FAQ—Payroll Taxes
Does Canada have employer payroll taxes?
Both employees and employers have payroll taxes. Some payroll tax withholdings, like EI premiums and CPP contributions, are paid by employees and employers. Others, like EHT taxes, are a payroll tax for employers only.
What is the difference between an income tax and a payroll tax?
Payroll tax withholdings are paid by both employers and employees, though in different proportions for different types, and are taxed based on the employee’s wages. By contrast, income tax is paid solely by the employee and is based on the amount of money an employee earns through various means.
How are payroll taxes calculated in Ontario?
To calculate payroll in Ontario, you must add CPP contributions, EI premiums, federal and provincial income tax deductions, and EHT taxes. CPP contributions, EI premiums, and federal income tax deductions are calculated similarly in every province, as outlined above.
However, provincial income tax rates vary from province to province. To determine provincial income tax rates for Ontario along with other payroll deduction rates, consult the CRA’s payroll deductions table.
How do I calculate payroll taxes per employee?
To calculate payroll taxes per employee, add the CPP contributions, EI premiums, and federal and provincial income tax deductions for each employee. All calculations outlined in this article calculate payroll taxes owed for a single employee.