Canada Tax Info

This section includes specific tax info for Canada payroll tax withholding.  For US States, click here.

GENERAL CANADA TAX INFO
        Canada Tax Basics | Employee info | Ontario items | British Columbia Items | Tax References

Canadian Provincial Payroll Taxes
        Alberta | British Columbia | Manitoba | New Brunswick | Newfoundland
        Northwest Territories | Nova Scotia | Nunavut | Ontario | Prince Edward Island
        Quebec | Saskatchewan | Yukon

Website Info Links
       Payroll Accounting Software | Payroll Software | Payroll Tax Table Updates

Canadian Payroll Tax Basics

Canada includes three basic payroll taxes:

  • Canada Pension Plan premiums (CPP)
  • Employment Insurance Premiums (EI)
  • Income tax, comprised of federal and provincial taxes

  The first two items use a simple percentage.  Goldenseal includes these components for each province's tax packages and calculates them automatically.

Entering Employee Payroll Info

To calculate federal and provincial income taxes correctly, enter the following information for each Employee account:

Tax Credits-- Take the amount claimed by the employee as Tax Credits according to the řTotal of personal tax credit amountsÓ indicated on Form TD1, multiply it by 0.17, and enter the result into the Federal Dollar Amount field in each employee account.
NOTE-- This amount is K1, the non-refundable personal tax credit (see your tax booklet for more information).

Other Credits-- Enter any other federal tax credits as an annual amount in the Local Dollar Amount field in the Employee account.    Examples of these are medical expenses or charitable donations authorized by a tax centre or tax services office.
NOTE-- This amount is K3 (see your tax booklet for more information).

Tax Factors-- Enter the sum of tax factors F, F2 and U1 into the State Dollar Amount field in each Employee account.  To obtain an annual amount, add the factors for one week, and multiply by 52.

  •  F: This factor includes deductions at the income source for contributions to a registered retirement savings plan (RRSP), a registered pension plan (RPP), or a retirement compensation
  • arrangement (RCA).
  •  F2: This factor includes deductions at the income source for alimony or maintenance payments required by a legal document dated on or before May 1, 1997.  See your tax booklet for more information regarding this factor.
  •  U1: This factor includes union dues paid to a trade union or an association of public servants, or any dues required by provincial law to an advisory or parity committee or like body.
Other Factors-- Enter the sum of tax factors F1 and HD as an annual amount in the Other Dollar Amount field in each Employee account.
  •  F1: This factor includes any annual deductions requested by the employee and authorized by a tax centre or tax services office.  Examples include child-care expenses and alimony or maintenance payments not deducted at income source.  A tax services office or tax centre must notify you, as the employer, of the amount to be deducted for F1 for any employee who will use this factor.
  •  HD: This factor is the annual amount of deduction for living in a prescribed zone, as indicated on tax Form TD1.
Additional Deductions-- Enter any additional tax deductions from Form TD1 or Form TD3 into the Tax Item named L: Additional Deductions.  Enter the amount for one pay period into the amount field to the right of the Calculation Method popup in the Tax Item's window.  If some employees use this deduction, you will also need to include this tax item in the Tax Package for them.

LCF Deduction-- If an employee takes the LCF deduction, enter the tax credit into the Tax Item called LCF: Federal labour-sponsored.  To determine the amount to use for LCF for each employee, take the lesser of $750; and 15% of the annual deduction for the employee's purchase of approved shares of capital stock of a prescribed labour-sponsored venture capital corporation.  You'll also need to create a Tax Package for the employees who take the deduction, and include this deduction for them.  If two or more employees use different amounts for LCF, each one will require a separate tax item with the correct amount (and separate Tax Packages).
HINT-- Use the Duplicate button in the Tax Item List window to make a copy of the original and edit the amount.  Then, create tax packages using Duplicate for each employee and select the appropriate LCF Tax Item that you created for that employee.

LCP Credits-- If your business is located in a province that allows tax credits for LCP, the labour-sponsored funds annual provincial tax credit, you must enter the appropriate amount for any employee claiming LCP credits in the LCP tax item for your province.  Provinces that allow this credit are Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, British Columbia, Northwest Territories and Nunavut.

Ontario Employers

Enter into each Employee account the sum of the number of dependents under age 18 and the number of dependents with disabilities.  Enter this value in the Local Exemptions field in each employee account.

British Columbia Employers

Enter into each employee's account the number of dependents.  Enter this value in the Local Exemptions field in each employee's account.

Tax References

Employer's Guide: Payroll Deductions (Basic Information)
  Employer's Guide: Remitting Payroll Deductions
  Payroll Deductions Formulas for Computer Programs
  Employer's Guide: Taxable Benefits
  Employer's Guide: Filing T4 and T4F Slips and Summary Forms
  (Includes Form RC104)
  Employer's Guide: Filing the T4A Slip and Summary Form
  Payroll Deductions Tables (available for each Province or Territory, and for businesses or employees located outside Canada or outside the boundaries of any Province or Territory)

 These publications are available from the Canada Customs and Revenue Agency and can be ordered at the following toll free number: 1-800-959-2221 , or from their web site at www.ccra-adrc.gc.ca.