Business
Canada — Business: Payroll
Every Canadian employer must withhold three mandatory deductions from employee pay: CPP contributions, EI premiums, and federal + provincial income tax (based on the employee's TD1 federal and provincial forms, both required before the first paycheque). For 2026, the lowest federal income tax bracket is 14% (down from 14.5%) on income up to $58,523, with a federal basic personal amount of $16,452. After each pay run, employers remit a combined payment to the CRA covering employee CPP + employee EI + employee income tax + employer CPP + employer EI. Most small businesses remit monthly, by the 15th of the following month; employers with higher average monthly withholdings must remit more frequently (twice or up to four times monthly).
Key facts
- Mandatory deductions: CPP, EI, and federal + provincial income tax.
- Every new employee must complete federal and provincial TD1 forms before their first paycheque.
- 2026 lowest federal tax bracket: 14% up to $58,523; federal basic personal amount: $16,452.
- Most small businesses remit combined payroll deductions monthly, by the 15th of the following month.
Steps
- 1. Collect TD1 forms — New employees complete federal and provincial TD1 forms declaring personal tax credit amounts before their first pay.
- 2. Calculate and withhold deductions — CPP, EI, and federal/provincial income tax withheld per the CRA's payroll deduction tables/formulas.
- 3. Remit to CRA — Combined employee + employer CPP/EI plus employee income tax remitted on a monthly (or more frequent) schedule.
Timelines
- Standard monthly remittance deadline: 15th of the month following deduction
Required documents
- TD1 federal form
- TD1 provincial form
Common mistakes
- Not collecting TD1 forms before the first paycheque, leading to incorrect default withholding.
- Remitting monthly when average withholding volume actually requires a more frequent (twice/four-times monthly) remittance schedule.