................................
Penalties and interest ..........................................................
How to appeal a payroll assessment or a CPP/EI
ruling .................................................................................
6
6
6
7
8
9
10
11
11
Chapter 2 Canada Pension Plan contributions ...........

Impact of contribution errors .............................................
When to deduct CPP contributions ...................................
Amounts and benefits subject to CPP contributions ......
Employment, benefits and payments not subject to
CPP contributions ............................................................
CPP contribution rate and maximum ...............................
Calculating the CPP deduction ..........................................
Starting and stopping CPP deductions .............................
Employees who are 60 to 70 years of age .........................
Commissions paid at irregular intervals ..........................
CPP overpayment ................................................................
Recovering CPP contributions ...........................................
CPP coverage by an employer resident outside
Canada...............................................................................
Canadas social security agreements with other
countries ............................................................................
12
12
12
12
Chapter 3 Employment insurance premiums .............

When to deduct EI premiums ............................................
Amounts and benefits subject to EI premiums................
Employment, benefits and payments not subject to
EI premiums .....................................................................
EI premium rate and maximum ........................................
Quebec Parental Insurance Plan (QPIP) ...........................
Reducing the rate of your EI premiums if you have a
short-term disability plan ...............................................
Calculating EI deductions ..................................................
EI overpayment ....................................................................
Recovering EI premiums ....................................................
Establishing the number of insurable hours ....................
Record of employment (ROE) ............................................
18
18
18
21
21
22
22
22
23
Chapter 4 Pensionable and insurable earnings

review (PIER) ...................................................................
23
Chapter 5 Deducting income tax ...................................

Form TD1, Personal Tax Credits Return .................................
Form TD1X, Statement of Commission Income and
Expenses for Payroll Tax Deductions .................................
Form TD3F, Fishers Election to Have Tax Deducted
at Source .............................................................................
Remuneration subject to income tax .................................
Reducing remuneration subject to income tax ................
Calculating income tax deductions ...................................
13
14
14
15
17
17
17
17
18
18
19
20
21
24
24
25
26
26
26
28
Page
Non-resident employees who perform services in
Canada ..............................................................................
Chapter 6 Special payments ..........................................
Advances ..............................................................................
Bonuses, retroactive pay increases or irregular
amounts ............................................................................
Directors fees ......................................................................
Employees profit sharing plan (EPSP) .............................
Overtime pay .......................................................................
Qualifying retroactive lump-sum payments ...................
Retirement compensation arrangements .........................
Retiring allowances .............................................................
Salary deferral arrangements ............................................
Vacation pay and public holidays ....................................
Wages in lieu of termination notice ..................................
Wage loss replacement plans ............................................
Workers compensation awards ........................................
Chapter 7 Special situations ..........................................
Barbers and hairdressers, taxi drivers and drivers of
other passenger-carrying vehicles.................................
Emergency volunteers ........................................................
Employees of a temporary-help service firm ..................
Employing a caregiver, baby-sitter, or domestic
worker ...............................................................................
Employment outside Canada ............................................
Fishers and employment insurance ..................................
Placement and employment agency workers .................
Seasonal agricultural workers program ...........................
Indian employees ................................................................
28
28
28
28
30
31
32
32
32
33
35
35
36
36
36
38
38
39
40
40
40
41
41
42
42
Chapter 8 Remitting payroll deductions .....................

Are you a new remitter? .....................................................
Remitter types and due dates ............................................
Remittance forms ................................................................
Remittance methods ...........................................................
Notice of assessment ...........................................................
Service bureaus....................................................................
Remitting error ....................................................................
43
43
43
44
47
47
47
47
Appendix 1 Which payroll table should you use? ....
48
Appendix 2 Calculation of CPP contributions

(single pay period) .........................................................
49

(multiple pay periods or year-end verification) ........
50
Appendix 4 Canadas social security agreements

with other countries .......................................................
51
Appendix 5 Calculation of employee

EI premiums (2012).........................................................
52
Appendix 6 Special payments chart.............................
53
Index .....................................................................................
56
For more information ........................................................
58
www.cra.gc.ca
Chapter 1 General information

Do you need to register for a payroll
account?
You need to register for a payroll account if you:
Visit Revenu Qubecs Web site at www.revenuquebec.ca

or write to Revenu Qubec, 3800 rue de Marly, Qubec QC
G1X 4A5, if one of the following situations applies and you
need more information:
pay salaries or wages;
pay tips and gratuities;
pay bonuses and vacation pay;
provide benefits and allowances to employees; or
need to report, deduct and remit amounts from other

types of remuneration (such as pension or
superannuation).
If you need a payroll account and you already have a

business number (BN), you only need to add a payroll
account to your existing BN. However, if you dont have a
BN, you must request one and register for a payroll account
before your first remittance due date.
For information on the BN and Canada Revenue Agency
(CRA) accounts or to register online, go to
www.cra.gc.ca/bn. You can also read Booklet RC2, The
Business Number and Your Canada Revenue Agency Program
Accounts.
Payroll deductions can be complicated. If you are having
trouble with them, go to www.cra.gc.ca/payroll or
call 1-800-959-5525.
Contacts and authorized representatives

As a business owner, partner, director, trustee, or officer of
a business, you can authorize representatives, including
your employees, an accountant, bookkeeper, lawyer, or a
firm, to act on your behalf.
You can authorize a representative (including an employee)
by using the Authorize or manage representatives service
in My Business Account at
www.cra.gc.ca/mybusinessaccount, or by sending a
completed Form RC59, Business Consent Form to your tax
centre. Authorization through My Business Account takes
effect immediately.
Using the My Business Account service, you can also view
a list of representatives we have on record for your
business, and change or cancel their authorization.
Most services offered through My Business Account
are available to representatives. Representatives can
access the services through Represent a Client at
www.cra.gc.ca/representatives.
The Quebec provincial government administers its own

provincial pension plan called the Quebec Pension Plan
(QPP), its own provincial income tax, and the Quebec
Parental Insurance Plan (QPIP), which also may be referred
to as the Provincial Parental Insurance Plan (PPIP).
the employee has to report to your place of business in

Quebec; or
the employee does not have to report to your place of

business, but you pay the employee from your place of
business in Quebec.
Are you an employer?

We generally consider you to be an employer if:
you pay salaries, wages (including advances), bonuses,

vacation pay, or tips to your employees; or
you provide certain taxable benefits, such as an

automobile or allowances to your employees.
An individual is an employee if the employment

arrangement between the worker and the payer is an
employer-employee relationship. This relationship is
referred to in this guide as employment under a contract of
service. Although a written contract might indicate that an
individual is self-employed (working under a contract for
services), we may not consider the individual as such if
there is evidence of an employer-employee relationship.
Note
You may not have to deduct EI premiums if you hire
family members or non-related employees. For more
information, see page 19.
If you or a person working for you is not sure of the
workers employment status, either party can request a
ruling to have the status determined. If you are a business
owner, you can use the Request a CPP/EI ruling service
in My Business Account. For more information, go to
www.cra.gc.ca/mybusinessaccount. As well, you can use
Form CPT1, Request for a Ruling as to the Status of a Worker
under the Canada Pension Plan and/or the Employment
Insurance Act, and send it to your tax services office. For
more information on employment status, see Guide
RC4110, Employee or Self-Employed?
Employment by a trustee
Employment in Quebec
Employers with employees in Quebec have to deduct

contributions for the QPP instead of the CPP, if the
employment is pensionable under the QPP. Employers

have to take deductions for both the QPIP and EI, if the
employment is insurable. The QPP, QPIP, and Quebec
provincial income tax deductions are sent to Revenu
Qubec, while the EI and federal tax deductions are
sent to the CRA.
A trustee includes a liquidator, receiver, receiver-manager,

trustee in bankruptcy, assignee, executor, administrator,
sequestrator, or any other person who performs a function
similar to the one a trustee performs. A trustee does the
following:
authorizes a payment or causes a payment to be made for

another person; and
administers, manages, distributes, winds up, controls, or

otherwise deals with another persons property,
business, estate, or income.
www.cra.gc.ca
The trustee is jointly and severally, or solidarily liable for

deducting and remitting the tax, CPP, and EI for all
payments the trustee makes.
Trustee in bankruptcy
Under the Canada Pension Plan and the Employment
Insurance Act, the trustee in bankruptcy is the agent of the
bankrupt employer in the event of an employers
liquidation, assignment, or bankruptcy.
If a bankrupt employer has deducted CPP contributions,
EI premiums, or income tax from amounts employees
received before the bankruptcy and the employer has not
remitted these amounts to us, the trustee must hold the
amounts in trust. These amounts are not part of the estate
in bankruptcy and should be kept separate.
If a trustee continues to operate the bankrupt employers
business, a new business number (BN) is required. The
trustee has to continue to deduct and remit the necessary
CPP contributions, EI premiums, and income tax according
to the bankrupt employers remittance schedule. T4 slips
should be prepared and filed in the usual way.
Note
Amounts paid by a trustee to employees of a bankrupt
corporation to settle claims for wages that the bankrupt
employer did not pay are taxed as other income.
However, this income is not subject to CPP, EI, and
income tax withholdings. These payments are to be
reported on T4A slips. For details, see Guide RC4157,
Deducting Income Tax on Pension and Other Income, and
Filing the T4A Slip and Summary.
All other trustees
If a trustee continues to operate the employers business, a
new business number (BN) is required. The trustee has to
continue to deduct and remit the necessary CPP
contributions, EI premiums, and income tax according to
the employers remittance schedule. T4 slips should be
prepared and filed in the usual way.
Fees paid to executors, liquidators or administrators are
either income from office or employment or business
income, depending on whether the executor or
administrator acts in this capacity in the regular course of
business.
What are your responsibilities?

You are responsible for deducting, remitting, and reporting
payroll deductions. You also have responsibilities in
situations such as hiring an employee, when an employee
leaves or if the business ceases its operations.
The following are the responsibilities of the employer, and
in some circumstances, the trustee and payer:
Open and maintain a payroll account. If you meet the

criteria to open an account on page 6, you must register
to obtain one.
Get your employees social insurance number (SIN).

Every employee must show you his or her SIN card to
work in Canada. For more information, see Social
insurance number (SIN) on page 8.
Obtain a completed federal Form TD1 and, if applicable,

a provincial or territorial Form TD1. New employees or
recipients of other amounts such as pension income
must complete this form. For more information, see
page 24.
Deduct CPP contributions, EI premiums, and income tax

from remuneration or other amounts, including taxable
benefits and allowances, you pay in a pay period. You
should hold these amounts in trust for the
Receiver General and keep them separate from the
operating funds of your business. Make sure these
amounts are not part of an estate in liquidation,
assignment, receivership, or bankruptcy.
Remit these deductions along with your share of

CPP contributions and EI premiums. The CPP and
EI chapters of this guide explain how to calculate your
share of contributions/premiums. Chapter 8 explains
how and when to remit these amounts.
Report the employees income and deductions on the

appropriate T4 or T4A slip. You must file an information
return on or before the last day of February of the
following calendar year. For more information, see
Guide RC4120, Employers Guide Filing the T4 Slip and
Summary and Guide RC4157, Deducting Income Tax on
Pension and Other Income, and Filing the T4A Slip and
Summary.
Complete and issue a Record of Employment (ROE) when

an employee stops working and has an interruption of
earnings. For more information, see page 23.
Keep records of what you do, as our officers can ask to

see them. For more information, see Keeping records
on page 8.
Payer of other amounts

A payer of other amounts can be an employer, trustee,
estate executor, liquidator, administrator, or a corporate
director who pays other types of income related to an
employment. This income can include pension or
superannuation, lump-sum payments, self-employed
commissions, annuities, retiring allowances, or any other
type covered in this publication or in Guide RC4157,
Deducting Income Tax on Pension and Other Income, and Filing
the T4A Slip and Summary. These amounts are to be reported
on a T4A slip, with the exception of retiring allowances that
are to be reported on the T4 slip. See Guide RC4120,
Employers Guide Filing the T4 Slip and Summary for more
information.
Notes
Employers resident outside Canada who employ
Canadian residents but do not have an establishment in
Canada have the same responsibilities as Canadian
employers, regardless of whether the services performed
by the Canadian resident employee are performed in
Canada or outside Canada. For more information about
CPP coverage by an employer resident outside Canada,
see page 18.
www.cra.gc.ca
You have to deduct CPP on a non-resident employees

remuneration in the same way you would for a resident
employee unless he or she comes from a country where a
social security agreement has been signed with Canada.
For more information, see Non-resident employees
who perform services in Canada on page 28.
Keeping records
You have to keep your paper and electronic records for at
least six years after the year to which they relate. If you
want to destroy them before the six-year period is over,
complete Form T137, Request for Destruction of Records.
For more information, go to www.cra.gc.ca/records or
see Guide RC4409, Keeping Records.
Social insurance number (SIN)

As an employer, you have to get the correct SIN from each
employee. Every person employed in pensionable or
insurable employment has to show you their SIN card. If
the employee does not give you his or her SIN, you should
be able to show that you made a reasonable effort to get it.
For example, if you contact an employee by mail to ask for
his or her SIN, be sure to record the date of your request
and keep a copy of any correspondence that relates to it.
We consider this to be a reasonable effort. If you do not
make a reasonable effort to get a SIN, you may be subject to
a penalty of $100 for each failure. Employees also have an
obligation to provide you their SIN. If an employee does
not do this, the employee may be subject to a penalty of
$100 for each failure.
Under the Canada Pension Plan Regulations, you have to tell
your employees who dont have a SIN card how to get a
SIN. Refer them to their Service Canada Centre within
three days of the day they start work and ask them to
provide you with proof of application as well as to show
you their SIN card once they receive it. To find the nearest
Service Canada Centre, visit www.servicecanada.gc.ca.
Always use the correct name and number as shown on the
employees SIN card. An incorrect SIN can affect an
employees future CPP benefits if the record of earnings
file is not accurate. Also, if you report an incorrect SIN on
a T4 slip that has a pension adjustment (PA) amount, the
employee may receive an inaccurate annual Registered
Retirement Savings Plan (RRSP) Deduction Limit
Statement. In addition, the related information on the
employees notice of assessment will be inaccurate.
When an employee has an interruption in earnings, you
have to record the correct SIN on a Record of Employment
(ROE) for EI purposes (for details on the ROE, see page 23).
If you dont, you could be fined up to $2,000, imprisoned
for up to six months, or both.
Notes
Even if you have not received your employees SIN, you
still have to make deductions and file your information
returns on or before the last day of February of the
following calendar year. If you do not, you may be
subject to a penalty for late filing.
If you filed a T4 slip without a SIN but subsequently
received it, file an amended T4 slip and include the SIN.
See Guide RC4120, Employers Guide Filing the T4 Slip

and Summary for instructions on how to amend a T4 slip.
For more information, see Information Circular IC82-2,
Social Insurance Number Legislation that Relates to the
Preparation of Information Slips or visit the Service Canada
Web site at www.servicecanada.gc.ca.
SIN beginning with the number 9

An eligible person who is not a Canadian citizen or a
permanent resident of Canada and who applies for a SIN
will get a SIN beginning with the number 9.
If you hire a person whom you know is not a Canadian
citizen or permanent resident, make sure that:
the persons SIN begins with the number 9;
the SIN card has an expiry date and the card has not
expired; and
the person has a valid work permit issued by Citizenship

and Immigration Canada (CIC).
Note
If the SIN card does not have an expiry date, the card is
not valid. Refer the person to the nearest Service Canada
Centre. If the eligible person becomes a Canadian citizen
or permanent resident of Canada, they will receive a
permanent SIN.
Payroll deductions tables

The payroll deductions tables help you calculate
CPP contributions, EI premiums, and the amount of
federal, provincial (except Quebec), and territorial income
tax that you have to deduct from amounts you pay.
The CRA encourages employers to take advantage of our
electronic payroll deductions services:
Payroll Deductions Online Calculator (PDOC) You

can use this application to calculate your payroll
deductions. It calculates payroll deductions for the most
common pay periods, province (except Quebec
provincial tax) and territory. The calculation is based on
exact salary figures. You can use PDOC by going to
www.cra.gc.ca/pdoc.
Payroll Deductions Tables (T4032) You can use these

tables to calculate payroll deductions for the most
common pay periods. They are available at
www.cra.gc.ca/payroll.
Payroll Deductions Supplementary Tables (T4008) You

can use these tables to calculate payroll deductions for
irregular pay periods. They are available at
Payroll Deductions Formulas for Computer Programs

(T4127) You may want to use these formulas instead of
the tables to calculate your employees payroll
deductions. This publication contains formulas to
calculate CPP contributions, EI premiums, and federal,
provincial (except Quebec), and territorial income tax.
They are available at www.cra.gc.ca/payroll.
www.cra.gc.ca
Note
A pay period means the period for which you pay
earnings or other remuneration to an employee.
All the payroll deductions tables are available for each
province and territory (except Quebec) and also for
employees working in Canada beyond the limits of any
province, or outside Canada.
Which tax tables should you use?

Employment income
When you pay employment income such as salaries, wages,
or commissions, you have to determine your employees
province or territory of employment. This depends on
whether or not you require your employee to report for
work at your place of business.
Your place of business does not have to be a permanent
physical location. For example, the place of business for a
construction company can include one or more
construction sites.
For more information on which tax tables to use, see
Appendix 1 on page 48.
Example 1
Your employee does not have to report to any of your
places of business, but you pay the employee from your
office in Quebec. In this case, use the Quebec Payroll
Deductions Tables. The employee is not subject to
CPP contributions, but could be subject to Quebec Pension
Plan (QPP) contributions.
Example 2
Your head office is in Ontario. Your employee works from a
home office in Alberta, but occasionally has to report to
your Alberta office. You pay your employee from your
head office in Ontario. In this case, use the Alberta Payroll
Deductions Tables, if the majority of the employees time
during a pay period is spent at your Alberta office.
Otherwise use the Ontario Payroll Deductions Tables.
If you have employees working in Canada but you do not
have a place of business or an employers establishment
in Canada, the employees are considered employed in
Canada beyond the limits of any province for purposes of
tax at source.
Note 1
If an employee reports to your place of business for part
of a pay period in one province and part in another
province, use the tables for the location in which the
majority of the employees time was spent. If the time is
equal, for example in a bi-weekly pay period the
employee has worked one week in one province and one
week in another province, use the province of
employment for the last location.
Example
Your Canadian resident employees work as salespeople in
Ontario and British Columbia. They work from their home
offices and report directly to your business located outside
Canada. In this case, use the In Canada Beyond the Limits of
any Province/Territory or Outside Canada Payroll Deductions
Tables.
Note 2
An employee who lives in one province or territory but
reports to your place of business in another one may be
subject to excessive tax deductions. If so, he or she can
ask for a reduction in tax deductions by getting a letter
of authority from any tax services office. For more
information, see Letter of authority on page 27.
Non-employment income
If you paid amounts other than employment income, such
as pension income, retiring allowance, or RRSP, use the
provincial or territorial table of the recipients province or
territory of residence. For more information on which tax
tables to use, see Appendix 1 on page 48.
An employee who lives in one province or territory but

reports to your place of business in another may not
have enough tax deducted. If this is the case, the
employee should request additional tax deductions on
Form TD1, Personal Tax Credits Return.
Example 1
Your head office is in Ontario, but you require your
employee to report to your place of business in Manitoba.
In this case, use the Manitoba Payroll Deductions Tables.
Example 2
Your employee lives in Quebec, but you require your
employee to report to your place of business in
New Brunswick. In this case, use the New Brunswick Payroll
Deductions Tables.
If you do not require your employee to report for work at
your place of business, (for example, per the employment
contract, the employee works from a home office), the
employees province or territory of employment is the
province or territory where your business is located and
from where you pay your employees salary.
If you do not have any employees for a period

of time
Inform us by using My Business Account, by calling our
TeleReply service, or by sending us your completed
remittance form and indicate when you expect to have
employees subject to deductions. For more information on
My Business Account, go to
www.cra.gc.ca/mybusinessaccount.
To find out how to use our TeleReply service, see page 46.
Changes to your business entity

If your business stops operating or the
partner or proprietor dies
Remit all CPP contributions, EI premiums, and income

tax deductions withheld for the former employees to
your tax centre within seven days of the day your
business ends.
Calculate the pension adjustment (PA) that applies to

your former employees who accrued benefits for the year
under your registered pension plan (RPP) or deferred
www.cra.gc.ca
profit sharing plan (DPSP). For information on how to

calculate pension adjustments, see Guide T4084, Pension
Adjustment Guide.
Complete and file all T4 or T4A slips and summaries

using electronic filing methods or on paper, and send
them to the Ottawa Technology Centre (at the address
located at the end of this guide) within 30 days of the day
your business ends (or 90 days for estates). If you file
more than 50 slips for a calendar year, you must file the
return over the Internet in eXtensible mark-up language
(XML). Distribute copies of the T4 or T4A slips to your
former employees.
Prepare and give a Record of Employment (ROE) to each
former employee, generally, within five calendar days.
For more information, see Record of employment
(ROE) on page 23.
When the owner of a sole proprietorship dies, a final

personal income tax and benefit return has to be filed.
This return is due by June 15 of the year following death,
unless the date of death is between December 16 and
December 31, in which case the final return is due six
months after the date of death. For more information, see
Guide T4011, Preparing Returns for Deceased Persons.
Close the business number (BN) and all CRA business

accounts after all the final returns and all the amounts
owing have been processed.
To close your payroll account, you can use the Request
to close payroll account service in My Business Account
at www.cra.gc.ca/mybusinessaccount.
To find out how to complete and file the T4 or T4A slips

and summary, go to www.cra.gc.ca/payroll, or see
Summary or Guide RC4157, Deducting Income Tax on Pension
and Other Income, and Filing the T4A Slip and Summary.
If you change your legal status, restructure,

or reorganize
If you change your legal status, restructure, or reorganize,
we consider you to be a new employer. You may need a
new business number (BN) and a new payroll account.
Call 1-800-959-5525 to let us know if your business status
has changed or will change in the near future.
Note
Amalgamations have different rules. For more
information, see the next section, If your business
amalgamates.
You are the sole proprietor of a business and you decide

to incorporate.
You and a partner own a business. Your partner leaves

the business and sells his half interest to you, making you
a sole proprietor.
A corporation sells its property division to another

corporation.
One corporation transfers all of its employees to another

corporation.
10
Go to Employer restructuring/Succession of employers

at www.cra.gc.ca/cppeiexplained to see if you can benefit
from these circumstances.
In cases where the above situation does not apply, you
must continue to deduct CPP/QPP, EI, and PPIP.
The predecessor company has to close the business number
(BN) and all CRA business accounts after all the final
returns and all the amounts owing have been processed. To
find out how to complete and file the T4 or T4A slips and
summary, go to www.cra.gc.ca/payroll, or see
Summary or Guide RC4157, Deducting Income Tax on Pension
For more information, go to www.cra.gc.ca/tx/bsnss/tpcs/
pyrll/hwpyrllwrks/chngs/menu-eng.html, or call
1-800-959-5525.
If your business amalgamates

If your business amalgamates with another, special rules
apply. In this case, you as the successor employer can keep
the business number (BN) of one of the corporations, or you
can apply for a new one. If one of the corporations is
non-resident, you have to apply for a new BN.
Since no new employer exists for CPP and EI purposes,
continue deducting in the normal manner, taking into
account the deductions and remittances that occurred
before the amalgamation. These remittances will be
reported under the payroll account of the successor BN.
If you had previously been granted a reduced employers
EI remittance rate, you will need to contact Human
Resources and Skills Development Canada to make sure
you are still eligible for the reduced rate.
With an amalgamation, the predecessor corporations do not
have to file T4 returns for the period leading up to the
amalgamation. The successor corporation files the
T4 returns for the entire year.
The following are examples of changes to a business status:
When a change happens, a new (successor) employer is

created. A successor employer who has acquired all or part
of a business, and who has immediately succeeded the
former (predecessor) employer as the new employer of an
employee, may, under certain circumstances, take into
consideration the CPP/QPP, EI, and PPIP deductions
already withheld by the previous employer and continue
withholding and remitting such deductions as if there was
no change in employer. If employees have already paid the
maximum deductions, no further deductions would be
taken for the year.
Filing information returns

