CRA Payroll Deductions 2024

Payroll Services in Toronto

For 2024, the Canada Revenue Agency (CRA) has updated the payroll deduction tables to reflect changes in federal, provincial, and territorial tax rates, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums.

Employers are responsible for deducting the following four amounts:

  • the Canada Pension Plan contribution
  • the Employment Insurance premium
  • federal income tax
  • provincial and territorial income tax

Employers must remit these deductions to the Canada Revenue Agency (CRA), in addition to their portion of the Canada Pension Plan and Employment Insurance contributions.

CRA Payroll Deductions 2024

A new calendar year requires updates to your payroll deductions.  Below are both the federal and provincial/territorial payroll deductions for 2024.

Canada Pension Plan (CPP)

  • Regular CPP Contributions: Applicable for pensionable income up to $68,500.
  • CPP2 Contributions: For pensionable income between $68,500 and $73,200, an additional contribution is required.

Employment Insurance (EI)

  • Maximum Annual Insurable Earnings: $63,200 for 2024.
  • EI Premium Rate:63% for employees outside Quebec, with a maximum annual employee premium of $1,030.55. Employers contribute 1.4 times the employee rate.

Federal Tax Rates

  • to $55,867: 15%
  • $55,867.01 to $111,733:5%
  • $111,733.01 to $173,205: 26%
  • $173,205.01 to $246,752: 29%
  • $246,752.01 and over: 33%​

Basic Personal Amounts

  • Maximum Basic Personal Amount: $15,705.
  • Minimum Basic Personal Amount: $14,156​

Provincial Tax Rates

Each province and territory has specific tax rates and income thresholds. For example, British Columbia's rates for 2024 range from 5.06% for income up to $47,937 to 20.5% for income over $252,752.

For more detailed information and to access the specific tables for each province, refer to the CRA T4032 Payroll Deductions Tables

Payroll Deduction Amounts Depend on the Province or Territory of Employment

While federal income tax is the same across Canada, provincial and territorial tax rates vary.

It is therefore important to determine an employee's province or territory of employment to ensure you are deducting the right amounts. For example, if your employee lives in Ontario but works at your New Brunswick facility, you must use the payroll deduction tables for New Brunswick.

In Quebec, which administers its own pension plan, the situation is somewhat different for employers.

  • The Québec Pension Plan replaces the Canada Pension Plan.
  • The employer must contribute to the Québec Parental Insurance Plan.
  • The provincial income tax for Quebec is remitted to Revenu Québec.
  • Employment Insurance is withheld at a lower rate.

You can find the payroll deduction tables by province on the CRA website.

How Much Do You Have to Deduct?

Payroll deductions are calculated for each pay period. To help you, the CRA website provides an online calculator that can be used to calculate federal, provincial, and territorial payroll deductions. You can also use it to calculate the required deductions for Quebec, such as the Québec Pension Plan and Employment Insurance at the prescribed rate for Quebec.

How Often are Deductions Remitted to the CRA?

The frequency of payments to the CRA varies. Payments may be submitted monthly (on the 15th day of the following month) or quarterly (on the 15th of January, April, July, and October). The employer can also make accelerated remittances, up to two or four times a month.

Do I Have to Withhold Deductions If I Pay Myself a Salary?

Yes, even if you are paying yourself a salary, you are required to withhold the appropriate deductions. This includes federal and provincial income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums.

If the business is a sole proprietorship or partnership, deductions will not be sent to the CRA via the payroll account. For these businesses, payments are made when the T1 income tax and benefit return is filed, unless the sole proprietor or partner is required to pay in installments.

For entrepreneurs employed by their incorporated business, their salary will be treated as employment income and deductions will be required. If the entrepreneur controls more than 40% of the common shares (with voting rights), he or she is exempt from Employment Insurance premiums and will not be entitled to Employment Insurance benefits.

What Happens if You Don't Make Payroll Deductions?

Failing to make the required payroll deductions can result in several serious consequences from the Canada Revenue Agency (CRA). These include financial penalties, interest charges, and legal actions. Here are the key repercussions:

Financial Penalties and Interest

1) Penalties for Late Remittances:

  • If you do not remit the payroll deductions by the due date, you may be subject to a penalty of 3% of the amount due if it is 1 to 3 days late, 5% if it is 4 to 5 days late, 7% if it is 6 to 7 days late, and 10% if it is more than 7 days late or if no amount is remitted​)​
  • Repeated failures to remit can result in higher penalties of up to 20%​

2) Interest Charges:

  • The CRA will charge interest on any overdue amounts. The interest rate is determined by the CRA and can change quarterly. Interest is compounded daily, making it accumulate quickly.

Legal Consequences

1) Directors' Liability:

  • If you are a director of a corporation, you can be held personally liable for the corporation's failure to remit payroll deductions. This means the CRA can pursue your personal assets to recover the outstanding amounts​

2) Trust Fund Recovery:

  • Payroll deductions are considered trust funds held for the government. Failure to remit these funds can be seen as a violation of trust, leading to further legal actions, including criminal charges in severe cases.

Audits and Assessments

1) Audits:

  • The CRA may conduct audits to ensure compliance. If discrepancies are found, they can reassess the amounts due and apply additional penalties and interest.

2) Assessment of Amounts Due:

  • If you fail to deduct the required amounts, the CRA can assess the missing deductions and require you to pay both the employer and employee portions, even if the employee has already paid their share of taxes.

Damaged Business Reputation

  • Non-compliance with payroll deduction requirements can damage your business reputation, making it difficult to obtain credit, attract investors, or maintain good relationships with employees and stakeholders.

Payroll Outsourcing in Canada

Take the stress out of payday with our outsourced payroll service. Filing Taxes manage Canadian payrolls for organizations of all sizes ranging from sole traders to large-scale multinational corporations. We don’t try to shoehorn clients into rigid and inflexible processes. Instead, our goal is to dovetail our payroll software, systems, and processes with yours. We provide a tailored payroll processing experience that enables your business to achieve the maximum benefits while requiring the minimum effort.

Our team of expert-certified payroll accountants in Toronto is equipped to handle a wide range of payroll tasks. Feel free to reach out to Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step toward proper management of your finances.

Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.

Written By:
Salman Rundhawa
Salman Rundhawa is the founder of Filing Taxes. Salman provides valuable tax planning, accounting, and income tax preparation services in Toronto, Mississauga, Oakville, and Hamilton.

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact Form Demo

This will close in 0 seconds

phone-handsetchevron-down Call Now linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram