Calculating the cost of payroll taxes and the appropriate deductions can be a tricky proposition. Many small businesses make mistakes when doing this, and those can lead to long hours trying to fix problems rather than working productively. To assist you, the Canada Revenue Agency has developed a free online tool called the Payroll Deductions Online Calculator, or PDOC.
The PDOC lets you calculate federal, provincial, and territorial payroll deductions for all provinces and territories except Quebec. To use the PDOC, you first need to enter the basic information about the type of payment you are making: salary, commission, or pension. You are then asked to enter the employee’s name, province of residence, and pay frequency (weekly, biweekly, monthly, etc.). Finally, the PDOC asks you to input the tax information of your employee, such as any credits he may be entitled to, along with year-to-date Canada Pension Plan and Employment Insurance contributions.
Once that is done, the PDOC generates a salary calculation result that shows the gross wages, federal and provincial deductions, CPP and EI contributions, and the actual net pay of the employee. You can print the results page or save it in PDF format for your records. While this document does not replace the proper statement of earnings that you must give to your employee, it can certainly help you to prepare it.
Finally, on a separate page, you can also view, print and save a summary of your employer remittance amounts, so that you know how much to send to the CRA at the end of the month.