You have to file a T4 or T4A information return, as
applicable, and give information slips to your employees
each year, on or before the last day of February of the
following calendar year to which the information return
applies. If the last day of February is a Saturday or a
Sunday, your information return is due the next business
day.
For information on how to report the employees income
and deductions on the appropriate slips and summary,
go to www.cra.gc.ca/slips or get one of the related
www.cra.gc.ca
publications listed on page 58. For information on filing

electronically, visit www.cra.gc.ca/iref,
www.cra.gc.ca/webforms or www.cra.gc.ca/electronicmedia.
You can view the status of a return by using the View
return status service in My Business Account. For more
information, go to www.cra.gc.ca/mybusinessaccount.
Filing without a Web access code
Interest
If you fail to pay an amount, we may apply interest from
the day your payment was due. The interest rate we use is
determined every three months, based on prescribed
interest rates. Interest is compounded daily. We also apply
interest to unpaid penalties. For the prescribed interest
rates we use, go to www.cra.gc.ca/interestrates.
For due dates, see pages 4 and 43.
You can also file your information returns without a Web

access code using the File a return service and selecting
either the Web Forms option or the Internet file transfer
(XML) option at:


business owner.
Penalties and interest

Failure to deduct
We can assess a penalty of 10% of the amount of CPP, EI,
and income tax you failed to deduct.
If you are subject to this penalty more than once in a
calendar year, we may apply a 20% penalty to the second
or later failures if they were made knowingly or under
circumstances of gross negligence.
Failure to remit and late remittances

We can assess a penalty on the amount you failed to remit
when:
you deduct the amounts, but do not remit them; or
we receive the amounts you deducted after the due date.
If the remittance due date is a Saturday, a Sunday, or a

public holiday, your remittance is due on the next business
day.
The penalty for remitting late is:
3% if the amount is one to three days late;
5% if it is four or five days late;
7% if it is six or seven days late; and
10% if it is more than seven days late, or if no amount is

remitted.
Generally, we only apply this penalty to the part of the

amount you failed to remit that is more than $500.
However, in certain circumstances, we may apply the
penalty to the total amount.
If you are subject to this penalty more than once in a
calendar year, we may assess a 20% penalty on the second
or later failures if they were made knowingly or under
circumstances of gross negligence.
Note
We consider a non-sufficient funds (NSF) cheque to be a
failure to remit and will automatically apply a penalty,
as well as an administrative charge.
Obligations and liabilities

Offences and punishment
If you fail to comply with the deducting, remitting, and
reporting requirements, you may be prosecuted. You could
be fined from $1,000 up to $25,000, or you could be fined
and imprisoned for a term of up to 12 months.
Directors liability
If a corporation (including for-profit or non-profit
corporations) fails to deduct, remit, or pay amounts held in
trust for the Receiver General (CPP, EI, and income tax), the
directors of the corporation at the time of the failure may be
held jointly and severally or solidarily liable along with
the corporation to pay the amount due. This amount
includes penalties and interest.
However, if the directors take action to ensure the
corporation makes the necessary deductions or remittances,
we will not hold the directors personally responsible. For
more information, see Information Circular IC89-2,
Directors Liability Section 227.1 of the Income Tax Act, Section
323 of the Excise Tax Act, Section 81 of the Air Travellers
Security Charge Act, and Subsection 295(1) of the Excise
Act, 2001.
Cancelling or waiving penalties and interest

The taxpayer relief provisions of the Income Tax Act give us
some discretion to cancel or waive all or a part of any
penalties and interest charges. This allows us to consider
extraordinary circumstances that may have prevented you
from fulfilling your obligations under the Act. For details,
go to www.cra.gc.ca/taxpayerrelief or see Information
Circular IC07-1, Taxpayer Relief Provisions.
How to appeal a payroll assessment or

a CPP/EI ruling
If you receive a payroll assessment for CPP contributions,
EI premiums, and/or income tax with which you do not
agree, or you have received a CPP/EI ruling letter and you
disagree with the decision, you can appeal within 90 days
after the date you were notified of the payroll assessment or
the CPP/EI ruling.
However, before you file an appeal, we recommend that
you first call or write to the tax services office or tax centre
that issued the CPP/EI ruling or the payroll assessment to
discuss the matter. Many disputes are solved this way and
can save you the time and trouble of appealing.
To appeal a payroll assessment for CPP contributions,
EI premiums and/or income tax, you can:
www.cra.gc.ca
11
access My Business Account at

www.cra.gc.ca/mybusinessaccount and select Register
a formal dispute (appeal) for your payroll account;
pensionable earnings less an exempt amount that is based

on the period of employment.
access Represent a Client, if you represent a business, at

www.cra.gc.ca/representatives and select Register a
formal dispute (appeal) for a payroll account;
Impact of contribution errors
file Form T400A, Objection Income Tax Act (income tax

only);
file Form CPT101, Appeal of an Assessment under the

Canada Pension Plan and/or Employment Insurance Act
(CPP and/or EI only); or
write to the chief of appeals at your tax services office or

tax centre explaining why you do not agree with the
assessment and provide all related facts. Include a copy
of the payroll assessment notice. The addresses of our tax
centres are listed at the end of this guide. They, along
with the addresses of our tax services offices, are also
available at www.cra.gc.ca/tso.
For more information on how to appeal a payroll

assessment of income tax, see Booklet P148, Resolving Your
Dispute: Objection and Appeal Rights under the Income Tax Act.
To appeal a CPP/EI ruling decision, you can:
access My Business Account at

www.cra.gc.ca/mybusinessaccount and select Register
a formal dispute (appeal) for your payroll account;
access My Account at www.cra.gc.ca/myaccount, select
Register my formal dispute and choose CPP/EI
ruling in the subject area;
access Represent a Client at
www.cra.gc.ca/representatives. If you represent a
business, select "Register a formal dispute (appeal)" for a
payroll account, and then choose "CPP/EI ruling" in the
subject area. If you represent an individual, select
"Register my formal dispute", and then choose "CPP/EI
ruling" in the subject area;
file Form CPT100, Appeal of a Ruling under the Canada

Pension Plan and/or Employment Insurance Act; or
write to the chief of appeals at your tax services office or

tax centre explaining why you do not agree with the
ruling, and provide all related facts. Include a copy of the
CPP/EI ruling letter. The addresses of our tax centres are
listed at the end of this guide. They, along with the
addresses of our tax services offices, are available at
www.cra.gc.ca/tso.
For more information on how to appeal a CPP/EI ruling

decision, see Booklet P133, Your Appeal Rights Canada
Pension Plan and Employment Insurance.
Chapter 2 Canada Pension

Plan contributions
For example, when a part-year employee does not qualify

for the full annual exemption, a program may indicate that
the employer should report a CPP overdeduction in box 22,
Income tax deducted, of the T4 slip. This may result in an
unwarranted refund of tax to the employee when the
employee files his or her income tax and benefit return.
When employees receive refunds for apparent CPP
overdeductions, their pensionable service is adversely
affected. This could affect their CPP income when they retire.
In addition, employers who report such overdeductions
receive a credit to which they are not entitled because the
employee worked for them for less than 12 months.
When to deduct CPP contributions

You have to deduct CPP contributions from an employees
pensionable earnings if that employee:
is 18 to 70 years of age;
is in pensionable employment during the year;
is not considered to be disabled under CPP or QPP; and
is 60 to 65 years of age, and is in receipt of a CPP or QPP

retirement pension;
is 65 to 70 years of age, is in receipt of a CPP or QPP

retirement pension, and has not given you a completed
election form CPT30, Election to Stop Contributing to the
Canada Pension Plan, or Revocation of a prior Election to stop
deducting CPP contributions from his/her earnings.
Notes
For more information, see Starting and stopping CPP
deductions on page 15.
Quebec employers deduct Quebec Pension Plan (QPP)
contributions instead of CPP contributions. For
information on deducting and remitting the QPP, see the
publication TP-1015.G-V, Guide for Employers Source
Deductions and Contributions, which you can get from
Revenu Qubec (see page 6).
Amounts and benefits subject to

CPP contributions
You generally deduct CPP contributions from the following
amounts and benefits:
or Canada Pension Plan (CPP) purposes, contributions

are not calculated from the first dollar of pensionable
earnings. Contributions are calculated using the amount of
12
If used improperly, some payroll software programs,

in-house payroll programs, and bookkeeping methods can
calculate unwarranted or incorrect refunds of CPP
contributions for both employees and employers.
The improper calculations treat all employment as if it were
full-year employment, which incorrectly reduces both the
employees and employers contributions.
salary, wages, bonuses, commissions, or other

remuneration (including payroll advances or earnings
advances), and wages in lieu of termination notice;
most cash/non-cash taxable benefits and allowances,

including certain rent-free and low-rent housing, the
www.cra.gc.ca
who pays the employee less than $250 in cash

remuneration in a calendar year; or
value of board and lodging (other than an exempt

allowance paid to an employee at a special work site or
remote work location), interest-free and low-interest
loans, employer contributions to an employees
registered retirement savings plan (RRSP), group term
life insurance premiums, personal use of an automobile
that you as the employer own or lease, holiday trips,
subsidized meals, and certain gifts, prizes, and awards.
For more information, see Guide T4130, Employers
Guide Taxable Benefits and Allowances;
honorariums from employment or office, a share of profit

that an employer paid, incentive payments, directors
fees, management fees, fees paid to board or committee
members, and executors, liquidators, or administrators
fees earned to administer an estate (as long as the
executor, liquidator, or administrator does not act in
this capacity in the regular course of business);
certain tips and gratuities received for services performed;
remuneration received while on vacation, furlough,

sabbatical, or sick leave, or for lost-time pay from a union,
vacation pay, payments received under a supplementary
unemployment benefit plan (SUBP) that does not qualify
as a SUBP under the Income Tax Act (for example,
employer paid maternity and parental top-up amounts),
amounts paid under a SUBP that does not qualify as a
SUBP under the Income Tax Act, but where the plan is
registered with Service Canada, such as EI benefit
payments supplemented by the employer because of a
temporary stoppage of work, training, illness, injury or
quarantine and payments for sick leave credits;
employs the employee for a period of less than 25

working days in the same year on terms providing for
payment of cash remunerationthe working days do
not have to be consecutive;
Note
In a calendar year, if the employee reaches both
minimums$250 or more in cash remuneration and
works 25 days or morethe employment is pensionable
starting from the first day of work.
casual employment if it is for a purpose other than your

usual trade or business;
employment as a teacher on exchange from a foreign

country;
employment of a spouse or common-law partner if you

cannot deduct the remuneration paid as an expense
under the Income Tax Act;
employment of your child or a person that you maintain

if no cash remuneration is paid;
employment of a person in a rescue or disaster operation,

as long as you do not regularly employ that person for
that purpose;
employment of a person at a circus, fair, parade, carnival,

exposition, exhibition, or other similar activity, except for
entertainers, if that person:
is not your regular employee; and
wage loss benefits that an employee receives from a

wage loss replacement plan (these benefits may or may
not be subject to CPP contributionsfor more
information, see page 36);
benefits derived from security option plans; and
the salary you continue to pay to an employee before or

after a workers compensation board claim is decided, as
well as:
works for less than seven days in the year.

Note
If the employee works seven days or more, the
employment is pensionable from the first day of work.
is not a regular employee of the government body; and

works for less than 35 hours in a calendar year.
any advance or loan you make that is more than the

workers compensation award;
Note
If the employee works 35 hours or more, the
employment is pensionable from the first hour of work.
any advance or loan not repaid to you; or

a top-up amount you pay in addition to the workers
compensation award paid by a workers compensation
board.
Note
If you pay any of these amounts to a former employee
and you have to deduct CPP contributions, use the
current rate in effect when you make the payment.
employment by a government body as an election

worker if the worker:
employment of a member of a religious order who has

taken a vow of perpetual poverty. This applies whether
the remuneration is paid directly to the order, or the
member pays it to the order.
employment in Canada by a foreign government or an

international organization, except when the foreign
government or international organization enters into an
agreement with the government of Canada.
Employment, benefits and payments

not subject to CPP contributions
Benefits and payments
Employment
Do not deduct CPP contributions from:
Do not deduct CPP contributions from payments for these

types of employment:
employment in agriculture, or an agricultural enterprise,

horticulture, fishing, hunting, trapping, forestry, logging,
or lumbering, by an employer:
pension payments, lump-sum payments from a pension

plan, death benefits, amounts that a trustee allocated
under a profit sharing plan or that a trustee paid under a
deferred profit sharing plan, and benefits received under
www.cra.gc.ca
13
a supplementary unemployment benefit plan (SUBP) that

qualifies as a SUBP under the Income Tax Act;
payments you make after an employee dies, except for

amounts the employee earned and was owed before the
date of death;
an advance or a loan equal to a workers compensation

award you pay to an employee, before or after the
workers compensation board claim is decided (for
information on situations when CPP contributions are
required, see Amounts and benefits subject to
CPP contributions on page 12; for information on
workers compensation awards, see page 36);

not be subject to CPP contributionsfor more
information, see page 36);
amounts for the residence of a clergy member if he or she

receives a tax deduction for the residence; and
amounts received on account of an earnings loss benefit,

supplementary retirement benefit or permanent
impairment allowance payable to the taxpayer under
Part 2 of the Canadian Forces Members and Veterans
Re-establishment and Compensation Act.
(different business numbers). If an employee leaves one

employer during the year to start work with another
employer, the new employer also has to deduct CPP
contributions without taking into account what was paid
by the previous employer. This is the case even if the
employee has paid the maximum contribution amount
during the previous employment. If your business went
through a restructure or reorganization, see page 10.
Any overpayments will be refunded to employees when
they file their income tax and benefit returns. However,
there is no provision in the Canada Pension Plan that
would allow us to refund or credit the employer for his
or her contributions in those circumstances.
Different rates apply for employees working in Quebec.
You may have a place of business in Quebec and in another
province or territory. If you transfer an employee from
Quebec to another province or territory, you have to
prepare two T4 slips:
one showing the province of employment as Quebec, the

remuneration the employee earned in Quebec, the QPP
contributions deducted, the applicable pensionable
earnings, and any other applicable deductions; and
one showing the other province or territory of

employment, the remuneration the employee earned in
that other province or territory, the CPP contributions
deducted, the applicable pensionable earnings, and any
other applicable deductions.
CPP contribution rate and maximum

You have to deduct CPP contributions from the amounts
and benefits you pay or provide to your employees. In
addition, you must contribute an amount equal to the
amount that you deduct from your employees
remuneration.
Example
CPP contributions you deducted
from your employees salary in the month ............. $240.40
Your share of CPP contributions .................................. $240.40
Total amount you remit for CPP contributions .......... $480.80
Each year, we determine:
the maximum pensionable earnings from which you

deduct CPP ($50,100 for 2012);
the annual basic exemption, which is a base amount

from which you do not deduct CPP contributions
($3,500 for 2012 see Appendix 2); and
the rate you use to calculate the amount to deduct

from your employees remuneration (4.95% for 2012).
You stop deducting CPP contributions when the

employees annual earnings reach the maximum
pensionable earnings or the maximum employee
contribution for the year ($2,306.70 for 2012).
Calculating the CPP deduction

To determine the amount of CPP contributions to deduct,
use one of the following tools:
the Payroll Deductions Online Calculator (PDOC);
the Payroll Deductions Tables (T4032);
the Payroll Deductions Supplementary Tables (T4008); or
the Payroll Deductions Formulas for Computer Programs

(T4127).
Note
The payroll deductions tables break the CPP basic yearly
exemption down by pay periods.
To find out which method is best for you, see Payroll

deductions tables, on page 8.
The employees contribution rate for the next year can be

found in the Payroll Deductions Tables, which are usually
available in mid-December on our Web site at
Notes
The annual maximum pensionable earnings applies to
each job the employee holds with different employers
14
In such a case, when calculating the amount of CPP

contributions, you can take into account the QPP
contributions you deducted from that employee
throughout the year. The total contributions to both
plans cannot be more than the maximum contribution
for the year.
You can also use a manual method to calculate your

employees CPP deductions. For a single pay period, use
the calculation in Appendix 2 on page 49. For multiple pay
periods, or to verify the CPP contributions deducted at the
end of the year before completing the T4 slip, use the
calculation in Appendix 3 on page 50.
Notes
A pay period means the period for which you pay
earnings or other remuneration to an employee.
www.cra.gc.ca
Once you have established your type of pay period, the

pay-period exemption (see Appendix 2) must remain the
same, even when an unpaid leave of absence occurs, or
when earnings are paid for part of a pay period.
Starting and stopping CPP deductions

There may be special situations where you may have to
start or stop deducting CPP in the year for a particular
employee. In these situations, you also have to prorate the
maximum CPP contribution for the year to make sure you
have not overdeducted.
Note
In some cases, the requirements are different for Quebec
Pension Plan. For information, see Guide TP-1015.G-V,
Guide for Employers: Source Deductions and Contributions,
which you can get from Revenu Qubec (see page 6).
Step 1: Deduct the year's basic exemption ($3,500 for 2012)

from the year's maximum pensionable earnings
($50,100 for 2012).
Step 2: Multiply the result of Step 1 by the number of
pensionable months.
Step 3: Divide the result of Step 2 by 12 (months).
Step 4: Multiply the result of Step 3 by the CPP rate that
applies for the year (4.95% for 2012).
To find out about the previous and current exemptions,
maximums, and rates, go to www.cra-arc.gc.ca/tx/bsnss/
tpcs/pyrll/clcltng/cpp-rpc/cnt-chrt-pf-eng.html.
2) Calculate the CPP contribution per pay period using
Appendix 2, and withhold the amount calculated until
the sooner of:
the maximum prorated contribution for the year is

reached; or
the last pay period for which deductions are required

is completed.
Special situations
Your employee turns 18 in the year Start deducting
CPP contributions in the first pay dated in the month after
the employee turns 18. When you prorate, use the number
of months after the month the employee turns 18
(see example 1);
Your employee turns 70 in the year Deduct
CPP contributions up to and including the last pay dated in
the month in which the employee turns 70. When you
prorate, use the number of months up to and including the
month the employee turns 70 (see example 2);
Your employee is receiving a CPP or QPP retirement
pension For details, see Employees who are 60 to
70 years of age, on page 17.
Your employee is considered to be disabled under the
CPP An employee who is considered to be disabled under
the CPP does not have to contribute to the CPP. Deduct
CPP contributions up to and including the last pay dated in
the month in which the employee becomes or is considered
to be disabled according to the award letter issued to the
employee by Service Canada. When prorating, use the
number of months up to and including the month the
employee was considered to be disabled.
Note
If the employee is no longer considered disabled under
the CPP, start deducting CPP contributions on the first
pay dated in the month after the employee is no longer
considered disabled. When prorating, use the number of
months after the month the employee ceased to be
disabled.
Your employee dies in the year Deduct CPP
contributions up to and including the last pay dated in the
month in which the employee dies. Also deduct CPP
contributions from any amounts and benefits that are
earned or owed to the employee on the date of death. When
prorating, use the number of months up to and including
the month of death.
Checking the amount of CPP you deducted
1) Prorate the maximum CPP contribution for the year by
following these steps:
3) The correct amount of CPP contributions will be the

lower of 1) and 2).
Example 1
Brent turned 18 on June 15, 2012. He receives $1,000 every
two weeks ($26,000 a year). This amount is less than the
maximum pensionable earnings ($50,100 for 2012) that are
subject to CPP contributions.
Prorated maximum contribution for 2012:
($50,100 3,500) 6/12 4.95% = $1,153.35
(6/12 represents the number of pensionable months
divided by 12).
Brents maximum CPP contribution for 2012 is $1,153.35.
Pay period calculation:
January to June 2012
No CPP contributions
July to December 2012
Pay period: bi-weekly
Earnings: $1,000
Brents first pay in July is July 11, for the period June 30
to July 13.
Using the calculation in Appendix 2, Brents

CPP contributions for each pay are calculated as follows:
Step 1: Brents pensionable earnings
= $1,000.00
Step 2: Basic exemption for the period from

the table in Appendix 2
$134.61
Step 3: Pensionable earnings minus basic

exemption
$865.39
Step 4: CPP contribution rate for 2012
4.95%
Step 5: CPP contribution per pay period
$42.84
You will have to start deducting $42.84 from each of Brents

paycheques, beginning with the cheque dated July 13
(the month after Brent turns 18). His actual contributions
www.cra.gc.ca
15
for the year will be $42.84 13 (biweekly pay

periods) = $556.92.
This does not exceed the prorated maximum contribution
of $1,153.35; therefore, the correct amount of CPP has been
deducted.
When you complete Brents T4 slip at the end of the year,
report $26,000 in box 14, $556.92 in box 16, and $13,000 in
box 26. Complete the rest of his T4 slip in the usual way.
Example 2
Maria turns 70 on February 15, 2012. She receives $1,000 per
week ($52,000 per year). This amount is more than the
maximum pensionable earnings ($50,100 for 2012) that are
subject to CPP contributions.
($50,100 3,500) 2/12 4.95% = $384.45 (2/12 represents
the number of pensionable months divided by 12).
Example 3 (New CPP rules Starting 2012)

Catherine is 64 years old and receives a CPP retirement
pension. On July 23, 2012, she turns 65 and elects to stop
paying CPP contributions. She gives you a signed and
completed Form CPT30, Election to Stop Contributing to the
Canada Pension Plan, or Revocation of a Prior Election, that
same day.
Catherine receives $1,000 every two weeks ($26,000 a year).
This amount is less than the maximum pensionable
earnings ($50,100 for 2012) that are subject to CPP
contributions.
($50,100 3,500) 7/12 4.95% = $1,345.57 (7/12
represents the number of pensionable months divided
by 12).
Catherines maximum CPP contribution for 2012 is
$1,345.57.
Marias CPP contributions for 2012 should not be more

than $384.45.
January to July 2012

Pay period: bi-weekly
January to February 2012

Pay period: weekly
Earnings: $1,000
Catherine's last pay in July has a pay date of July 26,

covering the period July 13 to July 26.
Earnings: $1,000
Marias last pay in February is February 29th, covering

the period February 23 to February 29
March to December 2012

August to December 2012

Using the calculation in Appendix 2, Catherines
Using the calculation in Appendix 2, Marias

Step 1: Catherines pensionable earnings
= $1,000.00
Step 1: Marias pensionable earnings
= $1,000.00

$134.61

$67.30

exemption
$865.39

exemption
$932.70
Step 4: CPP contribution rate
4.95%
Step 4: CPP contribution rate for 2012
4.95%
$42.84
$46.17
Marias CPP contributions will be $46.17 each pay, up to

and including her pay dated February 29 (the month in
which she turns 70). Her actual contributions for the year
will be $46.17 9 (weekly pay periods) = $415.53.
Since this is more than the prorated maximum CPP
contribution of $384.45 you should stop deducting when
the maximum contribution is reached. If you deducted
$415.53, you will have to reimburse your employee for the
difference. For more information, see CPP
overpayment on page 17.
When you complete Marias T4 slip at the end of the year,
report $52,000 in box 14, $384.45* in box 16, and $8,350*
(50,100 2/12) in box 26. Complete the rest of her T4 slip in
the usual way.
You have to deduct CPP contributions from each of

Catherine's pay cheques, up to and including the last pay
dated in the month she gives the election to you. Her actual
contributions for the year will be $42.84 15 (bi-weekly pay
periods) = $642.60.
This does not exceed the prorated maximum contribution
of $1,345.57; therefore, the correct amount of CPP has been
deducted.
When you complete Catherines T4 slip at the end of the
year, report $26,000 in box 14, $642.60 in box 16, and
$15,000 in box 26. Complete the rest of her T4 slip in the
usual way.
For more information about the new CPP rules, go to
www.cra.gc.ca/cppchanges-employers.
* These were calculated using the maximum pensionable

earnings of $50,100 for 2012.
16
www.cra.gc.ca
Employees who are 60 to 70 years of

age
These employees can apply for a CPP retirement pension.
You have to deduct CPP contributions from their
pensionable earnings up to and including the last pay dated
in the month in which the employee turns 70.
You will have to deduct CPP contributions from an
employee who is receiving pensionable earnings, and meets
one of these conditions:
who is currently receiving a CPP or QPP retirement

pension and is 60 to 65 years of age, even if it means
deducting from someone who was not contributing in a
previous year because he or she was receiving a
CPP/QPP retirement pension; or
who is currently receiving a CPP or QPP retirement

pension and is 65 to 70 years of age, and who has not
given you a copy of a completed and signed Form
CPT30, Election to Stop Contributing to the Canada Pension
Plan, or Revocation of a Prior Election.
Notes
These legislative amendments do not affect the salary or
wages of an employee who is considered to be disabled
under the CPP or QPP, nor do they affect the salary and
wages of a person who has reached 70 years of age. Do
not deduct CPP contributions from the salary and wages
that you pay these employees.
Those who are not subject to CPP, for example, Quebec
employees, are not affected by these rules.
Human Resources and Skills Development Canada

(HRSDC) sends an award letter to employees who get a
pension. The letter indicates the date the pension becomes
payable.
For information on these changes, go to
www.cra.gc.ca/cppchanges-employers. For information on
benefit entitlement, contact Service Canada or visit
www.servicecanada.gc.ca/cppchanges.
Note
The requirements are different for QPP. For information
on QPP, see the publication TP-1015.G-V, Guide for
Employers Source Deductions and Contributions, which
you can get from Revenu Qubec (see page 6).
Commissions paid at irregular

intervals
If an employee always gets paid on commission and is paid
only after selling something (which does not occur
regularly), you have to prorate the annual basic exemption
amount for the number of days in the year between the
commission payments in order to determine the maximum
contribution amount.
Calculate the required contribution for 2012 as follows:
Prorate the basic yearly exemption:

