Statutory Deductions

This section explains the mandatory deduction language that turns gross pay into take-home pay and creates employer remittance work. It covers the umbrella term source deductions, income tax withholding, and the payroll concepts that feed CPP and EI calculations.

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• Source Deductions explains the Canadian umbrella term for income tax, CPP, and EI amounts withheld from pay.
• Income Tax Deduction explains the payroll withholding line many employees notice first on the pay stub.
• TD1 explains the form payroll uses as an input for income tax withholding.
• Federal Income Tax Deduction explains the federal portion inside payroll tax withholding.
• Provincial Income Tax Deduction explains the province-linked payroll tax withholding layer.
• CPP explains Canada Pension Plan payroll contributions.
• CPP2 explains the second additional CPP layer that can appear for higher pensionable earnings.
• EI explains Employment Insurance payroll premiums.
• Pensionable Earnings explains the earnings base that matters for CPP treatment.
• Insurable Earnings explains the earnings base that matters for EI treatment.

Questions This Section Answers

• Why does gross pay not match net pay?
• How is income tax deduction different from CPP and EI?
• How is federal income tax deduction different from provincial income tax deduction in payroll?
• Why can CPP-related deductions change later in the year for higher earnings?
• Which employee form helps payroll determine income tax withholding?
• Why does payroll track separate earnings bases for different deductions?
• How do CPP and EI fit inside the broader source-deductions concept?

Continue To

• Source Deductions & Remittances for how employers remit the amounts payroll created.
• Pay Basics for the employee-facing amounts deductions change.
• Employment Status, ROE & Termination for insurable hours and related records.

In this section

• CPP
  Canada Pension Plan contribution withheld from pensionable earnings, with matching employer payroll responsibility and Quebec-specific exceptions.
• CPP2
  Second additional CPP deduction that can appear later in the year after regular CPP payroll withholding.
• EI
  Employment Insurance premium withheld from insurable earnings, with a separate employer contribution and ROE-related reporting context.
• Federal Income Tax Deduction
  Federal income tax withholding on payroll pay runs, pay stubs, TD1 inputs, and remittance totals.
• Income Tax Deduction
  Payroll tax withholding that reduces net pay and sits beside CPP and EI inside source deductions.
• Insurable Earnings
  Earnings base payroll uses for EI premiums, separate from broad gross pay and from ROE hour tracking.
• Pensionable Earnings
  Earnings base payroll uses for CPP calculations, separate from gross pay and from EI's insurable-earnings base.
• Provincial Income Tax Deduction
  Province- or territory-linked payroll tax withholding, distinct from the federal deduction and Quebec's separate provincial path.
• Source Deductions
  Income tax, CPP, and EI amounts withheld from pay and later remitted through the Canadian payroll system.
• TD1
  Payroll withholding form employees complete so income tax deductions reflect personal tax-credit information.