What Happened to your Paycheque? Your Guide to 2024 Deductions & Contributions

With a diverse range of deductions to consider, navigating the Canadian payroll system requires careful attention and compliance with regulatory guidelines. Here’s your quick guide to understanding payroll and the deductions required.

📄 Employment Insurance (EI) 📄

The (EI) program provides temporary income support to unemployed workers while they seek employment or upgrade their skills. The EI program also provides special benefits to workers who take time off work due to specific life events, such as illness, pregnancy, caring for a newborn or newly adopted child, caring for a critically ill or injured person, etc. Workers receive EI benefits only if they have paid premiums in the past year and meet qualifying and entitlement conditions. Self-employed workers may participate in EI and receive special benefits.

• Maximum insurable earnings: $63,200
• Maximum employee premium: $1049.12
• Maximum employer premium: $1468.77
• Employee: 1.66%
• Employer: 2.32%

🏖️ Canadian Pension Plan (CPP) 🏖️

The Canada Pension Plan (CPP) is a social insurance plan funded by the contributions of employees, employers and self-employed people as well as the revenue earned on CPP investments. The CPP covers virtually all employed and self-employed people in Canada, excluding Quebec.

• Maximum Pensionable Earnings: $68,500
• Basic Exemption: $3,500
• Maximum Employee Premium: $3,867.50
• Maximum Employer Premium: $3,867.50
• Self-employed Maximum Premium: $7,735.00
• Employee and employer contribution rate: 5.95%
• Self-employed: 11.9%

📎 Income Taxes 📎

Canada uses a progressive tax system, which means someone’s tax rate increases the more money they make (this seems fair unless you ask a billionaire). The progressive tax system is true for both federal and provincial/territorial taxes, which each have unique tax brackets. Income tax in Canada is based on your taxable income, which is your total gross income from all sources, minus eligible deductions.

Provincial:

• $0 to $51,446 - 5.05%
• $51,446 to $102,894 - 9.15%
• $102,894 to $150,000 - 11.16%
• $150,000 to $220,000 - 12.16%
• $220,000+ - 13.16%

Federal: The increased Basic Personal Amount for 2024 is now $15,705, meaning you can earn up to this amount in 2024 before paying any federal income tax.

• $0 to $55,867 - 15%
• $55,867 to $111,733 - 20.5%
• $111,733 to $173,205 - 26%
• $173,205 to $246,752 - 29%
• $246,752+ - 33%

🏥 Worker’s Compensation 🏥

WSIB provides wage-loss benefits, medical coverage and support to help people get back to work after a work-related injury or illness. They're funded by premiums paid by Ontario businesses, like Prostaff, providing no-fault collective liability insurance and access to industry-specific health and safety information.

WSIB Employer Contributions: 1.3% or $1.30 per $100 of insurable payroll.

🩺 Employer Health Tax 🩺

The Employer Health Tax (EHT) is a payroll tax on remuneration for example, salaries, wages, bonuses, taxable benefits, stock options etc.) that employers in Ontario provide to current and former employees. The purpose of this tax is to assist in providing the government with revenue to fund health care in Ontario.

This is a tax paid by the employer and not deducted from employees.

• Exemption threshold: $1 million
• Tax rate above the threshold is .98% to 1.95% depending on how much over the threshold the payroll is

💵 Minimum Wage 💵

The minimum wage is the lowest wage rate an employer can pay an employee. Most employees are eligible for minimum wage, whether they are full-time, part-time, or casual employees, or are paid an hourly rate, commission, piece rate, flat rate or salary. Some employees have jobs that are exempt from the minimum wage provisions of the Employment Standards Act.

General: $16.55 per hour

Students: $15.60 per

💰 Contribution Limits 💰

TFSA lets you shelter tax on investment returns, while RRSP allows you to defer tax until withdrawal later on. The FHSA, combines the benefits of other programs, to allow you to save for the purchase of a house.

TFSA: $7000 + any unused contribution room.

RRSP: 18% of earned income, up to $31,560.

FHSA: $8000 + any unused contribution room.

Navigating your paycheque can be confusing, and you should not hesitate to contact the HR department of your employer for clarification, or if you have concerns over the correctness of your deductions. If you're unsure of what to do with your remaining paycheque, reach out to a local Certified Financial Planner to assist you in managing your finances and budgeting!