76 365 (days) $3,500 = $728.76
You have to deduct CPP contributions of:

$1,800 $728.76 = $1,071.24
$1,071.24 4.95% = $53.03
CPP overpayment
If, during a year, you have overdeducted CPP contributions
from your employees remuneration (for example, the
maximum amount of pensionable earnings was reached, or
the employee was not employed in pensionable
employment), you should reimburse the employee the
amount deducted in error and adjust your payroll records
to reflect the reduced deduction. This will result in a credit
on your CRA payroll account equal to the employee and
employer part of the overdeduction. You may then reduce
a future remittance in the same calendar year.
Do not include the reimbursed amount on the T4 slip. If
you cannot reimburse the overpayment, show the total CPP
contributions deducted and the correct pensionable
earnings on the T4 slip of the employee. If you reported the
employees overpayment on the T4 slip, you can ask for a
refund by completing Form PD24, Application for a Refund of
Overdeducted CPP Contributions or EI Premiums. Your
request must be made no later than four years from the end
of the year in which the overpayment occurred.
Recovering CPP contributions

If you receive a notice of assessment or if you discover that
you have underdeducted CPP contributions you are
responsible for remitting the balance due (both the
employers and employees shares).
You can recover the employees contributions from later
payments to the employee. The recovered contribution can
be equal to, but not more than, the amount you should
have deducted from each payment of remuneration.
However, you cannot recover a contribution amount that
has been outstanding for more than 12 months. As well,
you cannot adjust the employees income tax deduction to
cover the CPP shortfall.
If you should have made a deduction in a previous year
and you recover it through an additional deduction in the
current year, do not report the recovered contributions on
the current years T4 slip. Instead, the CRA will amend the
previous years T4 slips and send them to you.
The recovered amount does not affect the current
year-to-date CPP contributions.
Example
a) You did not deduct or remit CPP contributions that
should have been deducted as follows:
Example
Sylvie, your employee, works on commission. You pay her
only when she sells something. On June 1, 2012, you paid
her a $1,800 commission. The last time you paid her a
commission was March 16, 2012. There are 76 days between
these two payments.
www.cra.gc.ca
Month
September
October
November
December
Total
CPP
$23.40
$23.40
$24.10
$24.70
$95.60
17
b) After auditing the records, we issue a

notice of assessment as follows:
Employee Employer
CPP contributions
$95.60
$95.60
Penalties and interest are added to the total.
Total
$191.20
c) The following year, you can recover the employees

contribution of $95.60 as follows:
Current
contribution
April
May
June
July
Total
$24.70
$24.70
$25.10
$25.10
Recovered
contribution
+
+
+
+
$23.40 (for September)

$23.40 (for October)
$24.10 (for November)
$24.70 (for December)
$95.60
Employees
deduction
=
=
=
=
$48.10
$48.10
$49.20
$49.80
maximum for the year, you should not deduct any more
premiums, even though the excess remuneration is still
considered insurable. For 2012, the maximum annual
insurable earnings is $45,900.
When to deduct EI premiums

You have to deduct EI premiums from an employees
insurable earnings if that employee is in insurable
employment during the year.
Insurable employment includes most employment in
Canada under a contract of service (see Are you an
employer? on page 6). There is no age limit for deducting
EI premiums. Some employment outside Canada is also
insurable (see page 40).
Notes
If the employee is a student, you will have to deduct
premiums for each type of remuneration that is subject to
EI, as you would for any other employee.
Details on the pensionable and insurable earnings review

(PIER) are contained in Chapter 4.
Certain workers who are not employees might be

considered to be in insurable employment. Examples of
such workers are taxi drivers and drivers of other
passenger-carrying vehicles, barbers and hairdressers,
and fishers (see page 38).
CPP coverage by an employer resident

outside Canada
If you are an employer who does not have a place of
business in Canada, you can apply to have employment
that you provide in Canada (for resident or non-resident
employees) covered under the CPP. This coverage is
optional. Even if your country does not have a social
security agreement with Canada, you can apply for
coverage by completing Form CPT13, Application for
Coverage of Employment in Canada Under the Canada Pension
Plan by an Employer Resident Outside Canada.
Canadas social security agreements

with other countries
Amounts and benefits subject to

EI premiums
You generally deduct EI premiums from the following
amounts and benefits:
salary, wages, bonuses, commissions, or other

remuneration (including payroll advances or earnings
advances), and wages in lieu of termination notice;
most cash taxable benefits and allowances, including

certain rent-free and low-rent housing if paid as cash or a
subsidy, the value of board and lodging if cash earnings
are also paid in the pay period (other than an exempt
remote work location);
employer contributions to an employees registered

retirement savings plan (RRSP) except where employees
cannot withdraw amounts from a group RRSP until they
retire or cease to be employed, or if the RRSP agreement
allows the employee to withdraw an amount from the
RRSP under the Home Buyers Plan (HBP) or the
Lifelong Learning Plan (LLP);
Canada has reciprocal social security agreements with other

countries. These agreements ensure that only one plan
covers an employeeCPP or a foreign social security plan.
To find out which country has CPP coverage provisions
with Canada and to obtain the specific CPT application
form number, see Appendix 4 on page 51.
You can get an application form for coverage or for
extending coverage under the CPP by going
to www.cra.gc.ca/forms.
Note
If you have questions about coverage under the QPP in
other countries, send them to the following address:
Bureau des ententes de scurit sociale
Rgie des rentes du Qubec
1055 Ren-Lvesque Blvd. East, 13th floor
Montral QC H2L 4S5
Chapter 3 Employment
insurance premiums
ou have to deduct employment insurance (EI)

premiums from each dollar of insurable earnings up to
the yearly maximum. After you have deducted the
18
gifts, prizes, and awards paid in cash;
honorariums, a share of profit that an employer paid,

incentive payments, management fees, and other fees if
paid in the course of insurable employment;
stipends, fees or remuneration paid to elected or

appointed officials who hold an office in a union or an
association of unions or hold a position within a federal
or provincial government or agency;
certain tips and gratuities received for services

performed;

sabbatical, sick leave, or for vacation pay;
www.cra.gc.ca
payments made to individuals who hold an office in a

union or an association of unions;
Employment Insurance Act and sending it to the

CPP/EI Rulings Division of your tax services office.

not be subject to EI premiumsfor more information, see
page 36); and
the salary you continue to pay to an employee before or

after a workers compensation board claim is decided, as
well as:
Note
If you deducted EI premiums and dont think you
should have, you can request a refund of the EI
premiums. Normally this requires that we complete a
ruling to confirm the employees working relationship
with you.
any advance or loan you make that is more than the

workers compensation award;
when a corporation employs a person who controls more

than 40% of the corporations voting shares;
employment of an individual holding an office in the

private, municipal or academic sectors. This includes
mayors, municipal councillors, school commissioners,
chiefs of Indian bands, band councillors, executors,
liquidators, or administrators for settling estates,
corporation directors, or any other position when a
person is elected or appointed to that office. For more
information, go to www.cra.gc.ca/tx/bsnss/tpcs/pyrll/
clcltng/spcl/ffcl-eng.html.
employment that is an exchange of work or services;
employment in agriculture, horticulture or an

agricultural enterprise when:
any advance or loan not repaid to you.

Note
If you pay any of these amounts to a former employee
and you have to deduct EI premiums, use the current
rate in effect when you make the payment.
Employment, benefits and payments

not subject to EI premiums
Employment
Even if there is a contract of service, payments for these
types of employment are not insurable and are not subject
to EI premiums:
casual employment if it is for a purpose other than your

usual trade or business;
employment when you and your employee do not deal

with each other at arms length. There are two main
categories of employees who could be affectedrelated
persons and non-related persons:
Related persons: individuals connected by blood
relationship, marriage, common-law relationship, or
adoption. In cases where the employer is a corporation,
the employee will be related to the corporation when
the employee is related to a person who either controls
the corporation or is a member of a related group that
controls the corporation. However, these individuals
can be in insurable employment if you would have
negotiated a similar contract with a person that you
deal with at arms length.
Non-related persons: an employment contract between
you and a non-related employee can be determined to
be non-insurable if it is apparent from the
circumstances of employment that you were not
dealing with each other in the way arms length parties
normally would.
the person receives no cash remuneration; or

works less than seven days with the same employer
during the year;
Note
employment is insurable from the first day of work.
is not your regular employee; and

works for less than seven days in the year;
Note
employment is insurable from the first day of work.
employment of a person in a rescue or disaster operation,

as long as you do not regularly employ that person for
that purpose;
employment by a government body as an election

worker if the worker:
is not a regular employee of the government body; and
works for less than 35 hours in a calendar year;
For more information, read the interpretation article on

this subject at www.cra.gc.ca/cppeiexplained.
If you have any doubts as to whether or not you should
deduct EI premiums when employing related persons
(family members) or non-related employees whose
circumstances of employment are unusual, we suggest
you request a ruling using our My Business Account
service at www.cra.gc.ca/mybusinessaccount, or by
completing form CPT1, Request for a Ruling as to the Status
of a Worker under the Canada Pension Plan and/or the
employment of a person in connection with a circus, fair,

parade, carnival, exposition, exhibition, or other similar
activity, except for entertainers, if that person:
Note
If the employee works 35 hours or more, the
employment is insurable from the first hour of work.
employment in Canada under an exchange program if

the employer paying the remuneration is not resident in
Canada;
employment of a member of a religious order who has

taken a vow of poverty. This applies whether the
remuneration is paid directly to the order, or the member
pays it to the order;
www.cra.gc.ca
19
any employment when premiums have to be paid

according to the unemployment insurance laws of any
state of the United States, the District of Columbia,
Puerto Rico, or the Virgin Islands, or according to the
Railroad Unemployment Insurance Act of the United States;
employment in Canada of a non-resident person if the
unemployment insurance laws of any foreign country
require someone to pay premiums for that employment;
employment in Canada by a foreign government or an
international organization, except when the foreign
government or international organization agrees to cover
its Canadian employees under Canadas EI legislation
(in this case, the employment is insurable if HRSDC
agrees); or
employment under the Self-employment assistance
and Job creation partnerships employment benefits
established by the Canada Employment Insurance
Commission under section 59 of the Employment
Insurance Act, or under a similar benefit that a provincial
government or other organization provides and is the
subject of an agreement under section 63 of the
Employment Insurance Act.
the total amount of your payment and the EI weekly

benefits does not exceed the employees normal
weekly gross salary; and
your payment does not reduce any other accumulated
employment benefits such as banked sick leave,
vacation leave credits, or retiring allowance;
an advance or a loan equal to the workers compensation

award that you pay to employees before or after the
workers compensation board claim is decided (see
page 37);
a top-up amount you pay to an employee in addition to

the workers compensation award paid by a workers
compensation board after the workers compensation
board is decided (see page 37);
top-ups to wage loss replacement plan benefits that are

not subject to EI premiums (see page 36).

not be subject to EI premiumsfor more information, see
page 36);
amounts that a trustee allocated under a profit sharing

plan or that a trustee paid under a deferred profit sharing
plan.
Benefits and payments

Do not deduct EI premiums from:
a payment made under a registered supplementary
unemployment benefit plan and covering periods of
unemployment resulting from a temporary stoppage of
work, training, sickness, injury or quarantine;
EI premium rate and maximum
any non-cash benefit, except the value of board and

lodging when cash remuneration is also paid in a pay
period;
* The rate may be less than 1.4 (see page 21).
monies earned (such as salary, banked overtime, bonus,

vacation, etc.) before the death of an employee and not
yet paid at the time of death are not subject to
EI premiums;
employer contributions to an employees group RRSP

where access is restricted and does not permit employees
to withdraw the amounts until they retire or cease to be
employed or if the RRSP agreement allows the employee
to withdraw an amount from the RRSP under the HBP or
the LLP;
amounts received on account of an earnings loss benefit,

supplementary retirement benefit or permanent
impairment allowance payable to the taxpayer under
Part 2 of the Canadian Forces Members and Veterans
Re-establishment and Compensation Act;
any amount excluded as income under paragraph 6(1)(a)
or 6(1)(b) or subsection 6(6) or (16) of the Income Tax Act;
a retiring allowance (for information on the make-up of

a retiring allowance, see page 33);
amounts you pay to an employee to cover the waiting

period or to increase the maternity, parental or
compassionate care benefits if the following two
conditions are met:
20
You have to deduct EI premiums from insurable earnings

you pay to your employees. In addition, you must pay
1.4 times* the amount of the employees premiums.
Example
EI premiums you deducted
from your employees in the month ......................... $195.50
Your share of EI premiums ( 1.4) ............................... $273.70
Total amount you remit for EI premiums ................... $469.20
Each year, we determine:
the maximum annual insurable earnings from which

you deduct EI ($45,900 for 2012); and
a premium rate that you use to calculate the amount to

deduct from your employees (1.83% for 2012for
Quebec, use 1.47%).
You stop deducting EI premiums when you reach the

employees maximum annual insurable earnings or the
maximum annual employee premium ($839.97 for
2012the maximum is $674.73 for Quebec).
The employees premium rate for the next year can be
found in the Payroll Deductions Tables, which are usually
available in mid-December on our Web site at
Notes
The annual maximum for insurable earnings ($45,900
for 2012) applies to each job the employee holds with
different employers (different business numbers). If an
employee leaves one employer during the year to start
work with another employer, the new employer also has
www.cra.gc.ca
to deduct EI premiums without taking into account what

was paid by the previous employer. This is the case even
if the employee has paid the maximum premium
amount during the previous employment. If your
business went through a restructure or reorganization,
see page 10.
Any overpayments will be refunded to employees when
they file their income tax and benefit returns. There is no
provision that provides a credit or refund to the
employer in such circumstances.
an initial application, which you can find in Service

Canadas publication called Reducing Your Employment
Insurance (EI) Premiums; and
a copy of the short-term disability plan provided to your

employees.
You can get the guide at your Service Canada Centre or by

contacting:
Service Canada
EI Premium Reduction Program
P.O. Box 11000
Bathurst NB E2A 4T5
Different EI rates apply for employees working in

Quebec as a result of the establishment of the Quebec
Parental Insurance Plan (QPIP).
Example
Hassan makes $30,000 of insurable earnings in Ontario, and
after changes his province of employment to Quebec. He
then makes an additional $40,000 with the same employer.
Hassans maximum premium is calculated as follows:
Total insurable earnings.................................. $45,900
In Ontario:........................... $30,000 1.83% = $549.00
In Quebec: ........................... $15,900 1.47% = $233.73
Total premiums .................................................. $782.73
Quebec Parental Insurance Plan (QPIP)

Since January 1, 2006, maternity, parental, and adoption
benefits for residents of Quebec are administered by the
province of Quebec. The QPIP replaces similar benefits that
Quebec residents previously received under the
Employment Insurance Act.
All employers who have employees working in Quebec
deduct a reduced EI premium rate (1.47% for 2012) for all
those employees regardless of their province or territory of
residence. The maximum annual premium for 2012
is $674.73.
For information on the QPIP program, visit
Revenu Qubecs Web site at www.revenuquebec.ca.
Note
If you issue more than one T4 slip to the same employee,
you can report the insurable earnings amount for each
period of employment in box 24 on each T4 slip.
Reporting these amounts can reduce unnecessary
pensionable and insurable earnings review (PIER)
reports for EI deficiency calculations, especially if the
employee worked both inside and outside Quebec.
Reducing the rate of your EI premiums

if you have a short-term disability plan
Some employers provide a wage loss replacement plan for
short-term disability to their employees. If the plan meets
certain standards established by the Employment Insurance
Regulations, the employers EI premiums could be paid at a
reduced rate (less than 1.4 times the employees premiums.)
Telephone: 1-800-561-7923
Fax:
506-548-7473
Web site:
www.servicecanada.gc.ca/prp
The employers EI premiums are reduced only in respect of
employees covered by the approved plan (this includes
employees serving an eligibility period under the plan of
three months or less). These employees will continue to be
reported under the current payroll account, which will be
set at a reduced rate. An officer of the EI Premium
Reduction Program will ask you to open an additional
payroll account under your business number (BN) to make
a separate remittance for employees not covered by the
plan.
You have to file a separate T4 information return for each
payroll account under your BN:
For employees covered under an approved plan, report

their income and deductions using your payroll account
at the reduced EI premium rate (for example, RP0001).
For employees who are not covered by the plan, report

their income and deductions using your payroll account
at the standard rate of 1.4 times the employees
premiums (for example, RP0002).
Where an employee was transferred between both accounts

in the same calendar year, file a separate T4 slip for each
account.
Calculating EI deductions
To determine the amount of EI premiums to deduct, use
one of the following tools:
the Payroll Deductions Formulas Computer Programs

(T4127).

employees EI deductions. Use this method if you pay your
employees more than the maximum amount that appears in
Part C of the publication T4032, Payroll Deductions Tables.
To benefit from a reduced employer premium rate, you

have to register with the EI Premium Reduction Program
by submitting:
www.cra.gc.ca
21
EI overpayment
If, during a year, you have over-deducted EI premiums
from your employee (for example, the maximum amount of
insurable earnings was exceeded, or the employee was not
employed in insurable employment), you should reimburse
the employee the amount deducted in error and adjust your
payroll records in the same year the overpayment was
made to reflect the reduced deduction. This will result in a
credit on your payroll account equal to the employee and
employer portion of the over-deduction. You may reduce a
future remittance in the same calendar year by that amount.
The employer premiums are 1.4 employee premiums.

Penalty and interest are added to the total.
c) The following year, you can recover the employees
premiums of $301.00 as follows:
Current
Recovered
premium
premium
April $74.00 + $74.00 (for September)
May $78.00 + $74.00 (for October)
June $80.00 + $78.00 (for November)
July $80.00 + $75.00 (for December)
Total
$301.00
Do not include the reimbursed amount on the T4 slip. If

you cannot refund the overpayment, show the total EI
premiums deducted and the correct insurable earnings on
the T4 slip of the employee.
If you reported the employees overpayment on the T4 slip,
you can ask us for a refund by completing Form PD24,
Application for a Refund of Overdeducted CPP Contributions or
EI Premiums. Your request must be made no later than three
years from the end of the year in which the overpayment
occurred.
Recovering EI premiums
If you receive a notice of assessment or discover that you
have underdeducted EI premiums, you are responsible for
remitting the balance due (both the employers and
employees shares).
You can recover the employees premiums from later
payments to the employee. The recovered premium can be
equal to, but not more than the premium you should have
deducted from each payment of remuneration.
However, you cannot recover a premium that has been
outstanding for more than 12 months. As well, you cannot
adjust the employees income tax deduction to cover the
EI premium shortfall.
Note
Details on the pensionable and insurable earnings
review (PIER) are contained in Chapter 4.
Establishing the number of insurable

hours
Hours of work are used to determine if workers are entitled
to benefits and for how long. Employers have to keep
records.
Note
For information on how to report the total hours of
insurable employment, contact your Service Canada
Centre or visit www.servicecanada.gc.ca.
The number of insurable hours is determined as follows:
For an employee who is paid hourly The number of

insurable hours is the number of hours actually worked
and paid.
For an employee who is not paid hourly If the

employer knows the number of hours that the employee
actually worked and for which he or she was paid, we
consider the employee to have that number of insurable
hours. For example, an employee who is paid on an
annual basis, but whose employment contract specifies
32 hours as the usual hours of work per week, would be
credited with 32 insurable hours.
If you should have made a deduction in a previous year

and you recover it through an additional deduction in the
current year, do not report the recovered premium on the
current years T4 slip. Instead, the CRA will amend the
previous years T4 slip and send it to you.
Note
If the employer does not know the actual number of
hours worked, the employer and the employee can agree
on the number of insurable hours of work for which he
or she is paid. For example, an agreement on hours on
the value of piecework would determine the number of
insurable hours. However, if no contract or agreement
on hours exists or can be reached, we determine the
number of insurable hours by dividing the insurable
earnings by the minimum wage. The result cannot be
more than seven hours per day or 35 hours per week.
The recovered amount does not affect the current

year-to-date EI premiums.
Example
a) You did not deduct or remit EI premiums that you
should have deducted as follows:
Month
September
October
November
December
Total
EI
$74.00
$74.00
$78.00
$75.00
$301.00
b) After auditing the records, we issue a notice of

assessment as follows:
EI premiums
22
Employee
$301.00
Employer
$421.40
Total
$722.40
Employees
deduction
= $148.00
= $152.00
= $158.00
= $155.00
Hours limited by federal or provincial statutes

Full-time employees who are limited by law to less than
35 hours per week will be credited 35 insurable hours per
week. Part-time employees in these circumstances are
credited with a proportionate number of hours.
Military and police Full-time members of the Canadian

Forces or a police force will be credited 35 insurable
hours per week, unless the employer keeps and provides
the actual number of hours worked.
www.cra.gc.ca
Overtime hours accumulated and paid at a later date or

paid on termination of employment One hour of
overtime work equals one hour of insurable
employment, even if the rate of pay is higher. Overtime
hours accumulated and paid at a later date, or paid on
termination of employment, are equally insurable when
the parties can establish the effective hours worked. The
insurable hours will be the hours actually worked and
not the hours accumulated at a rate greater than the
regular one.
Example
An employee works 20 hours of overtime, so he
accumulates 30 hours (1.5 number of hours worked).
At the end of the year, the worker asks his employer to
be paid for his accumulated hours. The number of
insurable hours will correspond to the actual hours
worked, which is 20 hours in this case.
Worker called in to work The number of insurable

hours equals the number of hours paid.
Stand-by hours Stand-by hours are insurable if:

the stand-by hours are paid at a rate equal to or above
the rate paid for the hours the employee would have
worked; or
the employee is present at the employers premises,
waiting for the employer to request his services, as
required under a contract of employment, and these
hours are paid, regardless of the rate paid.
Public holiday One hour of work during a public

holiday equals one hour of insurable employment, even
if the rate of pay is higher.
Paid leave One hour of vacation time taken, paid sick

leave, or compensatory time off is considered to be one
insurable hour.
Remuneration paid with no hours attached An

employee who receives vacation pay without actually
taking any leave does not generate any insurable hours.
This also applies to such remuneration as bonuses,
gratuities, lieu-of-notice payments.
Record of employment (ROE)

Generally, you have to give your employee a Record of
Employment (ROE) within five days after an employees
interruption of earnings or the day the employer becomes
aware of the interruption of the date he or she stops
working for you. This is considered an interruption of
service, and includes situations where employment ends or
the employee leaves because of pregnancy, injury, illness,
adoption leave, layoff, leave without pay, or dismissal. You
may also have to provide an ROE if your business status
changes. For more information, see page 9.
Note
A different deadline may apply if you file your ROE
electronically. See www.servicecanada.gc.ca for more
information.
The employee needs the ROE to file a claim for

employment insurance (EI) benefits. It is used to determine
if he or she is entitled to EI benefits, and for how long.
To create an ROE for your employee, you can use Service
Canadas online ROE Web service, or complete a paper
Record of Employment (ROE).
Note
When completing the ROE you will have to determine
the number of insurable hours. Also, there are
consequences for not filing the ROE.
For more information on the ROE, see the publication
called Employment Insurance How to Complete the Record of
Employment (ROE) Form (publication IN-327-02-12E), which
is available at the Service Canada Centre, on their Web site
at www.servicecanada.gc.ca or by calling at 1-800-622-6232.
Chapter 4 Pensionable and

insurable earnings review (PIER)
ach year, we check the calculations you made on the

T4 slips that you filed with your T4 Summary. We do
this to make sure the pensionable and insurable earnings
you reported agree with the deductions you withheld and
remitted.
We check the calculations by matching the pensionable
and insurable earnings you reported with the required
CPP contributions or EI premiums indicated in the
publication T4032, Payroll Deductions Tables. We then
compare these required amounts with the
CPP contributions and EI premiums reported on
the T4 slips.
If there is a deficiency between the CPP contributions or
EI premiums required and the ones you reported, we print
the figures on a PIER listing. If you file on electronic media
or by Internet and report an employee number on your
T4 slips, we will display the employee number on the
PIER listing.
We will send you the listing showing the name of the
affected employees and the figures we used in the
calculations. We will also include a PIER summary which
will show any balance due.
Notes
You will be responsible for remitting the balance due,
including your employees share.
If you agree with our calculations and are remitting the
exact amount shown on the PIER summary (either by
mail or at your financial institution), do not send the
PIER listing back. We only need the listing if you are
correcting the figures or a SIN, or are submitting
information we should update on our file.
Why is a review important?

