As per Canadian law, an employer withholds Income tax, Employee contributions to employment insurance known as EI, and employee contributions to the Canada pension plan called CPP. Hence, the amount credited to your account will be lesser than the amount earned for every pay stub.
- Income Tax deduction – Per law, an employer will deduct income tax for the amount paid at the source.
- Employment Insurance Premium (EI) – Employers will deduct EI from every employee’s pay stub using the annual EI premium rate and maximum. EI helps you with temporary financial assistance in case of job loss. An employer is also required to remit their share of EI payment for every employee, through payroll remittances.
- Canada Pension Plan (CPP) - CPP is deducted from an employee's pay stub to safeguard their retirement phase. In addition to employee’s share, an employer will also remit their share to Canada Revenue Agency (CRA).To learn more about CPP, see Canada Pension Plan (CPP) contributions for CPP working beneficiaries.