Source deductions refer to the money you are obligated to withhold from your employee’s paycheques and remit to the Canada Revenue Agency. These deductions include Canada Pension Plan contributions, Employment Insurance premiums, and income tax. The amount you must remit varies based on how much your employees earn as well as any deductions for dependants to which they are entitled.
When you hire your first employee, you must set up a payroll account with the CRA. Through your payroll account, you can access the forms you need to calculate payroll deduction amounts and make remittances. If you hire consultants or freelancers, you do not have to make source deductions on their behalf. These individuals are considered self-employed, and must take care of their own CPP, EI, and income tax payments.