We verify these calculations so that your employees or their
beneficiaries will receive the proper:
CPP benefits if the employees retire, become disabled,

or die; and
www.cra.gc.ca
23
EI benefits if the employees become unemployed, take

maternity, parental, adoption, compassionate care leave
or are injured, ill or on leave without pay.
Note
If you report insufficient amounts, it could reduce an
employees benefits.
CPP deficiency calculations

If your employee has 52 pensionable weeks during the
year, you usually calculate the required CPP contributions
as follows:
Step 1: Subtract the CPP basic exemption for the year from
the CPP pensionable earnings shown in box 26 on
the employees T4 slip.
benefit is the only amount reported on a T4 slip, enter an

"X" in box 28 (Exempt) under EI. Do not place an "X" in the
CPP exempt box 28. This benefit is pensionable and CPP
contributions are required.
Multiple T4 returns
If you are an employer with a business number (BN) that
has multiple payroll account extensions, we will not send
you a PIER report if we detect deficiencies at the time your
return is processed. At a later date we will compare all
T4 returns for your BN to verify the PIER information and
contact you if we confirm there are deficiencies. If we do
not find any deficiencies, we will cancel the PIER. If you
have any questions, contact the PIER unit in your tax
centre.
Step 2: Multiply the result of Step 1 by the current years

CPP contribution rate.
Chapter 5 Deducting income

tax
The yearly CPP basic exemption appears in Appendix 2

and the CPP contribution rate appears on page 14.
The result is the employees yearly CPP contributions,
which you report in box 16 of the T4 slip.
There may be cases when you have to either start deducting
CPP, or stop deducting CPP, for your employee during the
year. For more information, see Starting and stopping CPP
deductions on page 15. In these cases, to verify the
employees CPP contributions before you file the T4 slip,
use the calculation in Appendix 3 on page 50.
s an employer or payer, you are responsible for

deducting income tax from the remuneration or other
income you pay. There is no age limit for deducting
income tax and there is no employer contribution required.
We have forms to help you determine how much income
tax to deduct:
Most employees and recipients complete Form TD1,

Personal Tax Credits Return.
Employees who are paid commissions and who claim

expenses may choose to complete Form TD1X, Statement
of Commission Income and Expenses for Payroll Tax
Deductions, instead of completing Form TD1.
Fishers complete Form TD3F, Fishers Election to Have Tax

Deducted at Source.
EI deficiency calculations
To calculate the required EI premiums, multiply the
EI insurable earnings shown in box 24 of the employees
T4 slip by the current years EI premium rate.
See the yearly EI premium rate on page 20 or in the
publication T4032, Payroll Deductions Tables.
The result is the employees yearly EI premiums, which
you report in box 18 of the T4 slip.
To verify the employees EI premiums before you file the
T4 slip, you can complete Appendix 5 Calculation of
employee EI premiums (2012) on page 52.
If you put an X in box 28 (CPP/QPP, EI and
PPIP exempt) on the T4 slip and you reported amounts
in boxes 16 or 17, and 26 for CPP/QPP or in boxes 18
and 24 for EI, our processing system ignores the X. For
more information, see Box 28 Exempt (CPP/QPP, EI
and PPIP) in Guide RC4120, Employers Guide Filing the
T4 Slip and Summary.
If you issue more than one T4 slip to the same employee,
you should report the insurable earnings amount for each
period of employment in box 24 on each T4 slip. Reporting
these amounts can reduce unnecessary PIER reports for
EI deficiency calculations, especially if the employee
worked both inside and outside Quebec.
Security options on PIER listings

The PIER program checks security options reported as a
non-cash taxable benefit in box 38 (Security options) and
box 14 (Employment income) on T4 slips because such a
benefit is pensionable but not insurable. If this type of
24
Form TD1, Personal Tax Credits Return

There are two types of Form TD1, Personal Tax Credits
Returnfederal and provincial or territorial. Both forms,
once completed, are used to determine the amount of
federal and provincial or territorial tax to be deducted from
the income an individual receives in a year.
Individuals who will receive salary, wages, commissions,
employment insurance benefits, pensions, or other
remuneration must complete a federal Form TD1 and, if
more than the basic personal amount is claimed, a
provincial or territorial Form TD1. For Quebec, see
Employment in Quebec on page 25.
An employee must complete Form TD1 and file it with the
employer when the employee commences employment
with that employer. The employee should complete a new
Form TD1 within seven days of any change that may
reasonably be expected to result in a change to their
personal tax credits for the year.
Note
If your employee has more than one employer or payer
at the same time and has already claimed personal tax
credit amounts on another TD1 form, he or she cannot
www.cra.gc.ca
claim them again. If his or her total income from all

sources will be more than the personal tax credits
claimed on another TD1 form, he or she must check the
box "More than one employer or payer at the same time"
on the back of the TD1 form, enter "0" on line 13 on the
front page and should not complete lines 2 to 12.
Employees who do not complete new forms may be subject
to a penalty of $25 for each day the form is late. The
minimum penalty is $100, which increases by $25 per day
to the maximum of $2,500.
Employees do not have to complete new TD1 forms if their
personal tax credit amounts have not changed for the year.
The provincial or territorial Form TD1 the employee
completes should be the form for the province or territory
of employment. The section Which tax tables should you
use? on page 9, explains how to determine the province or
territory of employment. The same section also explains
what to do if the employee lives in one province or territory
and works in another. If the income is not employment
income (for example, pension income, retiring allowance,
or RRSP), use the provincial or territorial Form TD1 for the
recipients province or territory of residence.
It is a serious offence to knowingly accept a Form TD1 that
contains false or deceptive statements. If you think a
Form TD1 contains incorrect information, call
1-800-959-5525.
Have a completed Form TD1 on file for each of your
employees or recipients. We may ask to see it.
Note
You may create a federal and/or provincial or territorial
Form TD1 and have your employee send it to you
electronically. For more information, go to
www.cra.gc.ca/payroll, and select "TD1, Electronic" in
the Payroll Alphabetical Index.
Employment in Quebec
Individuals who work or receive other income (such as
pension income) in the province of Quebec have to
complete a federal Form TD1, Personal Tax Credits Return,
and a provincial Form TP-1015.3-V, Source Deductions
Return.
Individuals who incur expenses related to earning
commissions have to complete a federal Form TD1X,
Statement of Commission Income and Expenses for Payroll Tax
Deductions, and a provincial Form TP-1015.R.13.1, Statement
of Commissions and Expenses for Source Deduction Purposes.
Quebec forms can be obtained from Revenu Qubec
(see page 6).
Claim codes
The total amount of personal tax credits an employee
claims on Form TD1 will determine which claim code to
use. An explanation of the claim codes is in the Payroll
Deductions Tables (T4032).
In some cases, you will use one claim code for the federal
Form TD1 and another claim code for the provincial or
territorial Form TD1. If your employee does not complete
Form TD1, use the code that corresponds to the basic

personal amount.
A non-resident employee may not have a claim amount
on Form TD1. For more information, see the back of
Form TD1.
Request for more tax deductions from

employment income
Employees can choose to have more tax deducted from the
remuneration they receive in a year. To do this, they have
to file a new federal Form TD1 that shows how much more
tax they want deducted. This amount stays the same until
they file a new Form TD1.
You should advise part-time employees that it could be
beneficial to have more income tax deducted from the
remuneration they receive. In this way, they can avoid
having to pay a large amount of tax when they file their
income tax and benefit returns, especially if they have
worked part-time for different employers during the year.
Deduction for living in a prescribed zone

Employees who live in a prescribed zone during a
continuous period of at least six months (that begins or
ends in the tax year) may be entitled to claim a residency
deduction when filing their return. As a result, these
employees may request a reduction in payroll deductions
by claiming it on Form TD1.
If you provide housing and travel assistance benefits, see
Guide T4130, Employers Guide Taxable Benefits and
Allowances, Publication RC4054, Ceiling Amounts for Housing
Benefits Paid in Prescribed Zones, and Publication T4039,
Northern Residents Deductions Places in Prescribed Zones.
Form TD1X, Statement of Commission

Income and Expenses for Payroll Tax
Deductions
Employees who are paid in whole or in part by commission
and who claim expenses may choose to complete this form
in addition to Form TD1. They can estimate their income
and expenses by using one of the following two figures:
their previous years figures, if they were paid by

commission in that year; or
the current years estimated figures.
Employees who elect to complete Form TD1X have to give

it to you by one of the following dates:
on or before January 31 if they worked for you last year;
within one month of the date their employment starts;
within one month of the date their personal tax credits

have changed; or
within one month of the date any change occurs that will
substantially change the estimated remuneration or
expenses previously reported.
Note
An employee may choose, at any time during the year,
to revoke in writing the election he or she made. Use the
www.cra.gc.ca
25
total claim amount from the employees Form TD1

instead.
for the pay periods in which they are received or

enjoyed.
There is only one Form TD1X for federal, provincial, and

territorial tax purposes. For an employee in Quebec, see
Employment in Quebec on page 25.
most cash/non-cash taxable benefits and allowances

including certain rent-free and low-rent housing, the
value of board and lodging (other than an exempt
remote work location), interest-free and low-interest
loans, personal use of an automobile that you as the
employer own or lease, allowances you pay to employees
to use his or her own vehicle, holiday trips, gifts,
subsidized meals or any other taxable benefit you pay for
or provide to your employee. For more information, see
Guide T4130, Employers Guide Taxable Benefits and
Allowances;
honorariums from employment or office, a share of profit

that an employer paid, incentive payments, directors
fees, management fees, fees paid to board or committee
members, and executors, liquidators, or administrators
fees earned to administer an estate (as long as the
executor, liquidator, or administrator does not act in this
capacity in the regular course of business);
certain tips and gratuities received for services

performed;

sabbatical, or sick leave, or for lost-time pay from a
union, vacation pay, payments received under a
supplementary unemployment benefit plan (SUBP) that
does not qualify as a SUBP under the Income Tax Act (for
example, employer paid maternity and parental top-up
amounts), and payments for sick leave credits and
accrued vacation;
wage loss benefits that an employee receives

from a wage loss replacement plan that is not an
employee-pay-all-plan. (These benefits are taxable but
you may not have to deduct tax. For more information,
see page 36 or Interpretation Bulletin IT-428, Wage Loss
Replacement Plans);
pensions, retiring allowances (also called severance pay),

certain amounts received for wrongful dismissal, and
death benefits;
distributions from a retirement compensation

arrangement (RCA);
additional amounts that you as an employer pay while

participating in a job creation project that Service Canada
has approved; and
benefits under the Employment Insurance Act.
Tax deductions from commission

remuneration
If an employee is paid on commission or receives a salary
plus commission, you can deduct tax in one of the
following ways.
Employees who earn commissions without expenses
If you pay commissions at the same time you pay salary,

add this amount to the salary, then use the Payroll
Deductions Online Calculator (PDOC), the computer
formulas (T4127), or the manual calculation method found
in Part A of the Payroll Deductions Tables (T4032). If you pay
commissions periodically or the amounts fluctuate, you
may want to use the bonus method to determine the tax to
deduct from the commission payment. See Bonuses,
retroactive pay increases or irregular amounts on page 28
to find out how to do this.
Employees who earn commissions with expenses
To calculate the amount of tax to deduct, you can use the

Payroll Deductions Online Calculator (PDOC), the
computer formulas (T4127), or the manual calculation
method found in Part A of the Payroll Deductions Tables
(T4032).
Notes
Employees who claim employment expenses on their
income tax and benefit return must have their employer
complete Form T2200, Declaration of Conditions of
Employment.
An employee may choose, at any time during the year,
to revoke in writing the election he or she made. Use the
total claim amount from the employees Form TD1
instead.
Form TD3F, Fishers Election to Have

Tax Deducted at Source
When a fisher sells a catch, the fisher can choose to have
the buyer, also known as the designated employer, deduct
income tax at a rate of 20% from the proceeds of the sale.
To do this, the fisher must complete Form TD3F with the
designated employer. The designated employer is then
responsible to deduct, remit and report the amounts
withheld.
Remuneration subject to income tax

You have to deduct income tax at source from the
following types of remuneration:
salary, wages, bonuses, commissions, taxable stock

option benefits or other remuneration (including payroll
advances or earnings advances), overtime, and wages in
lieu of termination notice;
Note
Salary or wages include payroll advances and any other
taxable allowances or taxable benefits, and are income
26
Reducing remuneration subject to

income tax
Certain amounts that you deduct from the remuneration
you pay an employee, as well as other authorized or
claimed amounts, can reduce the amount of remuneration
on which you have deducted tax for the pay period. The
remuneration can be reduced by the following amounts
before you calculate tax:
a deduction for living in a prescribed zone;
an amount that a tax services office has authorized;
www.cra.gc.ca
employees contributions to a registered pension plan

(RPP)for details on how to determine the exact amount
of these contributions, see the section called
Contributions to an RPP on page 27;
union dues;
Note
The Quebec provincial rules for reducing remuneration
for union dues are differentsee the publication
TP-1015.G-V, Guide for Employers Source Deductions and
Contributions, which you can get from Revenu Qubec
Web site (see page 6).
employees contributions to a retirement compensation

arrangement (RCA) or certain pension plans. For more
information on determining whether an employee is
eligible to deduct contributions made to an RCA, see
Guide T4041, Retirement Compensation Arrangements;
contributions to a registered retirement savings plan
(RRSP) provided you have reasonable grounds to believe
the contribution can be deducted by the employee for the
year (see the section called RRSP contributions you
withhold from remuneration on this page).
Do not subtract CPP contributions and EI premiums to

determine the remuneration subject to tax deductions.
Example
David is paid weekly (52 pay periods per year).
Basic salary ...................................................................... $500.00
Plus: taxable benefits...................................................... $50.00
Gross remuneration ........................................................ $550.00
Minus: weekly deductions for:
RPP contributions ..........................................................
Union dues .....................................................................
Living in a prescribed zone
($8.25 per day 7 days) .................................................
Total of: ............................................................................
$25.00
$ 5.50
$57.75
$88.25
Remuneration subject to tax deductions at source .... $461.75
Letter of authority
To reduce remuneration on which you have to deduct tax
in situations other than the ones described above, you need
a letter of authority from a tax services office. For example,
if you do not withhold the deductible RRSP contribution
but your employee makes the contributions or payments
himself or herself during the year, or if an employee who
lives in one province or territory but works in another is
subject to excessive tax deductions, the employee has to
give you a copy of a letter of authority that we issued.
To get a letter of authority, the employee has to send a
completed Form T1213, Request to Reduce Tax Deductions at
Source for Year(s) ____, or a written request to any tax
services office. The employee should include documents
that support his or her position why less tax should be
deducted at source. For example, if the employee regularly
contributes to an RRSP in the year, he or she should
provide documents to show the amounts he or she
contributes.
It takes us about four to six weeks to process a request of
this type. We usually issue a letter of authority for a specific
tax year. If an employee has a balance owing or has not

filed outstanding income tax and benefit returns, we will
not usually issue a letter of authority.
Keep all letters of authority with your payroll records so
our officers can examine them.
Note
Canadian resident employees applying for the overseas
employment tax credit, non-resident employees who
perform services in Canada, and non-resident directors
should not use Form T1213. See relevant topics below
and in Chapters 6 and 7 for details.
RRSP contributions you withhold from

remuneration
As indicated previously, a registered retirement savings
plan (RRSP) contribution that you withhold from the
remuneration that you pay an employee in a year
automatically reduces the remuneration on which you have
to deduct tax. However, you have to have reasonable
grounds to believe that the employee can deduct the
contribution for the year. This applies to an RRSP
contribution you withhold from remuneration that is subject
to income tax, regardless of the amount of the payment or
whether it is paid periodically or in a lump-sum.
The employees cannot receive the amounts and then
purchase an RRSP themselves. The contributions have to be
transferred by the employer directly to the employees
RRSP or to his or her spouse or common-law partners
RRSP (except for the eligible part of a retiring allowance
that has to be transferred only to the employees RRSP).
Generally, we consider you to have reasonable grounds to
believe your employee can deduct the contribution if you
have either confirmation by the employee that the
contribution can be deducted for the year, or a copy of his
or her RRSP deduction limit statement from a notice of
assessment.
Confirmation of the employees RRSP deduction limit is not
needed for the eligible part of a retiring allowance because
a special deduction under paragraph 60(j.1) of the Income
Tax Act applies to this amount. For information on how to
calculate the eligible part of a retiring allowance, see
page 33.
Contributions to an RPP
If the registered pension plan (RPP) requires or permits
employees to make contributions, you have to determine
the amount of contributions that your employee can deduct
on his or her income tax and benefit return. You have to do
this before you can calculate the amount of tax to deduct. In
addition to contributions for current service, make sure you
consider any contributions for past service.
For information on contributions to an RPP for current or
past service, see Interpretation Bulletin IT-167R6, Registered
Pension Plans Employees Contributions, and Guide T4040,
RRSPs and Other Registered Plans for Retirement.
You have to report these contributions on a T4 slip. For
information on how to report RPP contributions on a
T4 slip, see Box 20 RPP contributions in Guide RC4120,
Employers Guide Filing the T4 Slip and Summary.
www.cra.gc.ca
27
Calculating income tax deductions
Note
Payments to non-resident individuals, partnerships, or
corporations for services rendered in Canada (that they
did not perform in the ordinary course of an office or
employment) are subject to tax withholdings. See
Guide RC4445, T4A-NR Payments to Non-Residents for
Services Provided in Canada. In addition, tax withholding
may apply, if you pay or credit an amount to a
non-resident of Canada, such as interest, a dividend,
rental income, a royalty, pension income, a retiring
allowance, or other similar types of income, or if you
pay, credit, or provide an amount as a benefit for film or
video acting services rendered in Canada. See Guide
T4061, NR4 Non-Resident Tax Withholding, Remitting and
Reporting.
To determine the amount of income tax to deduct, use one

of the following tools:
the Payroll Deductions Formulas Computer Programs

(T4127).

employees income tax deductions. For more information,
see the instructions in the section called Step-by-step
calculation of tax deductions in Part A of the
publication T4032, Payroll Deductions Tables.
You have to deduct tax according to the claim code that
corresponds to the total claim amount on Form TD1. If an
employee states that his or her total expected income from
all sources will be less than the total claim amount, do not
deduct any federal, provincial or territorial tax. However,
if you know this statement is false, you have to deduct tax
on the amounts you pay. For more information, see Claim
codes on page 25. If you need advice, call 1-800-959-5525.
Tax deductions on other types of income

For tax deductions on other types of income, such as
bonuses, directors fees, and retiring allowances, see
Chapter 6. For other lump-sum payments not described
here, see Guide RC4157, Deducting Income Tax on Pension
Labour-sponsored funds tax credits

Tax deductions at source can be reduced by the tax credit
that applies to the purchase by the employee of approved
shares of capital stock in a labour-sponsored venture capital
corporation. For information on the labour-sponsored
funds tax credit, see publication T4127, Payroll Deductions
Formulas for Computer Programs.
Non-resident employees who perform

services in Canada
Employees not resident in Canada who are in regular and
continuous employment in Canada are subject to tax
deductions in the same way as Canadian residents. This
applies whether or not the employer is a resident of
Canada. A tax treaty between Canada and the country of
residence of a non-resident employee providing service in
Canada may provide relief from Canadian tax deductions.
Application for a waiver of tax withholding

A non-resident employee who wants a reduction of the
withholding based on a tax treaty can send a letter with
supporting documentation to the Non-resident Section
of their tax services office. For more information,
call 1-800-959-5525.
28
Chapter 6 Special payments
or all your deductions, use the rates in force on the date

you make your payment. For a summary of the
deductions you should make for special payments, see
Appendix 6 on page 53.
Advances
If you pay part of your employees salary before the usual
payday, you have to deduct CPP, EI and income tax from
the total advance. To determine the amounts to deduct, use
the regular pay period and reconcile the income and
deductions when the regular payday occurs.
Bonuses, retroactive pay increases or

irregular amounts
If you paid bonuses, retroactive pay increases or any other
additional or unusual amounts to your employees, you
have to deduct the following amounts:
CPP contributions (without taking into consideration the

annual basic exemption amount if the payment is on a
separate cheque);
EI premiums; and
income tax.
Note
Retroactive payments related to previous years, paid in
the current year, are taxed using the current income tax
rates unless a special rate is approved by the CRA. See
page 32 for information about qualifying retroactive
payments.
CPP contributions
If you have already deducted the yearly maximum CPP
contributions from an employees income, do not deduct
more contributions.
Note
Deduct CPP contributions from monies earned before
the death of an employee and not yet paid at the time of
death.
www.cra.gc.ca
Do not take into account any contributions that a previous

employer deducted in the same year.
Example
Joseph receives a retroactive pay increase of $450 on
June 29. His payroll record for the year indicates that, to
date, you have deducted $300 in CPP contributions.
After subtracting the above amounts, if the total

remuneration for the year (including the bonus or increase)
is more than $5,000, the amount you deduct depends on
whether the bonus is paid once a year or more than once a
year. Examples 1 and 2 show you how to manually
determine the amount to deduct in the case of a bonus.
Example 3 shows you how to manually determine this
amount in the case of a retroactive pay increase.
Maximum CPP contribution for the year (2012)..... $2,306.70

Contributions to date for the year ............................. $ 300.00
Maximum that you can deduct
for Joseph for the rest of the year........................... $2,006.70
Multiply the retroactive pay increase of
$450 the CPP rate of 4.95% .................................. $
22.28
You should deduct CPP contributions of $22.28 from

Josephs retroactive pay increase up to the maximum for
the year.
Note
The Payroll Deductions Online Calculator (PDOC)
calculates the CPP contributions, EI premiums, and
income tax on bonuses and retroactive pay increases.
You can use the PDOC by going to www.cra.gc.ca/pdoc.
Example 1 First or once-a-year bonus payment

Donna earns a salary of $400 per week. In September, you
gave her a bonus of $300. Her province of employment is
British Columbia. The claim code that applies to her TD1
and TD1BC forms is 1.
Step 1: Divide the bonus by the number of pay periods in
the year ($300 52 = $5.77).
Step 2: Add the $5.77 to the current pay rate of $400. As a
result, the adjusted pay rate for the year is $405.77
per week.
Step 3: In the T4032, Payroll Deductions Tables, go to Part D,
Federal tax deductions, and Part E, Provincial
tax deductions. Turn to the Weekly (52 pay
periods) table to find the increased weekly tax you
should deduct on the additional $5.77 per week.
EI premiums
Calculate as follows:
You have to deduct EI premiums from bonuses and

retroactive pay increases. Make sure that you do not deduct
more than the maximum for the year.
Find the federal and provincial tax that you deduct

on $405.77 per week.
Subtract the federal and provincial tax that you deduct

on $400 per week.
Do not take into account any premiums that a previous

employer deducted in the same year.
Income tax
The result is the tax you have to deduct on the additional

$5.77 per week.
Certain qualifying retroactive lump-sum payments are

eligible for a special tax calculation when an individual files
his or her income tax and benefits return. For more
information, see page 32.
Step 4: Multiply the additional tax that you deduct per

week by 52 (the number of pay periods in the year). This
gives you the amount of income tax to deduct from the
bonus of $300.
To determine how much income tax to deduct from

bonuses or retroactive pay increases, take the total
and subtract the following amounts:
Example 2 More than one bonus payment a year

Mario earns a salary of $400 per week (amount 1). You paid
him bonuses of $300 in January and $780 in February. His
province of employment is Alberta. The claim code that
applies to his TD1 and TD1AB forms is 1.
a deduction for living in a prescribed zone;
an amount that a tax services office has authorized;
registered pension plan (RPP) contributions;
union dues;
employees contributions to a retirement compensation

arrangement (RCA) or certain pension plans;
contributions to a registered retirement savings plan

(RRSP) provided you have reasonable grounds to believe
the contribution can be deducted by the employee for the
year.
The calculation must take into account all bonuses you paid
during the year. You have to calculate the amount of tax to
deduct for the entire year, regardless of when you paid the
bonus.
After subtracting the above amounts, if the total

is $5,000 or less, deduct 15% tax (10% in Quebec) from the
bonus or retroactive pay increase.
Step 1: Divide the bonus that you paid in January by the

number of pay periods in the year ($300 52 =
$5.77) (amount 2). Add the $5.77 to the weekly
salary of $400 to determine the adjusted weekly pay
before the February bonus ($400 + $5.77 = $405.77).
Step 2: Divide the last bonus that you paid to Mario by the
number of pay periods in the year ($780 52 = $15)
(amount 3). Add amounts 1, 2, and 3 to determine
the adjusted weekly pay for the year of $420.77
($400 + $5.77 + $15).
Step 3: In the T4032 Payroll Deductions Tables, go to Part D
Federal tax deductions and Part E Provincial tax
www.cra.gc.ca
29
deductions. Turn to the Weekly (52 pay periods)

table to find the increased weekly tax that you
should deduct on the additional $15 per week.
Find the federal and provincial tax that you deduct on

$420.77 per week.

on $405.77 per week.
The result is the tax you have to deduct on the

additional $15.
Step 4: Multiply the additional tax per week by 52 to
determine the amount to deduct on the bonus of $780.
To calculate tax on additional bonuses, repeat steps 1 to 4.
Example 3 Retroactive pay increase
Irenes pay increased from $440 to $460 per week. The
increase was retroactive to 12 weeks, which gives her a total
retroactive payment of $240 (12 $20). Her province of
employment is Nova Scotia. The claim code that applies to
her TD1 and TD1NS forms is 6.
if the employment duties are performed wholly or partly

outside Canada.
Whether CPP contributions are required when there is an
employment relationship between a director and a
corporation will be based on the directors employment
status. If in doubt, you can ask for a ruling. For more
information, see Are you an employer? on page 6.
To determine the CPP contributions to deduct on directors
fees, prorate the basic CPP exemption over the number of
times you pay the fees during the year.
Example
Alan is a director of your corporation. He is resident in
Canada. He does not receive remuneration as an employee.
You pay him a directors fee of $4,050 every three months.
Calculate the contribution in the following way:
Prorate the basic yearly CPP exemption to get the

quarterly amount: $3,500 4 = $875.
The amount from which you deduct contributions

is $3,175 ($4,050 $875).
Step 1: In the T4032, Payroll Deductions Tables, go to Part D,

Federal tax deductions, and Part E, Provincial
tax deductions. Turn to the Weekly (52 pay
periods) table to find the increase in the weekly tax
that you should deduct because of the increased
pay rate.
The amount of CPP contributions you remit is:
Do not deduct EI premiums from payments issued to board

or committee members (directors) of a corporation who are
resident or non-resident of Canada.
Find the federal and provincial tax that you deduct on

$460 per week.

on $440 per week.
The result is the tax you have to deduct on the additional

$20 per week.
Step 2: Multiply the increase in the weekly tax that you
deduct by the number of weeks to which the
retroactive pay increase applies. This amount
represents the tax that you must deduct from the
retroactive payment.
$157.16
$157.16
$314.32
EI premiums
Whether EI premiums are required when there is an

employment relationship between a director and a
corporation will be based on the directors employment
status. If in doubt, you can ask for a ruling. For more
Note
Directors fees paid to directors of Crown corporations
are subject to EI premiums, if the individual is appointed
and remunerated under an act governing the public
service of a province or if the Crown corporation is listed
within Schedule III of the Financial Administration Act.
Income tax
Directors fees
Employment income
Directors fees paid to a corporate director are employment
income, whether they are paid to a non-resident for services
rendered in Canada or to a Canadian resident. Report
directors fees on a T4 slip.
You only pay directors fees

CPP contributions
You have to deduct CPP contributions from payments
issued to board or committee members (directors) of a
corporation employed in Canada. This applies to resident
and non-resident directors.
For non-resident directors, CPP is only deducted if the
meetings or duties are performed wholly in Canada.
Do not deduct CPP contributions from a corporate director
30
Directors contribution ($3,175 4.95%) .............

