Federal Payroll Deductions

Payroll Steps

If you have any employees, you must set up a payroll account. Follow these steps to set up your payroll account and to understand how federal payroll deductions work:

  1. Determine whether you are an employer.
  2. If so, open a payroll account.
  3. Hire your employees.
  4. Calculate the CPP contributions, EI premiums, and income tax deductions based on the amounts paid to your employees. You will also calculate your share of the CPP and EI—this is covered later on in this Module.
  5. Remit the income tax deductions along with your share of the CPP and EI.
  6. Report the income and deductions on the appropriate information return.
  7. Keep proper records.

Note that there are commercial payroll businesses that will calculate the proper deductions and contributions as part of their services. The CRA has an online payroll deduction calculator.

Last modified: Friday, 25 August 2023, 1:33 PM