Employers contribution ........................................
Total .........................................................................
A non-resident director is not considered to be employed

in Canada, if he or she does not attend any meeting or
perform any other functions in Canada. Directors fees paid
to a non-resident director for attending a meeting from
outside Canada through electronic means, such as a
teleconference, are not taxable in Canada.
If the services rendered are only partly performed in
Canada, the employer is responsible for apportioning that
part of the annual fee paid to the non-resident director to
the services performed in Canada. For example, if ten
meetings were held during the year and the non-resident
director attended five meetings in Canada, one-half of the
flat annual amount paid to the non-resident director would
be subject to income tax deductions at source.
If you only pay directors fees and you estimate that the
total of these fees will not be more than the claim amount
www.cra.gc.ca
on Form TD1 (or the basic personal amount if a person does

not file Form TD1), do not deduct income tax.
If you estimate that directors fees will be more than the
claim amount on Form TD1, you have to deduct income
tax. A non-resident director may not have a claim amount
on Form TD1. For more information, see the back of
Form TD1.
Calculation
To calculate the amount to deduct, use the monthly federal

tax deductions and the monthly provincial tax deductions
tables in parts D and E of the Payroll Deductions Tables
(T4032) and calculate as follows:
Divide the fees by the number of months that have

passed since the last payment or since the first day of the
year, whichever is later.
Using the claim amount from Form TD1 and the amount
determined above, find the monthly deduction and
multiply it by the number of months that have passed
since the last payment or since the first day of the year,
whichever is later.
If the directors fees are not subject to CPP contributions

and/or EI premiums, an extra amount should be added
to the income tax deduction calculated above. See,
Deducting tax from income not subject to CPP
contributions or EI premiums in Part A of
publication T4032.
The result is the income tax to deduct from the

directors fees.
You pay directors fees as well as a salary

CPP contributions
If you pay both a salary and directors fees, add the fees to
the salary for that pay period to calculate the amount of tax
to deduct.
Whether CPP contributions are required on the salary
portion will be based on the employment status of the
director. If you are still in doubt after analyzing the facts
relating to the directors employment, you can ask for a
ruling. For more information, see Are you an employer?
on page 6.
EI premiums
If you pay both a salary and directors fees to a resident or
non-resident director, only deduct EI premiums from the
salary portion.
Whether EI premiums are required on the salary portion
will be based on the employment status of the director. If
you are still in doubt after analyzing the facts relating to the
directors employment, you can ask for a ruling. For more
Note
Directors fees paid to directors of Crown corporations
are subject to EI premiums, if the individual is appointed
and remunerated under an act governing the public
service of a province or if the Crown corporation is listed
in Schedule III of the Financial Administration Act.
Income tax
Use the calculation in the previous section to determine the
amount of tax to withhold for the directors fees.
Application for a waiver of tax withholding

A non-resident director of a corporation requesting a
reduction of the tax withholding on employment income
based on a tax treaty can send a letter with supporting
documentation to the Non-resident Section of his or her tax
services office in the area where the services will be
performed or in the case of a Canadian employer, the tax
services office closest to their location. For more
information, call 1-800-959-5525.
Directors fees paid to a corporation or

partnership
Where an individual is acting on behalf of or representing a
corporation as a director and the fees relating to these
services are paid directly, or are turned over by the
individual to the corporation, those fees are considered to
be income of the corporation and not of the individual. This
would also be the case if an individual is acting on behalf of
or representing a partnership.
Note
If the fees are directly or indirectly given back to the
individual for his or her personal benefit, the fees would
have to be included in that individuals income as
employment income. In such a case, follow the
instructions under Employment income on page 30.
Resident corporation or partnership

You do not have to deduct CPP, EI or income tax on the
fees you pay a resident corporation or partnership.
Non-resident corporation or partnership

You have to deduct 15% tax on the fees you pay a
non-resident corporation or partnership. Report these
payments on a T4A-NR slip.
If the corporation or partnership can show the tax
withholding is more than their potential tax liability in
Canada, either due to treaty protection or income and
expenses, they can file a waiver application to the tax
services office in the area where they will provide the
services.
For more information, see RC4445, T4A-NR Payments to
Non-Residents for Services Provided in Canada and
Information Circular IC75-6, Required Withholding from
Amounts Paid to Non-Residents Providing Services in Canada.
Employees profit sharing plan (EPSP)

An EPSP is an arrangement that allows an employer to
share profits with all or a designated group of employees.
Under an EPSP, amounts are paid to a trustee to be held
and invested for the benefit of the employees who are
beneficiaries of the plan.
Each year, the trustee is required to allocate to such
beneficiaries all employer contributions, profits from trust
property, capital gains and losses, and certain amounts in
respect of forfeitures.
www.cra.gc.ca
31
Report payments from EPSPs on a T4PS slip instead of a

T4 slip.
A complete description of the lump-sum payment and

the circumstances that required it to be paid.
Under proposed changes, you must indicate on the

T4PS slip if the employee is a specified employee: one who
is dealing with their employer in a non-arms length
relationship, or who has a significant equity interest
(10% or more of any class of shares) in their employer or a
company related to their employer. For more information
on the 2012 changes to EPSPs, go to
www.cra.gc.ca/gncy/bdgt/2012/qa05-eng.html.
The total amount of the lump-sum payment, including a

breakdown between the principal and the interest
element, if any, of the payment.
The principal amount of the lump-sum payment that

relates to the current year and each of the preceding
years covered by the payment.
See Interpretation Bulletin IT-379R, Employees Profit Sharing

Plans Allocations to Beneficiaries.
Note
An EPSP established for reasons of tax planning, income
splitting, and avoidance of CPP contributions or
EI premiums may not be considered valid. If you have
any concerns about whether your EPSP is valid or not,
request a tax ruling. See Information Circular IC70-6,
Advance Income Tax Rulings.
Overtime pay
CPP contributions, EI premiums, and
income tax
You have to deduct CPP contributions, EI premiums, and
income tax from overtime pay. When the overtime pay is
paid in the same pay period in which it is earned, add the
overtime pay to the employees regular pay and make the
deductions from the total amount in the usual way. When
the overtime pay is paid in a later pay period, treat the
overtime pay as a bonus and make the deductions using the
method outlined in the section called Bonuses, retroactive
pay increases or irregular amounts on page 28.
Qualifying retroactive lump-sum

payments
Certain lump-sum payments totalling $3,000 or more (not
including interest) are eligible for a special tax calculation
when an individual files his or her income tax and benefits
return. The payments must have been paid to an individual
for one or more preceding years throughout which the
individual was a resident of Canada. The payments must
have been paid after 1994 and relate to years 1978 and later.
Eligible sources of income are:
Income from an office or employment received under the

terms of an order or judgment of a competent tribunal,
an arbitration award, or an agreement to terminate a
legal proceeding (including amounts received as
damages).
Wage loss replacement benefits.
Note
A different tax treatment may apply if the employee is
deceased. In such a situation, call 1-800-959-5525.
The payer has to provide the following information in

writing to the recipient:
The year in which the lump-sum payment was made to

the recipient.
32
The payer can provide all the information indicated above

to the recipient by using Form T1198, Statement of Qualifying
Retroactive Lump-Sum Payment. The employee has to send
Form T1198 to his or her tax services office and request the
special tax calculation be applied to his or her income tax
and benefits return.
Withholding rates
Lump-sum payments may be considered regular
remuneration and subject to CPP, EI and tax as discussed in
this guide. However, certain types of lump-sum payments
are subject to income tax only and qualify for the lump-sum
withholding rates. See Special payments in
Guide RC4157, Deducting Income Tax on Pension and Other
Income, and Filing the T4A Slip and Summary, to determine if
the payment you are making qualifies for those rates.
Retirement compensation
arrangements
A retirement compensation arrangement (RCA) is a plan or
arrangement between an employer and an employee under
which:
contributions are made by the employer or employee to a

custodian of the RCA trust; and
the custodian may be required to make distributions to

the employee or another person on, after, or in view of,
the employees retirement, the loss of an office or
employment, or any substantial change in the services
the employee provides.
Withholding and remitting

If you are an employer and you set up a retirement
compensation arrangement, you have to deduct a 50%
refundable tax on any contributions you make to a
custodian of the arrangement and remit the amount of
refundable tax you collect to the Receiver General on or
before the 15th day of the month following the month
during which it was withheld.
Before you make any contributions to the custodian,
you have to file Form T733, Application for a Retirement
Compensation Arrangement (RCA) Account Number, to
apply for account numbers for both the employer and the
custodian of the RCA.
The custodian has to deduct income tax from any
distributions (periodic or lump-sum payments) made out
of the RCA and remit the amount of income tax collected
to the Receiver General.
Before the custodian makes any distributions out of the
RCA, he or she has to file Form T735, Application for a
www.cra.gc.ca
Remittance Number for Tax Withheld From a Retirement

Compensation Arrangement (RCA), to apply for a remittance
account number.
To report the distributions, the custodian has to file a
T4A-RCA Summary and the related T4A-RCA slips. The
custodian has to send them to the RCA Unit, Winnipeg Tax
Centre on or before the last day of February of the year
following the calendar year to which the information return
applies.
For more information on this type of plan or arrangement,
your responsibilities, and the forms you have to file, see
Guide T4041, Retirement Compensation Arrangements or
contact the RCA Unit at the Winnipeg Tax Centre.
Retiring allowances
Since 2011 (for the 2010 tax year) retiring allowances are
reported on the T4 slip instead of the T4A slip.
A retiring allowance (also called severance pay) is an
amount paid to officers or employees when or after they
retire from an office or employment in recognition of long
service or for the loss of office or employment.
Combine all retiring allowance payments that you have

paid or expect to pay in the calendar year when
determining the composite rate to use. Use the following
lump-sum withholding rates to deduct income tax:
10% (5% for Quebec) on amounts up to and including

$5,000;
20% (10% for Quebec) on amounts over $5,000 up to and

including $15,000; and
30% (15% for Quebec) on amounts over $15,000.
Do not deduct CPP contributions or EI premiums from

retiring allowances.
Recipients may have to pay extra tax on these amounts
when they file their returns. To avoid this situation, if a
recipient requests it, you can:
calculate the annual tax to deduct from the recipient's

yearly remuneration, including the lump sum payment.
For more information, please see the "Step-by-stepcalculation of tax deductions" section in guide T4032,
Payroll Deductions Tables of your province or territory;
calculate the annual tax to deduct from the recipient's

yearly remuneration, not including the lump sum
payment; and
subtract the second amount from the first amount.
A retiring allowance includes:
payments for unused sick-leave credits on

termination; and
amounts individuals receive when their office or

employment is terminated, even if the amount is for
damages (wrongful dismissal when the employee does
not return to work).
A retiring allowance does not include:
salary, wages, bonuses, overtime and legal fees
a superannuation or pension benefit;
an amount an individual receives as a result of an

employees death, (these payments may be treated as
death benefits). For more information, see Interpretation
Bulletin IT-508, Death Benefits;
a benefit derived from certain counselling services;
payments for accumulated vacation leave not taken prior

to retirement;
wages in lieu of termination notice (see page 36); and
damages for violations or alleged violations of an

employees applicable human rights awarded under the
human rights legislation, to the extent these amounts are
not taxable. For more information, see Interpretation
Bulletin IT-337R4 CONSOLID, Retiring Allowances.
If you pay a retiring allowance to a resident of Canada,

deduct income tax from any part you pay directly to the
recipient using the lump-sum withholding rates.
Note
Retiring allowances must be taxed even if a recipients
total earnings received or receivable during the calendar
year, including the lump-sum payment, are less than the
total claim amount on his or her Form TD1, Personal Tax
Credits Return.
The result is the amount you deduct from the lump sum
payment if the recipient requests it.
If you pay a retiring allowance to a non-resident of
Canada, withhold 25% of the retiring allowance (subject to
various tax conventions and agreements). Send this amount
to the Receiver General on the non-residents behalf. For
more information see Guide T4061, NR4 Non-Resident Tax
Withholding, Remitting and Reporting.
Transfer of a retiring allowance
Individuals with years of service before 1996 may be able to
directly transfer all or part of a retiring allowance to a
registered pension plan (RPP) or a registered retirement
savings plan (RRSP). This part is commonly referred to as
the eligible portion or the amount eligible for transfer.
A retiring allowance may include an eligible portion and a
non-eligible portion.
A retiring allowance may be paid over one or more years.
The amounts paid in any particular year may be transferred
to an RRSP or an RPP. The amounts transferred cannot
exceed the employees eligible portion of the retiring
allowance minus the eligible portion transferred by you in a
prior year.
The amount that is eligible for transfer under
paragraph 60(j.1) of the Income Tax Act (the Act)
is limited to:
$2,000 for each year or part of a year before 1996 that the
employee or former employee worked for you (or a
person related to you); plus
$1,500 for each year or part of a year before 1989 of that

employment in which none of your contributions to
the RPP or deferred profit sharing plan (DPSP) were
vested in the employees name when you paid the
www.cra.gc.ca
33
retiring allowance. To determine the equivalent number

of years of vesting, refer to the terms of the particular
plan. The number can be a fraction.
You can only transfer the eligible portion of the retiring
allowance under paragraph 60(j.1) of the Act to the
employees own RRSP or to an RPP under which your
employee is the annuitant. The eligible portion cannot be
directly transferred to a spousal or common-law partners
RRSP under paragraph 60(j.1) of the Act. If you transfer the
amount to an RPP, you may have to report a pension
adjustment (PA). For more information, contact your plan
administrator.
Your employee may choose not to use all or any portion of
the amount eligible for transfer under paragraph 60(j.1) of
the Act. If your employee has available RRSP deduction
limit, your employee may transfer some or all of the
retiring allowance to a spousal or common-law partner
RRSP up to his or her RRSP deduction limit.
Your employee may also ask you to transfer some or all of
the non-eligible portion of the retiring allowance to his or
her RRSP, or to a spousal or common-law partners RRSP.
The non-eligible portion of a retiring allowance is the
amount that exceeds the amount eligible for direct transfer.
The part that you transfer cannot be more than the
employees available RRSP deduction limit for the year.
You do not have to deduct income tax on the amount of
eligible retiring allowance that is transferred directly to an
employees RRSP or to an RPP on behalf of the employee.
You also do not have to deduct income tax on any part of
the retiring allowance that your employee transfers to a
spousal or common-law partners RRSP if you have
reasonable grounds to believe your employee can deduct
the RRSP contribution when filing his or her personal
income tax and benefit return. For more information, see
RRSP contributions you withhold from remuneration in
Chapter 5 on page 27.
The portion of the retiring allowance paid in each year that
is eligible for transfer should be reported on the T4 slip in
the Other information area, using code 66 (code 68 in the
case of an Indian). Amounts not eligible for transfers are
reported on a T4 slip in the Other information area using
code 67 (code 69 in the case of an Indian). For more
information on the details of codes, see Guide RC4120,
Note
A retiring allowance amount is not considered
employment income and should not be included in
pensionable or insurable earnings (boxes 24 and 26). Do
not include the retiring allowance in box 14 on the T4.
For example, if an employee receives $60,000 payable in
instalments of $10,000 over 6 years and has an eligible
amount of $40,000, the employee can choose how they want
the eligible and non-eligible portions applied to the
instalment payments in each year.
Example 1
In November 2012, you pay Bruno, your ex-employee, a
retiring allowance of $50,000. He worked for you from
1986 to 2012 (26 years, including part-years of service).
According to the terms of the pension plan, his
34
contributions are not vested in the pension plan. Therefore,

you can only reimburse his contributions to the plan.
Calculate the amount of retiring allowance eligible for
transfer as follows:
$2,000 10 years (from 1986 to 1995,

including part-years) .............................................
$20,000
plus
$1,500 3 years (from 1986 to 1988,

including part-years) .............................................
$ 4,500
Total eligible for transfer .....................................
$24,500
Note
You can no longer transfer $2,000 per year of service to
an RPP or RRSP for 1996 and later years.
Bruno is allowed to transfer $24,500 directly into an RPP or
RRSP with no tax deductions required.
The difference of the non-eligible amount of $25,500
($50,000 $24,500) between the allowance paid and the
maximum eligible for transfer could be directly transferred
to Brunos RRSP without tax deductions if he gives you a
written statement indicating that the amount is within his
RRSP deduction limit.
Example 2
Colette is retiring. She is paid a retiring allowance of
$35,000 in recognition of long service, of which $12,000 is
eligible for transfer to her RRSP under paragraph 60(j.1) of
the Income Tax Act. Colette wants you to transfer the total
amount of the eligible retiring allowance ($12,000) to her
RRSP. She also requests that you transfer an additional
$11,000 to her RRSP and gives you a written statement
indicating that her RRSP deduction limit is $11,000.
You have to calculate the amount of remuneration subject
to tax deductions at source as follows:
Retiring allowance ..................................................... $35,000
Minus:
eligible amount of retiring allowance

for transfer to an RRSP ..................... $12,000
transfer to RRSP based on

Colettes deduction limit:
non-eligible amount of retiring allowance
for transfer to an RRSP ..................... $11,000 ....... $23,000
Remuneration subject to tax

deductions at source .................................................. $12,000
You do not need a letter of authority from the CRA to
reduce the tax withheld from the amounts of the payment
that were transferred to Colettes RRSP because she
provided you with a written statement.
For more information on retiring allowances, see the
following publications:
Interpretation Bulletin IT-337R4 CONSOLID, Retiring

Allowances;
Guide RC4120, Employers' Guide Filing the T4 Slip and

Summary;
www.cra.gc.ca
Pamphlet T4145, Electing Under Section 217 of the Income

Tax Act;
Income tax
Deduct income tax from the following amounts:
Guide T4061, NR4 Non-Resident Tax Withholding,

Remitting and Reporting.
the participants net salary (the salary minus the deferred

amounts) while the person is working; and
the deferred amounts when you pay them to the

participant during the leave period.
Salary deferral arrangements

A salary deferral arrangement is a plan or arrangement
made between an employee and an employer. Under such
an arrangement, an employee postpones receiving salary
and wages to a later year. The amount postponed is called
deferred amount.
The interest income and other amounts earned by the

deferred amount are employment income paid to the
participant and reported in box 14 on the T4 slip.
If the arrangement is not a prescribed plan (see below),

treat the deferred salary and wages as employment income
in the year in which the employee earns the amount.
Report it on the employees T4 slip for the year earned.
Deduct CPP contributions, EI premiums and income tax in
the usual way.
When a participant withdraws from the plan because

he or she ceases to be employed, you have to consider
the withdrawal as employment income. Deduct
CPP contributions and income tax, but not EI premiums.
Prescribed plans or arrangements

Prescribed plans or arrangements are not covered by the
preceding salary-deferral rules. Treat the deferred amounts
in these cases as income in the year in which the employee
receives them. Report it on the employees T4 slip in the
year it is received.
To find out how to report pension adjustments under these
circumstances, see Guide T4084, Pension Adjustment Guide.
If you have employees who participate in a prescribed plan,
deduct CPP contributions, EI premiums, and income tax as
noted below.
Note
Interest income earned under these plans or
arrangements is subject to both CPP and EI deductions.
CPP contributions
Deduct CPP contributions from:
the participants net salary (the salary minus the deferred

amounts) while the person is working; and
the deferred amounts when you pay them to the

EI premiums
Deduct EI premiums from the participants gross salary
(including deferred amounts) while the person is
working. Do not deduct more than the yearly maximum.
Do not deduct EI premiums when you pay these to the

Box 24 EI insurable earnings
Enter the amount of insurable earnings on which you
calculated the employees EI premiums.
The EI premium for this income is based on the gross
amount, while the amount reported in box 14 is the net
amount. The insurable earnings cannot be the same as
box 14.
Withdrawal from the prescribed plan
Note
Custodians and trustees who administer prescribed
plans have the same responsibilities as an employer for
deducting, remitting, and reporting deductions.
Vacation pay and public holidays

When you pay vacation pay, how you calculate deductions
will depend on whether your employee takes holidays or
not. Also, deduct as you normally would when part of the
pay period includes a public holiday (such as Christmas
day).
The employee takes holidays

The following applies when you pay vacation pay and your
employee takes holidays.
Note
If your employee takes holidays but does not receive
their vacation pay at that time, see the next section, The
employee does not take holidays.
CPP contributions
Deduct CPP contributions from vacation pay in the same
way as you would from regular pay. Do not change the pay
period table you normally use. Do not deduct more than
the maximum employee contribution for the year.
EI premiums
Deduct EI premiums from vacation pay in the same way
you would from regular pay. Do not deduct more than the
maximum employee premium for the year.
Income tax
When you calculate the amount of income tax to deduct,
use the tax table that applies to the period of vacation. For
example, for one week of paid vacation, use the weekly tax
deduction table. If your payroll is bi-weekly and the
employee is paid one week of vacation pay and one week
of regular pay, the bi-weekly tables should be used. If the
employee is paid one week of vacation pay and the second
week is unpaid, the bi-weekly tables should be used.
www.cra.gc.ca
35
The employee does not take holidays

The following applies when you pay vacation pay and your
employee does not take holidays.
CPP contributions
To deduct CPP contributions, use the bonus method we
explained earlier in this chapter under the heading
Bonuses, retroactive pay increases or irregular amounts
on page 28. Do not deduct more than the maximum
employee contribution for the year.
EI premiums
Deduct EI premiums from vacation pay the same way you
would as from regular pay. Do not deduct more than the
maximum employee premium for the year.
Income tax
Use the bonus method we explained in Bonuses,
retroactive pay increases or irregular amounts on
page 28.
Vacation pay trust
Include in the employees income any contributions you
make to a trust for vacation credits that an employee earns
in the year. Deduct CPP/QPP contributions, EI/QPIP
premiums, and income tax from this amount as if you had
paid the amount directly to the employee.
Wages in lieu of termination notice

When you pay an employee an amount in lieu of
termination notice under the terms of an employment
contract or federal, provincial or territorial employment
labour standards, the amount is considered employment
income, whether or not it is paid on termination of the
employment.
Deduct CPP contributions, EI premiums, and income tax.
To determine the amounts to deduct, include the wages in
lieu of termination notice with the regular income, if any,
for the pay period.
You can use the bonus method we explained earlier in this
chapter to determine the tax to deduct from the wages in
lieu of termination notice if the calculation of the tax using
the Payroll Deductions Tables causes hardship to the
employee. See Bonuses, retroactive pay increases or
irregular amounts on page 28 to find out how to do this.
For more information, see Interpretation Bulletin IT-365R2,
Damages, Settlements and Similar Receipts.

A wage loss replacement plan (WLRP) is an arrangement
between an employer and employees, or an employer and a
group or association of employees. A WLRP may provide
short-term disability (STD), long-term disability (LTD) or
weekly indemnity (WI) benefits. The benefits may be paid
by the employer, or by an insurance carrier or other
independent organization.
36
A plan is a wage loss replacement plan when all of the

following conditions are met:
It is a group plan, i.e. coverage for more than a single

employee.
It is funded, in whole, or in part, by the employer.
The purpose of the plan is to indemnify employees

against a loss of employment income as a result of
sickness, accident or maternity.
Benefits are paid on a periodic basis, i.e. not lump-sum.
It follows insurance principles, i.e. funds are

accumulated, normally in the hands of a trustee or in a
trust account, and are calculated to be sufficient to meet
anticipated claims.
If the plan is not a group plan (i.e. it is for a single

employee), or if the plan is funded entirely by employee
contributions (an employee-pay-all plan), it is not a WLRP.
Any premiums you pay may be a taxable benefit. For
more information, see Guide T4130, Employers Guide
Taxable Benefits and Allowances or Interpretation Bulletin
IT-428, Wage Loss Replacement Plans or go to
www.cra.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/hlth/wg-eng.html.
CPP contributions and EI premiums
Wage loss replacement plan payments are subject to CPP
contributions and EI premiums when:
the employer pays benefits directly to an employee from

a wage loss replacement plan where the employer funds
any part of the plan; or
a trustee or an insurance company pays benefits on

behalf of the employer to an employee through a wage
loss replacement plan, when the employer:
funds any part of the plan; and
exercises a degree of control over the terms of the

plan; and
determines the eligibility for benefits.
Income tax
When wage loss benefits are subject to CPP contributions
and EI premiums, income tax should be withheld on these
payments in the usual manner. The employer, trustee, or
insurance company has to report these payments, as well as
the income tax, CPP contributions, and the EI premiums
deducted, on a T4 slip.
When wage loss benefits are not subject to CPP
contributions or EI premiums, they are still subject to
income tax, however, no withholding is required. The
trustee or insurance company will still have to report these
payments on a T4A slip.
Workers compensation awards

When an employee cannot work because of an
employment-related injury, a workers compensation board
may award benefits as compensation for lost wages.
www.cra.gc.ca
Reporting requirements
An employer who continues to pay an employees salary
before and after a workers compensation board claim is
decided is not allowed to retroactively reduce earnings in
the current year, or amend a previous-year T4 slip, and call
the earnings workers compensation benefits. As a result,
the employee has to report, in the year it is received, the
salary he or she receives before and after a workers
compensation board claim is decided.
If the claim is denied and you use the employees sick leave
credits to repay the loan, this amount has to be reported on
a T4 slip with CPP contributions, EI premiums, and
income tax withheld.
If income tax deductions cause undue hardship to the
employee, he or she can contact any tax services office to
ask for a letter of authority. This will allow you to deduct
less tax.
Advances by a third party
Our policy applies to:
self-insured employers who are directly liable for the

cost of amounts that the workers compensation board
awards to employees; and
regular employers who are not directly liable for the cost
of amounts that the workers compensation board
awards to employees.
Note
Since employers cannot amend T4 slips or the
current-year payroll records, they are not able to recover
their share of the CPP and EI contributions.
The T4 slip and T5007 slip, Statement of

Benefits
In the year that the workers compensation claim is paid,
the employee receives a T5007 slip from the workers
compensation board. The employee has to report the
amount shown on the T5007 slip as income on his or her
income tax and benefit return for that year and claim the
corresponding deduction.
For the employee to claim the other employment expenses
deduction, you have to complete a T4 slip for the year in
which the reimbursement is received by the employer, and
enter the amount of the reimbursed workers compensation
in the Other information area, under code 77. This will
allow the employee to deduct this amount against the
previously paid salary. If the award is used only to offset
loans and advances, you should not report this amount.
Advances or loans
Advances or loans made to an employee that are equivalent
to an anticipated workers compensation award will not be
treated as employment income. As a result, you do not
have to deduct CPP contributions, EI premiums, and
income tax on this amount. It is not reported on a T4 slip at
year-end. We do not consider any interest that accumulates
on advances or loans while waiting for a claim decision as a
taxable benefit.
Advances or loans not repaid

Normally, the advance or loan is offset or repaid when the
claim is paid by the workers compensation board.
However, if the workers compensation board denies an
award, and the advance or loan is not repaid in the year the
claim is settled, we consider the employee to have received
a benefit from employment in the year that the award is
refused. The amount of the loan or advance has to be
reported on a T4 slip with CPP contributions, EI premiums,
and income tax withheld.
If an insurance company pays an employee an amount

equivalent to his or her regular salary, the insurer will issue
a T4A slip. If the payments are later repaid by the workers
compensation board or by the employee to the insurance
company, the insurance company will issue, for the year of
the repayment, a receipt or a letter to the employee. This
will allow the employee to claim a deduction for the
repayment of this amount on his or her income tax and
benefit return.
Top-up amount
A top-up amount is an amount that you pay your employee
in addition to the amount of a workers compensation
award that the employee is paid by a workers
compensation board.
Exclude a top-up amount (even if it is paid as sick leave)
from insurable earnings if you pay it after the claim is
accepted by the workers compensation board. However,
the top-up amount is subject to CPP contributions and
income tax, and you have to report it on a T4 slip at
year-end.
An amount you pay in addition to an advance or loan is not
a top-up amount if you pay it while waiting for a decision
on a workers compensation board claim. This amount is
considered to be employment income, and you have to
deduct CPP contributions, EI premiums, and income tax.
Adjustment period for new workers

compensation claims
In many cases, an employer prepares payroll cheques in
advance. As a result, it may not always be possible to place
an employee on a loan or advance system immediately
after he or she files a claim. If this happens, we allow you a
reasonable period (normally one pay period) to adjust the
payroll records to an advance or a loan basis.
Commission de la sant et de la scurit du

travail (CSST)
In Quebec, workers compensation benefits are
administered by the Commission de la sant et de la
scurit du travail (CSST). Employers in Quebec are still
required to follow the instructions for the federal
requirements. For more information on Quebecs
requirement for CSST, see Guide TP-1015.G-V, Guide for
Employers Source Deductions and Contributions, which you
can get from Revenu Qubec (see page 6).
www.cra.gc.ca
37
How to treat workers compensation board

payments under different circumstances
Employer continues to pay regular wages
Example
John is injured at work on July 11, 2011. He continues to be
paid his regular wages until February 3, 2013, when the
workers compensation board pays his claim. The employer
is reimbursed by the workers compensation board.
Results
All wages paid in 2011, 2012, and 2013 are to be

reported on a T4 slip for each of those years, with
CPP contributions, EI premiums, and income tax
withheld. John will report these T4 slips on his income
tax and benefit return for the appropriate year.
In 2013, the year of the award, the employer is not
allowed to adjust box 14, Employment income, of the
T4 slip or to reduce the CPP contributions, EI premiums,
and income tax withheld in 2011, 2012, or 2013.
When completing the T4 slip for 2013, the employer will

enter code 77 in the Other information area at the
bottom of the slip, and report the total amount of the
workers compensation board award for the three years.
When John files his 2013 income tax and benefit return,
he will claim this amount as a deduction for other
employment expenses (repayment of salary or wages).
If there is any unused amount and John does not have

other types of income in 2013, this amount may become
a non-capital loss.
In 2013, when the claim is paid, her employer has to

offset the amount received from the workers
compensation board against the advances made in the
following way:
If the amounts are equal, no amount will be recorded
in the Other information area of the T4 slip.
If the advances are more than the amount of the award,
the difference is considered to be employment income.
Marys employer has to report this income on a T4 slip
with CPP contributions, EI premiums, and income tax
withheld. No entry is needed in the Other
information area.
If, after the claim is paid by the workers compensation
board, the employer continues to pay an amount in
addition to the workers compensation award, this
amount is considered to be a top-up amount and the
employer has to deduct CPP contributions and income
tax but no EI premiums. It will be reported on a T4 slip
in the year paid.
If the claim is disallowed, the advance not repaid
becomes employment income in the year the claim is
disallowed. The employer has to report the amount of
the advance on a T4 slip with CPP contributions,
EI premiums, and income tax withheld. If Mary repays
the advance, the employer does not have to report the
amount on a T4 slip. The amount of the advance is not
reported in the Other information area under
code 77 of the T4 slip, because it was never included
in income.
Chapter 7 Special situations

Employer pays advances equal to the expected
workers compensation board award and an amount in
addition to this advance
Example
Mary is injured on April 2, 2012, and is away from work
until June 6, 2013. Her employment contract states that her
employer will pay an amount equal to her regular net pay.
This amount will be in the form of advances equal to the
anticipated workers compensation board award and an
amount paid in addition to this advance.
Results
The amount of the advance equal to the amount of the

anticipated workers compensation board award is not
considered to be employment income. As a result, the
employer will not have to deduct CPP contributions,
EI premiums, and income tax on this amount.
The amount paid by the employer in addition to the
advance, while waiting for a decision, is considered to be
employment income in the year it is paid and is subject to
CPP contributions, EI premiums, and income tax.
Barbers and hairdressers, taxi drivers

and drivers of other
passenger-carrying vehicles
If these workers are your employees, you have to
deduct Canada Pension Plan (CPP) contributions,
employment insurance (EI) premiums, and income tax
as you would for regular employees.
When the workers have an interruption in earnings, you
have to complete a Record of Employment (ROE) within five
days of the last day worked. Different rules may apply if
you use ROE Web. For more information, visit the Service
Canada Web site at www.servicecanada.gc.ca.
If these workers are not your employees, the following
special rules apply and you have to report the gross
earnings of barbers and hairdressers, taxi drivers and
drivers of other passenger-carrying vehicles on their
T4 slip. For reporting instructions, see Guide RC4120,
Barbers and hairdressers

This class of workers is restricted to barbers or hairdressers
who provide their services in an establishment that offers
barbering and hairdressing services.
38
www.cra.gc.ca
CPP contributions and income tax

For CPP and income tax purposes, we consider individuals
who are not employed under a contract of service to be
self-employed. They are responsible for paying their
CPP contributions and income tax when they file their
income and benefits returns. Do not deduct CPP or income
tax from these workers.
EI premiums
Under a special EI regulation the owner, proprietor, or
operator of the barbershop or hairdressing business is
considered to be the employer of the individuals who
perform services in connection with the establishment, even
if the individuals are not employed under a contract of
service.
If you own or operate the business, you have to pay both
the workers share and your share of EI premiums. The
workers insurable earnings are to be calculated based on
the net revenue. The workers insurable earnings are used
to determine the workers share of EI premiums.
There are two ways to determine the insurable earnings for
a week, depending on whether or not you know the
workers actual weekly earnings and expenses:
a) If you know how much the worker earned in a pay
period and the expenses incurred in generating revenue
from the workers operation in the establishment, the
amount of the individuals insurable earnings is the
total actual earnings (net revenue) from the individuals
employment for the pay period up to the maximum
annual insurable earnings.
b) If you do not know how much the worker earned
and/or the expenses the worker incurred in generating
revenue from the workers operation in the
establishment in a pay period, the amount of insurable
earnings is the lesser of:
regulation, and consequently their employment is not

insurable.
A driver is considered to be the owner/operator if both of
the following conditions are met:
the driver is in a position to gain a profit or risk a loss

from the operation of the taxi business; and
the driver possesses the right to operate a taxicab.
CPP contributions and income tax

For CPP and income tax purposes, we consider individuals
who are not employed under a contract of service to be
self-employed. They are responsible for paying their
CPP contributions and income tax when they file their
income tax and benefit returns.
Do not deduct CPP or income tax from these workers.
EI premiums
If you are the deemed employer, you have to pay both the
driver's share and your share of EI premiums. The driver's
insurable earnings are calculated based on the net revenue.
There are two ways to determine the insurable earnings for
a week, depending on whether or not you know the
driver's actual earnings and expenses:
a) If you know how much the driver earned in a week and
the expenses the driver incurred while operating the
vehicle, the insurable earnings should be calculated as
the difference between the two amounts up to the
maximum annual insurable earnings.
b) If you do not know how much the driver earned in a
week and/or the expenses the driver incurred while
operating the vehicle, the amount of insurable earnings
is the lesser of:
the number of days worked in the week multiplied

by 1/390 of the maximum of the annual insurable
earnings; or
1/78 of the maximum of the annual insurable
earnings.
Drivers who are not employed under a contract of service

may be in insurable employment. At the taxi industrys
request, a special EI regulation was created to protect taxi
and passenger-vehicle drivers who are not employees.
The regulation was created because these workers often go
through periods without work. The regulation applies to
drivers who:
do not own more than 50% of the vehicle; and
do not own or operate a business.
the number of days worked in the week multiplied

by 1/390 of the maximum of the annual insurable
earnings; or
1/78 of the maximum of the annual insurable

earnings.
Emergency volunteers
Taxi drivers and drivers of other

passenger-carrying vehicles
The earnings of these workers are insurable even though

they are not employees. We consider the company for
which the drivers are providing driving services to be a
deemed employer for EI purposes. Drivers who do not
satisfy these conditions do not qualify under this
The Income Tax Act provides an exemption of up to $1,000

on amounts an individual receives from a government,
municipality, or public authority.
This exemption applies to the following individuals:
volunteer firefighters (see note below);
volunteer ambulance technicians; and
emergency service volunteers who help in the search or

rescue of individuals, or in other emergency situations
and disasters.
The $1,000 exemption only applies if the amount paid for

the duties that the individual performs is a nominal amount
in comparison to what it would have cost in the same
circumstances to have the same duties performed by a
regular full-time or part-time individual.
The $1,000 exemption does not apply if the individual was
employed in the year by the same public authority for the
www.cra.gc.ca
39
same or similar duties (such as a full-time firefighter who,

from time to time, acts as a volunteer firefighter or rescue
worker for his employer).
EI premiums, and income tax. You also have to remit these

amounts and report them on a T4 slip.
Rules for CPP contributions, EI premiums,

and income tax deductions
If you have any doubts about whether an

employer-employee relationship exists for CPP and EI
purposes, see Guide RC4110, Employee or Self-Employed?
You can request a ruling using Request a CPP/EI ruling
in My Business Account or by completing Form CPT1,
Request for a Ruling as to the Status of a Worker under the
Canada Pension Plan and/or the Employment Insurance Act,
and send it to the CPP/EI Rulings Division of your tax
services office.
Amounts received by volunteers are treated differently

under the Canada Pension Plan, Employment Insurance Act,
and the Income Tax Act.
Employing a caregiver, baby-sitter,

or domestic worker
Note
For volunteer firefighters, report the exempt amount
(up to $1,000) using code 87 in the Other information
area of the T4 slip. Do not report the exempt amount in
box 14.
CPP contributions
The EI conditions below also apply for CPP purposes.
However, if the individual qualifies for the exemption for
income tax purposes, only the amount that is more than
$1,000 is subject to CPP contributions. If the individual does
not qualify for the exemption, deduct CPP contributions on
the total amount paid.
EI premiums
Even if an individual is considered to be a volunteer for
income tax purposes, the amount received (including the
amount of the exemption up to the maximum of $1,000)
is subject to EI premiums if all of the following conditions
are met:
the individual receives an hourly wage, salary, or other

fixed amount of remuneration;
the individual must adhere to a regular work schedule;

and
the individual must be available and obligated to

intervene when an emergency happens (for example, a
fire) during the schedule fixed by his or her employer.
However, if the individual must be available during the
fixed work schedule, but he or she is not obligated to
intervene when the emergency happens, the amount
received by the individual is not subject to EI premiums.
Income tax
As indicated before, if the individual qualifies for the
exemption, there is no income tax to pay on the first $1,000
that he or she receives. Deduct income tax only on the
amount that is more than $1,000. However, if the individual
does not qualify for the exemption, deduct income tax on
the total amount paid.
When are you considered to be an employer?

You are considered to be an employer when you:
hire a person;
establish regular working hours (for example, 9 a.m.

to 5 p.m.); and
assign and supervise the tasks performed.
If you are not sure whether you are an employer based on

these criteria, see Guide RC4110, Employee or Self-Employed?
You can request a ruling using Request a CPP/EI ruling
in My Business Account or by completing Form CPT1,
Request for a Ruling as to the Status of a Worker under the
Canada Pension Plan and/or the Employment Insurance Act,
and sending it to the CPP/EI Rulings Division of your tax
services office.
To find out what your responsibilities are as an employer,
see page 7.
Employment outside Canada

CPP contributions If you are a Canadian employer and
you hire someone to work for you outside Canada, you
should deduct CPP contributions if:
the employee usually reports for work at your place of

business in Canada; or
the employee is a Canadian resident and is paid from

your place of business in Canada.
If the employment does not meet either of these conditions,

the employment outside Canada is not pensionable. As a
result, do not deduct CPP from the employees
remuneration.
Employees of a temporary-help
service firm
You may be the proprietor of a temporary-help service
firm. Temporary-help service firms are service contractors
who provide their employees to clients for assignments.
The assignments may be temporary, depending on the
clients needs.
Workers of these firms are usually employees of the firms.
As a result, you have to deduct CPP contributions,
40
If you hire a caregiver, baby-sitter, or domestic worker, you

may be considered to be the employer of that person. As an
employer, you have responsibilities in the employment
relationship between you and the person.
Under certain conditions, you have the option of

extending CPP coverage and deducting contributions from
employment outside Canada that is not usually
pensionable employment. To do this, complete Form CPT8,
Application and Undertaking for Coverage of Employment in a
Country Other Than Canada Under the Canada Pension Plan,
and send two copies to your tax services office.
www.cra.gc.ca
Please note that Form CPT8 is not required if Canada has a

reciprocal social security agreement with the country of
employment. A list of countries with which Canada has an
agreement is found in Appendix 4 on page 51.
EI premiums You have to deduct EI premiums from
employment income an employee earns outside or partly
outside Canada if all of these conditions apply:
you, as the employer, reside in Canada or have a place of

business in Canada;
the employee usually resides in Canada;
the employment is not insurable in the country where the

employment is performed; and
the employment is not excluded from insurable

employment for any other reason.
Income tax If an employee performs services for you

outside Canada, you may have to deduct income tax from
that employees remuneration. It should be noted that the
employee may be entitled to a tax reduction subject to a
foreign tax credit in respect of taxes paid in a foreign
jurisdiction. A request for a letter of authority (see page 27)
should be made. If you are not sure if you should deduct
income tax, call 1-800-959-5525.
Note
Special deduction rules apply to employment on ships,
trains, trucks, and aircraft. To find out more about these
rules, send a written request to the CPP/EI Rulings
Division of your tax services office. The addresses of our
tax services offices are available at www.cra.gc.ca/tso.
Overseas employment tax credit

Under proposed legislation, the overseas employment tax
credit (OETC) will be phased out between 2013 and 2016.
The OETC will be eliminated for 2016 and subsequent
years. Go to www.cra.gc.ca/gncy/bdgt/2012/qa07-eng.html.
If you hire a resident of Canada to work outside Canada for
more than six consecutive months, the employee may be
entitled to an overseas employment tax credit.
The six consecutive months of employment may start in the
current year or a previous year. The employment duties
performed outside Canada must either be to get a contract
for the employer or relate to a contract under which the
employer carried on business outside Canada. The contract
or business must relate to:
the exploration for or exploitation of petroleum, natural

gas, minerals, or other similar resources;
any construction, installation, agricultural, or

engineering activity; or
any prescribed activity.
An employee who is eligible for the credit may ask you to

reduce the amount of tax you deduct. The employee should
send a completed Form T626, Overseas Employment Tax
Credit, with a covering letter to the Non-resident Section of
the tax services office of the employer with the following
information:
qualification of the employer as a specified employer;
qualification of the employers contactsqualifying

activities; and
qualification of the employeeresidency, employment

terms and duties, and tax situation.
If we approve the reduction in tax deductions, we will send

the employee a letter of authorization stating that you can
reduce the amount of tax deductions. When the employee
provides you with a copy of this letter, you may reduce the
amount of tax withholding from the employees pay. Keep
this letter for our officers to examine. For more information
on this subject, see Interpretation Bulletin IT-497R, Overseas
Employment Tax Credit.
Certain Canadian individuals cannot claim the overseas
employment tax credit when they are employed by a
Canadian firm that contracts with a foreign firm to provide
the individuals services. The credit is not available in such
situations if the Canadian firm hires less than six full-time
employees and is either:
a corporation that the individual owns, or the individual

is related to a shareholder of the corporation who owns
10% or more of any class of shares of the corporations
capital stock; or
a partnership where the individual is related to a

member of the partnership or is a specified shareholder
of a member of the partnership.
Canadian International Development Agency (CIDA)

If you are paying an employee for services under a CIDA
program, you may have to deduct income tax from that
employees remuneration. If you are not sure if you should
deduct income tax, call 1-800-959-5525.
Fishers and employment insurance

Special rules apply to self-employed fishers. For information,
see Guide T4005, Fishers and Employment Insurance.
Placement and employment agency

workers
The following guidelines apply to workers engaged by
placement or employment agencies:
a) An agency that hires employees (even if they are
located at a clients premises) has to deduct
CPP contributions, EI premiums, and income tax from
amounts paid to these employees. The agency also has
to report these amounts on a T4 slip.
b) An agency that places workers in an employment under
the direction and control of a client of the agency and
where the agency pays the worker, the agency is
required to deduct CPP contributions and EI premiums,
but not income tax. The agency has to prepare a T4 slip
for the worker.
c) An agency that places workers in an employment under
the direction and control of a client of the agency and
where the client of the agency pays the worker, the
client is required to deduct CPP contributions and
income tax but is not required to deduct EI premiums.
The client of the agency is required to prepare a T4 slip
for the worker.
www.cra.gc.ca
41
d) An agency that hires a worker under a contract for

services is not required to deduct CPP contributions,
EI premiums, or income tax since the worker is
self-employed. Neither the agency nor the client is
required to file a T4 slip.
For 2008 and subsequent tax years, the gross earnings of
workers described in paragraphs b) and c) must be
reported on their T4 slip. For reporting instructions, see
Summary.
Seasonal agricultural workers program

Seasonal agricultural workers from foreign countries who
are in regular and continuous employment in Canada are
subject to CPP, EI, and income tax deductions in the same
way as Canadian residents.
For program information, see Guide RC4004, Seasonal
Agricultural Workers Program.
Indian employees
The following information will help you determine which
deductions you have to make for Indians.
Definitions
Indian
An Indian is a person who is registered or entitled to be
registered as an Indian under the Indian Act.
Reserve
The term reserve is defined under the Indian Act and, for
these purposes, includes all settlements given reserve-like
treatment for taxation purposes under the Indian Settlements
Remission Order and any other areas similarly treated under
federal legislation such as Category I-A lands under the
Cree-Naskapi (of Quebec) Act.
Indian living on a reserve
This means an Indian who lives on a reserve in a domestic
establishment that is his or her principal place of residence
and that is the centre of his or her daily routine.
Employer resident on a reserve
When an employer is resident on a reserve, the reserve is
the place where the central management and control over
the employer organization is actually located.
Note
We usually consider a group that performs the function of
board of directors of an organization as exercising the
central management and control of an organization.
However, it may be that some other person or group
manages and controls the organization. Generally, a
person or group manages and controls an organization at
the principal place of business. However, this activity can
occur in a place other than the principal administrative
office of the organization. It is a question of fact as to
where the central management and control is exercised.
Guidelines
determine a tax exemption that applies to an Indians

employment income. These guidelines do not reflect a
change in tax policy. They deal only with determining a tax
exemption under the Indian Act following the Supreme
Court decision. As a result of the Williams decision, you
have to examine all factors connecting income to a reserve
to determine if income was earned on a reserve and is
tax-exempt.
When you apply all the connecting factors, be aware of
unusual or exceptional circumstances where:
the income may not be taxable even though it does not

fall within one of the guidelines; or
the income may be taxable even though it appears to fall

within one of the guidelines.
If you have any questions about a particular situation,

call 1-800-959-5525.
Form TD1-IN, Determination of Exemption of an Indians
Employment Income, will help you determine the type of
exemption that applies to an Indians employment income
according to the Indian Act Exemption for Employment Income
Guidelines. Keep a completed form on file for each
employee, as we may ask to review it.
Taxable salary or wages paid to Indians

CPP contributions, EI premiums, and income tax
If you are an employer paying taxable salary or wages to an
Indian, you have to deduct CPP contributions,
EI premiums, and income tax.
Note
If you paid a retiring allowance to an Indian, see
Retiring allowances on page 33.
Non-taxable salary or wages paid to Indians

Canada Pension Plan
The employment of an Indian whose income is exempt
from tax is excluded from pensionable employment.
Therefore, if you are an employer paying non-taxable salary
or wages to an Indian, you do not have to deduct CPP
contributions.
Application for coverage under CPP
Although you do not have to deduct CPP from non-taxable
income paid to an Indian, you can choose to provide your
Indian employees with optional CPP coverage. You can
elect to do this by completing and filing Form CPT124,
Application for Coverage of Employment of an Indian in Canada
Under the Canada Pension Plan Whose Income is Exempt Under
the Income Tax Act. However, you cannot revoke this
election and you have to cover all employees.
CPP coverage starts on either the date you sign the
application or on a later date that you specify. Coverage
cannot be retroactive to a date before the date you signed
the application.
Employment insurance
The non-taxable salary or wages paid to an Indian are
subject to EI premiums.
Following the Supreme Court of Canada decision in the

Glenn Williams case, we developed guidelines to help you
42
www.cra.gc.ca
Note
EI benefits, retiring allowances, CPP payments,
registered pension plan benefits, or wage loss
replacement plan benefits will usually be exempt from
income tax when they are received as a result of
employment income that was exempt from tax. If a part
of the employment income was exempt, then a similar
part of these amounts will be exempt.
For more information about the Indian Act Exemption for
Employment Income Guidelines and the different registration
dates, go to www.cra.gc.ca/brgnls/ndns-eng.html.
Chapter 8 Remitting payroll

deductions


business owner.
Note
All payments made after the due date are subject to the
Regular remitter
If you are a new employer, or your average monthly
withholding amount (AMWA) two years ago was less than
$15,000, you are a regular remitter and have to remit your
deductions so we receive them on or before the 15th day of
the month following the month you made the deductions.
Note
We consider a remittance that was due on January 15 of
the current year (for deductions you made in December
of the previous year) to be late if it is paid with the
previous years T4 information return, and this return is
filed after January 15.
Are you a new remitter?

If you are a new employer or you have never remitted
Canada Pension Plan (CPP) contributions, employment
insurance (EI) premiums, or income tax deductions before,
you must apply for a business number (BN) and register for
a payroll account with us, if you dont already have one. See
Chapter 1 for registration and general information on your
responsibilities. If you need help calculating or remitting
your deductions, call 1-800-959-5525. New employers are
considered regular remitters for remitting frequencies.
If you do not have a payroll account number, or you
have not received a remittance form in time to make your
first remittance, send a cheque or money order to your
tax centre.
that you are a new remitter;
the period your remittance covers;
your complete employer name, address, and business

telephone number; and
your account number.
We will send you a remittance form in the mail after you

register and after each subsequent remittance. If you do not
receive a form in time for your next remittance, send in
your remittance as described above. In your letter, be sure
to indicate that you did not receive your remittance form.
Remitter types and due dates

Remittance due dates are always based on when an
employee is paid for his or her services (payday) rather
than the pay period for which the services are rendered.
For example, if a pay period ends in January but the
employee gets paid for this period in February, the
remittance due date would be determined from the payday
in February.
You can view remitting requirements online at:
Quarterly remitting gives small employers the option of

remitting source deductions once every three months.
To qualify for quarterly remitting, an employer has to:
have an average monthly withholding amount (AMWA)

of less than $3,000 in either the first or the second
preceding calendar year; and
have a perfect compliance history.

Note
We consider an employer to have a perfect compliance
history when, over a 12-month period, all deductions
and remittances of CPP contributions, EI premiums and
income tax were made on time, the GST/HST has been
paid on time, and T4 type information returns and
GST/HST returns have also been filed on time.
Make the cheque or money order payable to

the Receiver General and print your BN on the back.
Include a letter stating:
View remitting requirements
Quarterly remitter
You do not have to apply to remit quarterly. If you are a

new eligible employer, we will notify you by mail that you
have the option to remit quarterly, and we will provide
more information on quarterly remitting. Employers who
remain eligible to remit quarterly from one year to the next
will not be re-notified by letter. If you are currently an
eligible quarterly remitter, and you have not been notified
to the contrary, you may continue to remit quarterly.
The quarters are January to March, April to June, July to
September, and October to December. Remittances are due
the 15th day of the month immediately following the end of
each quarter. The due dates are April 15, July 15,
October 15, and January 15.
Notes
We conduct an annual review to identify employers who
qualify to be quarterly remitters. However, if at any time
after 12 months of business an employer believes they
have met the conditions mentioned above, they can
call 1-800-959-5525 and apply to remit quarterly.
An employer who fails to comply with all the required
conditions loses the quarterly remitting privilege. To
www.cra.gc.ca
43
regain the privilege, the employer has to re-establish a

12-month history of perfect compliance. Also, an
employer with multiple payroll accounts must meet the
compliance requirements for all accounts. If one payroll
account is ineligible, the employer loses the quarterly
remitting privilege for all accounts.
Associated corporations
Accelerated remitter
If a corporation is associated with one or more corporations

in the current year, and the total average monthly
withholding amount (AMWA) of all the associated
corporations was $15,000 or more, two calendar years ago,
we consider all the associated corporations to be
accelerated remitters. Associated corporations are defined
in the Income Tax Act.
There are two groups of accelerated remitters (called

threshold 1 and threshold 2).
Remittance frequency
Threshold 1
This group consists of employers, including those with
associated corporations, who had a total average monthly
withholding amount (AMWA) of $15,000 to $49,999.99
two calendar years ago.
Under the Income Tax Act, accelerated remitter employers

have the option of changing their remitting frequency
based on their AMWA in the immediate preceding calendar
year. If you want to use this option, call 1-800-959-5525. We
will review your account and let you know in writing when
we have to receive your deductions.
Amounts you deduct from remuneration paid in the

first 15 days of the month are due by the 25th of the same
month. Amounts you deduct from the 16th to the end of the
month are due by the 10th day of the following month.
What if your remittance due date falls on a

Saturday, Sunday, or public holiday?
Threshold 2
This group consists of employers, including those with
associated corporations, who had a total average monthly
withholding amount (AMWA) of $50,000 or more
two calendar years ago.
Average monthly withholding amount (AMWA)
Amounts you deduct from remuneration you pay any time

during the month are due to be received by your Canadian
financial institution no later than the third working day
(not counting Saturdays, Sundays, or public holidays) after
the end of the following periods:
from the 1st through the 7th day of the month;
from the 8th through the 14th day of the month;
from the 15th through the 21st day of the month;
from the 22nd through the last day of the month.
We determine the type of remitter you are by adding up all

the CPP, EI, and income tax you had to send us for your
payroll accounts two calendar years ago. We divide the
total by the number of months (maximum 12) that you had
to make payments in that year. For example, if you made
two monthly remittances totalling $120,000 in 2010, your
AMWA for 2012 would be $60,000 ($120,000 divided
by 2), and you would be a Threshold 2 employer. If your
remitter type changes based on our calculations, we will
advise you in writing, usually in December, of when we
have to receive your remittances for the following year.
Remittance forms
Example
If the payday falls during the period of the 1st through the
7th day of April 2012, the due date is April 12, as the three
working days after this period are counted from the day
after Easter Monday (the 9th).
Large employers with an average monthly withholding
amount of $50,000 or more are required to pay their
remittances at a financial institution. We consider all
payments made to the CRA at least one full day before the
due date to have been made at a financial institution and a
penalty will not be charged.
institution, are subject to a penalty of 3% of the amount
due.
All payments made after the due date, are subject to the
Threshold 1 and Threshold 2 accelerated remitters are
considered to be monthly accelerated remitters if they have
a payroll frequency of only once a month.
44
If your due date is a Saturday, a Sunday, or a public

holiday, your remittance is due on the next business day.
For a list of public holidays, go to www.cra.gc.ca/duedates.
To make your current remittance, you must use one of the

following forms:
Form PD7A, Remittance Voucher Statement of Account for

Current Source Deductions, for regular, quarterly, and
monthly accelerated remitters; or
Form PD7A(TM), Remittance Voucher Statement of

Account for Current Source Deductions, or Form PD7A-RB,
Remittance Voucher, for accelerated remitters (other than
monthly accelerated remitters who use Form PD7A).
Complete your remittance voucher (the bottom part of the

remittance form) correctly so we can apply your remittance
to your account.
Note
If you receive a notice of assessment that states you have
an amount owing, use only the remittance form attached
to the notice to make that payment.
Form PD7A
We will send Form PD7A to each eligible regular, quarterly,
and monthly accelerated remitter to remit deductions.
www.cra.gc.ca
If you mail your cheque or money order payable to the

Receiver General, keep the top part as a record of your
remittance and send the bottom part of Form PD7A to the
following address:
Form PD7A has three parts:

Top part This part is a statement of account from us.
It shows:
the date of your statement of account;
your account number;
your business name;
balances on your last statement:
Canada Revenue Agency

875 Heron Road
Ottawa ON K1A 1B1
amounts paid for (year indicated), which are

remittances we received for the year indicated; and
Form PD7A(TM)
assessed amount owing, which is the amount you had

to pay on assessments of deductions, including
penalties and interest;
Each month, we send Form PD7A(TM) to all accelerated

remitters, except monthly accelerated remitters (who use
Form PD7A).
current balances:
amounts paid for (year indicated), which are the
amounts you paid for your deductions for the year
indicated; and
assessed amount owing, which is your balance owing
on assessments of deductions, including penalties and
interest; and
If you need more information about Form PD7A,

call 1-800-959-5525.
an explanation of changes.
Form PD7A(TM) has two parts:

Top part This part is a statement of account from us.
It shows:
the date of your statement of account;
your account number;
your business name;
balances on your last statement:
Bottom part This part is your remittance form for
amounts paid for (year indicated), which are

remittances we received for the year indicated; and
current remittances.
When you complete the bottom part, ensure that the
following information is correct:
assessed amount owing, which is the amount you had

to pay on assessments of deductions, including
penalties and interest;
Your name, address and account number.
The gross payroll for the remitting period (rounded to

the nearest dollar). This represents all remuneration that
you pay before you make any deductions such as income
tax. It includes regular wages, commissions, overtime
pay, paid leave, taxable benefits and allowances,
piecework payments, and special payments. It is the
same as the monthly total of all amounts that would
appear in box 14, Employment income, on your
employees T4 slips. (For quarterly remitters, it is the
total of these amounts for the last month of the quarter.)
The number of employees in the last pay period. This

includes any employee for whom you will prepare a
T4 slip, such as part-time and temporary employees, and
employees absent with pay. Do not include people for
whom you will not complete a T4 slip. Do not include
those you did not pay in the last pay period in the month
or quarter, such as employees on unpaid leave.
remittances.
The end of the remitting period for which deductions

were withheld. Enter the month and year for which you
are remitting (for regular remitters) or the last month and
the year of the quarter for which you are remitting (for
quarterly remitters).
The amount paid. This is the total CPP and EI (both

employer and employee portions), and income tax you
are remitting.
Back of the form This part can be used if you will not be
making a remittance during the month or quarter. It also

provides information on our TeleReply service.
current balances:
amounts paid for (year indicated), which are the
amounts you paid for your deductions for the year
indicated; and
assessed amount owing, which is your balance owing
on assessments of deductions, including penalties and
interest; and
an explanation of changes.
Bottom part This part is your remittance form for current
When you complete the bottom part, ensure that the

following information is correct:
Your name, address and account number.
The gross payroll for the remitting period (rounded to

the nearest dollar). This represents all remuneration that
you pay before you make any deductions, such as
income tax. It includes regular wages, commissions,
overtime pay, paid leave, taxable benefits and
allowances, piecework payments, and special payments.
It is the same as the total of all amounts for the remitting
period that would appear in box 14, Employment
income, on your employees T4 slips.
The number of employees in the last pay period. This

includes any employee for whom you will prepare a
T4 slip, such as part-time and temporary employees, and
employees absent with pay. Do not include people for
whom you will not complete a T4 slip. Do not include
those you did not pay in the last pay period of the
www.cra.gc.ca
45
remitting period, such as employees on unpaid leave.

If you have various pay groups (for example, executive,
hourly, and salaried), include all employees paid in each
groups last pay period, but do not count any person
twice.
Bottom part This part is your remittance form when
The end of remitting period (YY MM DD). Threshold 1

accelerated remitters have two remitting periods per
month. Therefore, they should enter either 15th or
month-end as their end of remitting period on the
remittance form. Threshold 2 accelerated remitters have
four remitting periods per month. Therefore, they should
enter either 7th, 14th, 21st, or month-end, as
their end of remitting period.
If you are a regular or quarterly remitter and do not receive

your remittance form for the month or quarter, or if you
lose one, send your cheque or money order payable to the
Receiver General to your tax centre. Include a short note
that states your account number and the month or quarter
for which you withheld the deductions.
The amount paid. This is the total CPP and EI (both

employer and employee portions), and income tax you
are remitting.
When you make your remittance at your financial

institution or tax centre, complete the top and the bottom
parts of Form PD7A(TM) and present them with your
remittance. The recipient will date-stamp the bottom part
and return the top part to you as a receipt.
Threshold 2 remitters and certain payroll service companies
must remit payroll deductions electronically or in person at
their Canadian financial institution.
E-PD7A
E-PD7A is an electronic service that lets you receive and
view your Statement of Account for Current Source
Deductions. The E-PD7A replaces the paper version of the
PD7A and the PD7A(TM). To view financial transactions
displayed on the PD7A form, use the View account
transaction service. For more information, and to find out
if you can register, go to www.cra.gc.ca/epd7a.
My Business Account services
You can view account transactions and account balances.
The following amounts can be viewed by using the View
account balance service:
amounts paid for Canada Pension Plan contributions,

employment insurance premiums, and income tax; and
assessed amount(s) owing, including outstanding

penalties and interest.


business owner.
If you are an accelerated remitter and you did not receive

your remittance forms or you lost them, call 1-800-959-5525.
Note
Even if you do not have a remittance form, you still have
to send us your remittance so that we receive it by the
due date.
Not making a remittance

If you are not making a remittance for the month or
quarter, you may notify us by:
using the Provide a nil remittance service in My

Business Account or Represent a Client;
using our TeleReply service; or
by mail.
If you prefer not to use the online services or TeleReply,

complete the remittance form and mail it to us (see Back of
the form on page 45). Be sure to indicate when you expect
to have employees subject to deductions.
TeleReply
You can use TeleReply if you currently have no employees,
are submitting nil remittance information for your payroll
account, and the account number printed on your
remittance form is correct. If you use TeleReply, do not mail
your remittance form to us, but fill it out and keep it for
your records.
Hours of operation
Monday to Friday
Saturday
8:00 a.m. to 7:30 p.m.

8:00 a.m. to 4:30 p.m.
You cannot use TeleReply on Sundays and public holidays.

Before you call TeleReply
Form PD7A-RB
Each December, we provide accelerated remitters (except
monthly accelerated remitters who receive Form PD7A) a
booklet of PD7A-RB forms (either 27 or 54 forms) to use to
remit deductions. These booklets are printed once a year.
If you require additional forms, call 1-800-959-5525.
46
Missing or lost remittance forms
You can use TeleReply during the following times (local

time):
Go to:
Form PD7A-RB has two parts:

Top part This part is a receipt.
making your payment. To complete this part, see Bottom

part under the heading Form PD7A(TM) on this page.
Before you call TeleReply, you should complete the back of

your remittance form, make sure the account number and
address printed on your remittance form are correct, and
have this information with you when you call TeleReply.
Note
For best results and to ensure your privacy, do not use a
cordless or cellular telephone or one with the keypad in
the handset. Also, if at any time during the call we tell
you that you cannot use TeleReply, you will have to mail
your remittance form.
www.cra.gc.ca
How to you use TeleReply
By mail
1. Call TeleReply at 1-800-959-2256.
You can mail a cheque or money order payable to the

Receiver General to the address listed in your remittance
form booklet or on the back of your remittance form. Write
your account number on the back of your cheque or money
order. Complete and include the bottom part of your
remittance form with your payment. Allow sufficient
mailing time to ensure that we receive your remittance by
the due date. We accept cheques that are post-dated to the
due date. Do not send cash in the mail.
2. Follow the step-by-step instructions to enter your

information.
3. At the end of the call, we will ask you to confirm the
information you entered.
4. Write down the confirmation number we will give you
and keep it for your records.
If we do not give you a confirmation number, your
information will not be processed. You will have to call
TeleReply again or mail your completed remittance form to
us. For more information, go to www.cra.gc.ca/telereply or
call 1-800-959-5525.
Remittance methods
There are several methods to choose from when remitting
your payroll deductions. However, if you are a threshold 2
remitter, you must remit payroll deductions electronically
or in person at your Canadian financial institution on or
before the due date.
We consider all payments made to the CRA at least one full
day before the due date to have been made at a financial
institution and a penalty will not be charged.
institution, are subject to a penalty of 3% of the amount due.
All payments made after the due date are subject to the
graduated penalty rates. For more information, see page 11.
Remittances are deemed to have been made on the day on
which it is received by the Receiver General, and as such,
you should choose the appropriate remittance method to
meet your due date.
Regardless of your remittance method, allow 10 days for
your remittance to process.
Electronic payments
Make your payment online using the CRA's My Payment
service at www.cra.gc.ca/mypayment or using your
financial institution's telephone or Internet banking
services. For more information, go to
www.cra.gc.ca/electronicpayments or contact your
financial institution.
At your financial institution

You can make your payment at your Canadian financial
institution. Complete the remittance form and present it
with your payment. The financial institution will date
stamp the bottom part and return the top part to you as
a receipt.
Using an ATM (automated teller machine)
If you use an ATM to send us a remittance, allow time for the
financial institution to process the transaction. The institution
will debit your account when you use the ATM. However,
you should allow time for us to receive the remittance. An
ATM receipt is not proof of payment by the due date.
Payment arrangement
Payroll deductions must be held in trust for the Receiver
General in a separate account than your operating business
account, but if for any reason you cannot pay your balance
owing, call 1-877-397-6014. We will still charge a penalty
and daily compound interest on any outstanding balance.
Do you have more than one account?

If you remit deductions for more than one account, make
sure you provide your payroll account numbers and give a
breakdown of the amounts intended for each account. We
can then credit the right amounts to the right accounts.
Notice of assessment
If you receive a notice of assessment, use only the
remittance form attached to the notice to make your
payment.
Use only forms PD7A, PD7A(TM) and PD7A-RB for
current remittances of CPP, EI, and income tax.
Service bureaus
Service bureaus or similar institutions that take care of
payroll deductions for clients can remit a lump-sum
payment for the amounts they deduct for their clients. They
have to provide the following information for each client:
account number;
amount remitted;
gross payroll; and
number of employees in the last pay period.
If you use a service bureau or similar institution to remit

your deductions, you are still responsible for making sure
that the institution withholds your deductions and sends
them to us on time.
Remitting error
If you discover that you made an error in remitting your
deductions, you should remit any shortage as soon as
possible by electronic payment, another remittance form or
by writing a short letter giving your account number and
the pay period for which it applies.
If you have over-remitted, reduce your next remittance by
the amount of the overpayment.
If your remittance is late, we may apply a late-remitting
penalty. For more information, see page 11.
www.cra.gc.ca
47
Appendix 1 Which payroll table should you use?
Your employee is a...
Employee reports for

work at an
establishment of the
employer in Canada
Employee works in
Canada, but does not
report for work at an
establishment of the
employer
Employee works in
Canada, but employer
does not have an
establishment in
Canada
Resident of Canada
Use the payroll deductions

tables for the province or
territory where the employee
reports for work.

territory where the
employers establishment is
located and from which the
employees salary is paid.

tables for In Canada Beyond
the Limits of Any Province or
Outside Canada.
Deemed resident or sojourner

(see Note)

Outside Canada.

tables for In Canada
Beyond the Limits of Any
Province or Outside
Canada.

Outside Canada.
Part-year resident, for the part of

the year he/she is resident in
Canada (see Note)

territory where the employee
reports for work.

territory where the
employers establishment
is located and from which
the employees salary is
paid.

Outside Canada.
Part-year resident, for the part of

the year he/she is non-resident
(see Note)

territory where employment
duties are performed.


Non-resident, including a
commuter (see Note)



Note
For more information, see Interpretation Bulletin IT-221R3 CONSOLID, Determination of an Individuals Residence Status.
48
www.cra.gc.ca

(single pay period)
You can use the following calculation to determine the CPP contributions you should deduct for your employee for a single pay period.
To determine the CPP contributions for multiple pay periods, or to verify the annual contribution at years end, use Appendix 3 on the
next page.
Note
Before using this calculation, read Starting and stopping CPP deductions on page 15.
Step 1 Calculate the employees pensionable earnings for the pay period.
Enter the employees gross pay for the period ................................................................. $
Enter any taxable benefits and allowances for the period ................................................ $
Line 1 plus line 2 ............................................................................................................. $
Enter any income from Employment, benefits and payments not subject to
CPP contributions, described in Chapter 2 of this guide................................................... $
Pensionable earnings (line 3 minus line 4) ...................................................................................................
Step 2 Enter the basic exemption for the pay period. Use the table below, or the following equation:
Annual basic exemption ($3,500 for 2012) divided by the number of pay periods in the year ..........................
Step 3 Line 5 minus line 6 ...................................................................................................................................
Step 4 Enter CPP contribution rate (4.95% in 2012) .............................................................................................

Step 5 CPP contribution to be deducted (line 7 multiplied by line 8) ...................................................................
8
$
Employees basic CPP exemption for various 2012 pay periods

Pay period
Basic exemption
Annually (1)
$3,500.00
Semi-annually (2)
$1,750.00
Quarterly (4)
$875.00
Monthly (12)
$291.66
Semi-monthly (24)
$145.83
Bi-weekly (26)
$134.61
Bi-weekly (27)
$129.62
Weekly (52)
$67.30
Weekly (53)
$66.03
22 pay periods
$159.09
13 pay periods
$269.23
10 pay periods
$350.00
Daily (240)
$14.58
$1.75
Hourly (2,000)
www.cra.gc.ca
49

(multiple pay periods or year-end verification)
Use the following calculation to determine an employees CPP contributions over multiple pay periods, or to verify an employees
CPP contributions at year-end before you complete and file the T4 slips. This is the same calculation we use in Part B of the Guide
T4127, Payroll Deductions Formulas for Computer Programs. This optional calculation is the only one we authorize. You can get the
information you need to complete this calculation from each employees payroll master file.
Using the calculation will help you avoid the possibility of receiving a pensionable and insurable earnings review (PIER) report.
Note
Before using this calculation to determine an employees CPP contributions over multiple pay periods, read Starting and stopping
CPP deductions on page 15.
To calculate or verify contributions, follow these steps:
Step 1 Enter the salary, wages, benefits, and allowances for the total period of employment from the
employees payroll master file that you will include in box 14 Employment income of the T4 slip ...........
Total earnings not subject to CPP contributions ...............................................................................................
Step 3 Pensionable earnings for the period of employment (to a maximum of $50,100 for 2012)
Line 1 minus line 2 ....................................................................................................................................
Basic exemption that applies to the period of pensionable

employment (for more information, see Chapter 2).
This amount cannot be more than the maximum yearly basic
exemption of $3,500 .................................................................................................................................
Step 5 CPP contributory earnings for the period of pensionable employment Line 3 minus line 4 ....................
Step 6 Enter the CPP contribution rate for the year (4.95% for 2012) ..................................................................
Step 7 Employees required CPP contributions for the period of pensionable employment (maximum
$2,306.70 for 2012) Line 5 multiplied by the rate on line 6 .....................................................................
Step 8 Enter the CPP contributions from the employees payroll master file that you
deducted for the period of pensionable employment .................................................................................
Step 9 Line 7 minus line 8. The result should be zero ..........................................................................................
Step 2 Subtract from line 1 the following earnings of the employee:
the amount the employee received before and including

the month the employee turned 18 ........................................................................... $
the amount the employee received after the month the

employee turned 70 .................................................................................................. $
the amount the employee received after the effective date

of the employees completed and signed election
Form (CPT30) to stop contributing to the CPP .......................................................... $
the amount the employee received before and including

the month in which the employee provided you with a completed
and signed revocation Form (CPT30) to start contributing to the CPP ...................... $
the amount the employee received during the months the

employee was considered to be disabled under CPP or QPP .................................. $
any income from Employment, benefits and payments not subject to

CPP contributions, described in Chapter 2 of this guide ........................................... $
Step 4 Enter the basic exemption for the pay period

(see table on previous page) .................................................................................... $
Multiply by the number of pay periods of pensionable earnings
(related to the amount on line 3). Make sure not to include pay
periods that apply to the earnings listed in Step 2 above ..........................................
If the amount on line 9 is positive, you have underdeducted contributions. If this is the case, add line 8 and line 9 and include the
total in box 16, Employees CPP contributions, of the T4 slip.
Note
If the amount on line 9 is negative, you may have overdeducted contributions. If this is the case, verify the employees master file
to ensure that the amounts on line 1 and line 3 are correct. For more information on refunding CPP overpayments, see page 17.
50
www.cra.gc.ca
Appendix 4 Canadas social security agreements

with other countries
Date in force
CPT form
number
January 1, 1994
111
November 1, 1987
112
Barbados
January 1, 1986
113
Belgium
January 1, 1987
121
Chile
June 1, 1998
114
Croatia
May 1, 1999
115
Cyprus
May 1, 1991
116
Country
Antigua and
Barbuda
Austria
January 1, 2003
137
Denmark
January 1, 1986
117
Dominica
January 1, 1989
118
Estonia
November 1, 2006
142
Finland
February 1, 1988
128
France
March 1, 1981
52
April 1, 1988
130
Greece
Grenada
Lithuania
Luxembourg
Czech Republic
Germany
Country
Macedonia
Malta
Mexico
Morocco
Netherlands
Norway
Philippines
Poland
April 1, 1990
60
November 1, 2011
163
March 1, 1992
61
May 1, 1996
62
March 1, 2010
166
April 1, 2004
63
January 1, 1987
127
March 1, 1997
64
October 1, 2009
161
May 1, 1981
55
November 1, 2011
165
St. Kitts and Nevis
January 1, 1994
65
Saint Lucia
January 1, 1988
67
November 1, 1998
66
December 1, 1997
54
Saint Vincent and

the Grenadines
February 1, 1999
119
Slovakia
January 1, 2003
138
January 1, 2001
68
January 1, 1988
125
April 1, 2003
129
October 1, 1995
69
July 1, 1999
70
January 1, 2005
72
January 1, 1994
120
Hungary
October 1, 2003
141
Spain
Iceland
October 1, 1989
49
Sweden
Ireland
January 1, 1992
50
Switzerland
September 1, 2003
140
Italy
January 1, 1979
51
Trinidad and
Tobago
Jamaica
January 1, 1984
57
Japan
March 1, 2008
122
Jersey
January 1, 1994
120
May 1, 1999
58
November 1, 2006
143
Latvia
144
Romania
Guernsey
Korea (South)
November 1, 2006
CPT form
number
Portugal
Slovenia
Israel
Date in force
Turkey
United Kingdom
United States
Uruguay
www.cra.gc.ca
April 1, 1998
71
August 1, 1984
56
January 1, 2002
136
51
Appendix 5 Calculation of employee

EI premiums (2012)
The following year-end calculation will help you verify an employees EI premiums before you complete and file the T4 slips. This
optional calculation is the only one we authorize. We based the calculation on information in this guide and in Part C of the
Guide T4127, Payroll Deductions Formulas for Computer Programs. You can get the information you need to complete this calculation
from each employees payroll master file.
Using this calculation will help you avoid the possibility of receiving a pensionable and insurable earnings review (PIER) report.
To verify the EI deduction, follow these steps:
Step 1 Enter the insurable earnings for the year as indicated in each employees
payroll master file for the period of insurable employment. The amount should not be more than the
maximum annual amount of $45,900 (for 2012) ........................................................................................
Step 2 Enter the employees EI premium rate for the year (1.83% for 2012 for Quebec, use 1.47%) ................
Step 3 Multiply line 1 by line 2 to calculate the employees EI premiums payable for the year.
The amount should not be more than the maximum annual amount of $839.97
($674.73 for Quebec) for 2012 ..................................................................................................................
Step 4 Enter the employees EI premium deductions for the period of insurable
employment as indicated in the employees payroll master file .................................................................
Step 5 Line 3 minus line 4. The result should be zero ..........................................................................................
If there is an amount on line 5 and it is positive, you have underdeducted. If this is the case, add line 4 and line 5 and include the
total in box 18, Employees EI premiums, of the T4 slip.
Note
If the amount on line 5 is negative, you have overdeducted premiums. If this is the case, verify the employees payroll master file
to ensure that the amount on line 1 is correct. For more information on refunding EI overpayment, see page 22.
52
www.cra.gc.ca
Appendix 6 Special payments chart
he following chart will help you determine whether or not to deduct CPP, EI, and income tax on the following special
payments you make to your employees.
CPP
1
contributions
EI
1
premiums
Tax
deductions
Advances
Yes
Yes
Yes
Benefits under the Employment Insurance Act
No
No
Yes
Bonuses and retroactive pay increases
Yes
Yes
Yes
Casual employment if it is for a purpose other than your usual trade or

business (even if there is a contract of employment)
No
No
No
Compassionate care benefits amounts paid to cover the waiting period or to

increase the benefit
Yes
Yes/No
Yes
Corporate employee who controls more than 40% of the corporations voting
shares receiving salary, wages or other remuneration
Yes
No
Yes
No
Yes
Yes/No
Yes/No5
Yes
No
No
No
Special payments
Directors fees paid to residents of Canada or to non-residents
Fee only
Fee in addition to salary
Yes
Employees profit sharing plans (EPSP)

Employment in Canada by a foreign government or an international
organization
Yes/No
Employment in Canada of a non-resident person if the unemployment

insurance laws of any foreign country require someone to pay premiums for
that employment
Yes/No
Employment in Canada under an exchange program if the employer paying the

remuneration is not resident in Canada
Employment of your child or a person that you maintain if no cash
remuneration is paid
Yes/No
Yes
No
Yes
Yes/No
10
No
Yes
No
No
No
11
No
Yes/No
13
No
Yes/No
Employment that is in exchange of work or service (even if there is a contract

of service)
Yes/No
Employment under the Job creation partnerships and Self-employment

assistance employment benefits established by the Canada Employment and
Immigration Commission under section 59 of the Employment Insurance Act,
Yes/No
12
14
If you have already deducted the total yearly maximum contributions from the employees income, do not deduct more contributions. Do not
consider amounts deducted by previous employers during the same year unless there was a restructure or reorganizationsee page 10.
2
Do not deduct EI premiums if the following two conditions are met:
the total amount of your payment and the EI weekly benefits does not exceed the employees normal weekly gross salary; and
your payment does not reduce any other accumulated employment benefits such as banked sick leave, vacation leave credits, or retiring
allowance.
3
Do not deduct CPP contributions when the employment is performed totally or partly outside Canadasee page 18.
4
Do not deduct income tax if you estimate that the total fee paid in the year is less than the total claim amount on Form TD1.
5
Determination to deduct CPP, EI or both depends on the status of the resident directors employment. For more information on directors fees, see
page 30 of this guide.
6
Deduct CPP contributions when the international organization or the foreign government agree to cover their employees. A list of the
international organizations and foreign countries can be found under Schedules V and VII of the Canada Pension Plan Regulations (except for
employment listed in Schedules VI and VIII).
7
Deduct EI premiums when the foreign government or international organization agrees to cover its Canadian employees under Canadas EI
legislation (in this case, the employment is insurable if Human Resources and Skills Development Canada agrees).
8
For more information on non-resident employees, see page 28 of this guide.
9
Deduct CPP contributions unless the worker has a certificate of coverage from the competent authority of his/her country confirming that the
worker is contributing to a pension plan in his/her country. Do not deduct CPP contributions if the employer is not residing in Canada and
does not have an establishment in Canada, unless the employer has filed Form CPT13.
10
Do not deduct CPP contributions unless the employer has filed Form CPT13.
11
Deduct CPP contributions unless it is employment not subject to CPP deductions, as indicated in Chapter 2 of this guide.
12
For more information about bartering, see IT-490, Barter Transactions. Do not deduct income tax unless the taxpayer is an employee and makes a
regular habit of providing services for cash.
13
Do not deduct CPP contributions on benefits paid by HRSDC or a provincial government. Deduct CPP contributions on payments made by an
employer unless the individual is working as a self-employed individual or it is employment not subject to CPP contributions, as indicated in
Chapter 2 of this guide.
14
Deduct income tax if the payment is considered government financial assistance, but if the payment is considered an inducement to earn business
income, do not deduct income tax.
www.cra.gc.ca
53
EI
1
premiums
Tax
deductions
Yes/No
No
Yes
Entertainment activity, employment in
Yes
Yes
Yes
Furlough, amounts received when on
Yes
Yes
Yes
Honorariums from employment or office
Yes
Yes
Yes
Incentive payments
Yes
Yes
Yes
Yes/No
No
Yes
Lost-time pay from a union, amounts received as
Yes
Yes
Yes
Maternity benefits amounts paid to cover the waiting period or to increase the
benefit
Yes
Yes/No
Yes
Overtime pay, including banked overtime pay
Yes
Yes
Yes
Parental care benefits amounts paid to cover the waiting period or to

increase the benefit
Yes
Yes/No
Yes
Payments under Part 2 of the Canadian Forces Members and Veterans

Re-establishment and Compensation Act - amounts received on account of an
earnings loss benefit, supplementary retirement benefit or permanent
impairment allowance payable to the taxpayer
No
No
Yes
Yes/No
Yes/No16
Yes
Yes
Yes
Yes
Retirement compensation arrangements (RCA)
No
No
Yes
Retiring allowances (also called severance pay)
No
No
Yes
Sabbatical, remuneration received while on
Yes
Yes
Yes
Salary
Yes
Yes
Yes
Salary deferral arrangements on amounts earned
Yes
Yes
Yes
Sick leave, amounts received while on sick leave, sick leave credits, payments
for
Yes
Yes
Yes
Spouse or common-law partner, employment of, if you cannot deduct the

remuneration paid as an expense under the Income Tax Act
No
Yes/No
Teacher on exchange from a foreign country, employment of
No
Yes/No
Yes/No
Tips and gratuities (controlled by employer)
Yes
Yes
Yes
Tips and gratuities (direct tips or gratuities - not controlled by the employer)
No
No
No
Vacation pay, public holidays, and lump-sum vacation payment
Yes
Yes
Yes
CPP
1
contributions
Special payments
or under a similar benefit that a provincial government or other organization
provides and is the subject of an agreement under section 63 or the
Employment Insurance Act
Employment when employment insurance premiums have to be paid according
to the unemployment insurance laws of any state of the United States, the
District of Columbia, Puerto Rico, or the Virgin Islands, or according to the
Railroad Unemployment Insurance Act of the United States
Job creation HRSDC approved project, additional amounts that you as an

employer pay while participating in a project
Prescribed salary deferral plans or arrangements on amounts received

Qualifying retroactive lump-sum payments
17
15
10
15
16
19
20
18
Yes
21
22
22
Deduct CPP contributions on payments made by an employer unless the individual is working as a self-employed individual or it is employment
not subject to CPP contributions as indicated in Chapter 2 of this guide.
To determine if you have to deduct CPP, EI or both, see Prescribed plans or arrangements on page 35.
17
Qualifying retroactive lump-sum payments may be subject to CPP and/or EI in addition to income tax.
18
Do not deduct income tax on the amount of retiring allowance that is transferred directly to the recipients RPP or RRSP (up to the amount of the
employees available RRSP deduction limit)see page 33 for details.
19
Deduct EI premiums if you would have negotiated a similar contract with a person that you deal with at arms length.
20
Deduct EI premiums, unless the worker is remunerated by an employer residing outside Canada.
21
Canadian earnings are subject to tax unless provisions of an income tax convention/treaty dictate otherwise.
22
For more information on determining if the tips and gratuities are controlled or direct, see www.cra.gc.ca/tx/hm/xplnd/tps-eng.html.
16
54
www.cra.gc.ca
Vow of poverty employment of a member of a religious order who has taken

a vow of poverty. This applies whether the remuneration is paid directly to the
order or the member pays it to the order.
No
No
Yes/No
Wages
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
23
Paid by the employer
Paid by third party/trustee and the employer:

funds any part of the plan; and
exercises a degree of control over the plan; and
determines the eligibility for benefits.

Workers compensation awards
23
24
Employees salary paid before or after a workers compensation board

claim is decided
Yes
Yes
Yes
Advances or loans equal to the workers compensation award
No
No
No
Amount paid in addition to an advance or loan before the claim is

accepted
Yes
Yes
Top-up amounts paid after the claim is accepted
Yes
No
Yes
Top-up amounts paid as sick leave after the claim is accepted
Yes
No
Yes
24
Yes
Deduct income tax, unless the employer pays the remuneration directly to the order or the employee provides the employer with a letter of
authority approved by a tax services office.
An amount you pay in addition to an advance or loan is not a top-up amount if you pay it while waiting for a decision on a workers
compensation board claim. This amount is considered as employment income.
www.cra.gc.ca
55
Index
Page
Page
Accelerated remitter (threshold 1 and 2) ............................. 44
Employment and payments not subject to

EI premiums ...................................................................... 19
Insurable employment (definition) .................................... 18
Premium rate and maximum .............................................. 20
Quebec Parental Insurance Plan (QPIP) ............................ 21
Record of Employment (ROE) ............................................ 7, 23
Recovering EI premiums ..................................................... 22
Reducing the employers rate ............................................. 21
Year-end calculation of EI ............................................. 24, 52
Employment outside or partly outside Canada ................... 40
Addresses tax services offices and tax centres .................. 58

Agreements with other countries (CPP coverage) ........ 18, 51
Appeal of a payroll assessment or a CPP/EI ruling ........... 11
Arms length relationship ....................................................... 19
Assignment ................................................................................. 7
Associated corporations.......................................................... 44
Authorize or manage representatives ..................................... 6
Automated teller machine (ATM) ......................................... 47
Average monthly withholding amount (AMWA) .............. 44
Baby-sitters .............................................................................. 40
Bankruptcy ................................................................................. 7
Barbers and hairdressers ........................................................ 38
Bonuses ..................................................................................... 28
Books ........................................................................................... 7
Business, change in legal status ............................................. 10
Business goes through a restructure or reorganization ...... 10
Business Number and your payroll account.......................... 6
Business stops operating .......................................................... 9
Canada Pension Plan (CPP)

Amounts not subject to CPP contributions ...................... 13
Amounts subject to CPP contributions ............................. 12
Basic exemption for various pay periods ......................... 49
Basic yearly exemption ....................................................... 14
Canadas social security agreements ........................... 18, 51
Commissions paid at irregular intervals .......................... 16
CPP coverage by foreign employers ................................. 18
CPP overpayment ................................................................ 17
Employees between 60 and 70 years old .......................... 16
Excluded benefits and payments ....................................... 13
Excluded employment ........................................................ 13
Rate and maximum ............................................................. 14
Recovering CPP contributions ........................................... 17
Year-end calculation of CPP ............................................... 24
Canadian International Development Agency (CIDA) ...... 41
Caregivers ................................................................................. 40
Commissions ...................................................................... 16, 25
Computer programs, payroll deductions formulas for ........ 8
Contacts....................................................................................... 6
Contract for services .................................................................. 6
Contract of services ................................................................... 6
CSST (Commission de la sant et de la scurit
du travail).............................................................................. 37
Deduction for living in a prescribed zone ........................... 25

Directors fees ........................................................................... 30
Directors liability .................................................................... 11
Emergency volunteers ............................................................ 39
Employee leaves (termination of employment) .................... 7
Employees profit sharing plan (EPSP) .................................. 31
Employer (definition) ................................................................ 6
Employer-employee relationship ............................................ 6
Employer responsibilities ......................................................... 7
Employment in Quebec ...................................................... 6, 25
Employment insurance (EI).................................................... 18
Age limit for deducting premiums .................................... 18
Amounts subject to EI premiums ...................................... 18
EI overpayment .................................................................... 22
56
Fees estate executors or liquidators and administrators ... 7

Filing date of information returns.......................................... 10
Filing information returns....................................................... 10
Fishers and election to have income tax deducted .............. 26
Fishers and employment insurance ....................................... 41
Hiring a person who is not a Canadian citizen or a
permanent resident of Canada (see SIN)......................... 8
Income tax
Claim codes ........................................................................... 25
Form TD1 (Individuals) ....................................................... 24
Form TD1-IN (Indian).......................................................... 42
Form TD1X (Commissions with expenses) ....................... 25
Form TD3F (Fishers) ............................................................ 26
How to calculate how much tax to withhold ................... 28
Reducing remuneration subject to income tax ................. 26
Remuneration subject to income tax .................................. 26
Request for more tax deductions........................................ 25
Indian ......................................................................................... 42
Application for CPP coverage ............................................ 42
Interest ....................................................................................... 11
Labour-sponsored funds tax credits ..................................... 28

Letter of authority .................................................................... 27
Maids ........................................................................................ 40
No employees for a period during the year ........................... 9
Non-resident directors............................................................. 30
Non-resident employees who perform services
in Canada ............................................................................... 28
Online services......................................................................... 43
Authorize or manage representatives ................................. 6
File a return ........................................................................... 44
Provide a nil remittance....................................................... 46
Register a formal dispute (Appeal) .................................... 11
Request a CPP/EI ruling ................................................. 6, 40
Request to close payroll account .......................................... 9
View account balance .......................................................... 46
View account transactions................................................... 46
View remitting requirements .............................................. 43
View return status ................................................................ 10
Ottawa Technology Centre address ...................................... 58
Overseas employment tax credit............................................ 41
Overtime pay ............................................................................ 32
Payer of other amounts ............................................................. 7

Payroll account ..................................................................... 6, 47
Payroll advances ...................................................................... 28
Payroll Deductions Online Calculator (PDOC) ..................... 8
www.cra.gc.ca
Page
Page
Payroll deductions tables.......................................................... 8

Penalties .................................................................................... 11
Pensionable and insurable earnings review (PIER) ............ 23
Placement and employment agency workers ...................... 41
Prescribed plans or arrangements ......................................... 35
Provide a nil remittance .......................................................... 46
Provincial or territorial tax tables ...................................... 9, 48
Public holidays ..................................................................... 4, 35
Request to close payroll account .............................................. 9

Retirement compensation arrangements (RCA) .................. 32
Retiring allowances .................................................................. 33
Retroactive pay increases ........................................................ 28
Qualifying retroactive lump-sum payments ....................... 32

Withholding rates for lump-sum payments ................... 32
Quarterly remitters .................................................................. 43
Quebec Parental Insurance Plan (QPIP) ............................... 21
Quebec Pension Plan (QPP) ................................................... 12
Record of Employment (ROE) .............................................. 23

Registered pension plan (RPP) .............................................. 27
Registered retirement savings plan (RRSP) ......................... 27
Regular remitter ....................................................................... 43
Related persons ........................................................................ 19
Remittance due dates .......................................................... 4, 43
Remittance forms
PD7A ..................................................................................... 44
PD7A(TM), PD7A-RB, Electronic PD7A (E-PD7A) ......... 46
Remittance methods ................................................................ 47
Request a CPP/EI ruling .......................................................... 6
Salary deferral arrangements................................................. 35

Seasonal Agricultural Workers Program .............................. 42
Service Canada Centre .............................................................. 8
Social insurance number (SIN) ................................................. 8
Social security agreements with other countries ........... 18, 51
Special payments chart ............................................................ 53
Taxi drivers and drivers of other passenger-carrying
vehicles .................................................................................. 39
TeleReply service ..................................................................... 46
Temporary-help service firms ................................................ 40
Termination of employment ..................................................... 7
Tips and gratuities ....................................................... 12, 18, 26
Trustee, employment by a......................................................... 6
Trustee in bankruptcy ............................................................... 7
Vacation pay ............................................................................ 35

Wage loss replacement plan .................................................. 36
Wages in lieu of termination notice ....................................... 36
Waiving penalties and interest ............................................... 11
Workers compensation awards ............................................. 36
www.cra.gc.ca
57
For more information

What if you need help?
Addresses
If you need help after reading this publication, visit

www.cra.gc.ca/payroll or call 1-800-959-5525. To get our
forms or publications, go to www.cra.gc.ca/forms or call
1-800-959-2221.
Ottawa Technology Centre

875 Heron Road
Ottawa ON K1A 1A2
Teletypewriter (TTY) users
Tax services offices
TTY users can call 1-800-665-0354 for bilingual assistance

during regular business hours.
To find out where to send your requests, go to

www.cra.gc.ca/tso or call 1-800-959-5525.
Electronic mailing list
Tax centres
We can notify you immediately about new information

on payroll, electronic filing, and more. To subscribe,
free of charge, go to www.cra.gc.ca/lists.
Online services built for businesses

With the CRA's online services for businesses, you can do
many things, including:
authorize a representative for online access to your

business accounts;
change the mailing and physical addresses, as well as the

books and records address;
file or amend information returns without a Web access

code;
provide a nil remittance;
view your account balance and transactions;
register a formal dispute; and
request a CPP/EI ruling.
Shawinigan-Sud Tax Centre

Post Office Box 3000, Station Bureau-chef
Shawinigan QC G9N 7S6
St. Johns Tax Centre
290 Empire Avenue
St. Johns NL A1B 3Z1
Sudbury Tax Centre
1050 Notre-Dame Avenue
Sudbury ON P3A 5C1
Summerside Tax Centre
275 Pope Road
Summerside PE C1N 6A2
Surrey Tax Centre
9755 King George Boulevard
Surrey BC V3T 5E1
To access our online services, go to:

representative (including employees); or
www.cra.gc.ca/mybusinessaccount, if you are a business

owner.
Electronic payments
Make your payment online using the CRA's My Payment
service at www.cra.gc.ca/mypayment or using your
financial institution's telephone or Internet banking
services. For more information, go to
www.cra.gc.ca/electronicpayments or contact your
financial institution.
58
Jonquire Tax Centre

2251 Ren-Lvesque Boulevard
Jonquire QC G7S 5J1
Winnipeg Tax Centre

66 Stapon Road
Winnipeg MB R3C 3M2
Publications for employers
T4032, Payroll Deductions Tables
RC4120, Employers' Guide Filing the T4 Slip and Summary
T4130, Employers Guide Taxable Benefits and Allowances
RC4157, Deducting Income Tax on Pension and Other

Income, and Filing the T4A Slip and Summary
RC4110, Employee or Self-Employed?
RC4409, Keeping Records
www.cra.gc.ca
Our service complaint process
Your opinion counts
If you are not satisfied with the service that you have
received, contact the CRA employee you have been dealing
with or call the telephone number that you have been
given. If you are not pleased with the way your concerns
are addressed, you can ask to discuss the matter with the
employees supervisor.
If you have comments or suggestions that could help us

improve our publications, send them to:
If the matter is still not settled, you can then file a service
complaint by completing Form RC193, Service-Related
Complaint. If you are still not satisfied, you can file a
complaint with the Office of the Taxpayers Ombudsman.
Taxpayer Services Directorate

Canada Revenue Agency
395 Terminal Avenue
Ottawa ON K1A 0S5
For more information, go to www.cra.gc.ca/complaints or

see Booklet RC4420, Information on CRA Service
Complaints.
www.cra.gc.ca
59

Employer's Guide Payroll Deductions and Remittances

Uploaded by

Copyright:

Available Formats

Employer's Guide Payroll Deductions and Remittances

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Employer's Guide Payroll Deductions and Remittances

Uploaded by

Copyright:

Available Formats

Employers Guide

Payroll Deductions and Remittances

Is this guide for you?

a payer of other amounts related to employment; or

an estate executor, liquidator, administrator, or corporate director.

If you have a visual impairment, you can get our publications in

Temporary hiring credit for small

This guide was printed before the Canada Pension Plan

Under proposed changes, the one-time hiring credit for

Online services built for businesses

Wage loss replacement plans

Direct deposit for payroll accounts

Remittance due dates

Threshold 2 (average monthly withholding

For information on remittance methods, see page 47.

As a threshold 2 remitter, you have to remit your

New or regular remitter

July to September; and

the 1st through the 7th day of the month;

the 8th through the 14th day of the month;

the 15th through the 21st day of the month; and

the 22nd through the last day of the month.

We consider all payments made to the Canada Revenue

View remitting requirements

You can view remitting requirements online at:

www.cra.gc.ca/representatives, if you are an authorized

www.cra.gc.ca/mybusinessaccount, if you are the

for remuneration paid before the 16th day of the month,

for remuneration paid after the 15th day of the month

Chapter 2 Canada Pension Plan contributions ...........

Chapter 3 Employment insurance premiums .............

Chapter 4 Pensionable and insurable earnings

Chapter 5 Deducting income tax ...................................

Chapter 8 Remitting payroll deductions .....................

Appendix 1 Which payroll table should you use? ....

Appendix 2 Calculation of CPP contributions

Appendix 3 Calculation of CPP contributions

Appendix 4 Canadas social security agreements

Appendix 5 Calculation of employee

Appendix 6 Special payments chart.............................

For more information ........................................................

Chapter 1 General information

Visit Revenu Qubecs Web site at www.revenuquebec.ca

pay salaries or wages;

pay tips and gratuities;

pay bonuses and vacation pay;

provide benefits and allowances to employees; or

need to report, deduct and remit amounts from other

If you need a payroll account and you already have a

Contacts and authorized representatives

The Quebec provincial government administers its own

the employee has to report to your place of business in

the employee does not have to report to your place of

Are you an employer?

you pay salaries, wages (including advances), bonuses,

you provide certain taxable benefits, such as an

An individual is an employee if the employment

Employers with employees in Quebec have to deduct

employment is pensionable under the QPP. Employers