Reference: https://solidtax.ca/wp-content/uploads/2022/09/t4001-21e-Payroll-Deduction.pdf
You have a small company, ABC store. There are three employees. You pay your employees every month in 2022, as detailed below:
| 2022 | Salary / Year | Salary / Month |
| Mike | 84,000 | 7,000 |
| Anna | 66,000 | 5,500 |
| John | 48,000 | 4,000 |
To make a payroll system for this company, we need to calculate the CPP, EI and tax deductions for each employee from each pay. We also need to maintain a paystub for each employee to keep track of payment, deduction and tax remittance.
Calculate EI for each employee
EI = Salary * Rate (7000 x 1.58% = 110.6)
| 2022 | Salary / Year | Salary / Month | EI / Month |
| Mike | 84,000 | 7,000 | 110.6 |
| Anna | 66,000 | 5,500 | 86.9 |
| John | 48,000 | 4,000 | 63.2 |
Calculate CPP for each employee
To calculated monthly CPP, we need to prorate the basic exemption of $3,500, divided by 12.
Monthly CPP = (Salary /month – 3500/12) x Rate = (7000-3500/12) x 5.7% = 382.38
| 2022 | Salary / Year | Salary / Month | CPP / Month |
| Mike | 84,000 | 7,000 | 382.38 |
| Anna | 66,000 | 5,500 | 296.88 |
| John | 48,000 | 4,000 | 211.38 |
Calculate the tax deduction for each employee
To make it simple, our calculation is based on the default federal and provincial amount for each employee.
We suggest you use the Payroll Deductions Online Calculator from the CRA website below:
Using the CRA online calculator, we get the 3 PDFs below:
https://solidtax.ca/wp-content/uploads/2022/10/Payroll-Calculaiton-John-Abc-Store.pdf
https://solidtax.ca/wp-content/uploads/2022/10/Payroll-Calculation-Anna-Abc-Store.pdf
https://solidtax.ca/wp-content/uploads/2022/10/Payroll-Calculation-Mike-Abc-store.pdf
| 2022 | Salary / Year | Salary / Month | Tax / Month |
| Mike | 84,000 | 7,000 | 1432.87 |
| Anna | 66,000 | 5,500 | 975.41 |
| John | 48,000 | 4,000 | 547.58 |
Create paystubs for each employee
These paystubs were created using Excel. If you would like to have the Excel file, please contact us.
https://solidtax.ca/wp-content/uploads/2022/10/Paystubs-Anna-Abc-Store.pdf
https://solidtax.ca/wp-content/uploads/2022/10/Paystubs-John-Abc-Store.pdf
https://solidtax.ca/wp-content/uploads/2022/10/Paystubs-Mike-Abc-store.pdf
In September, Mike’s EI reduced to $67.94 since he reached the max EI contribution, and his CPP contribution is reduced to $58.43 since he reached the max CPP contribution.
Calculated payroll remittance
Based on these paystubs, we can calculate the required payroll remittance. The employer EI contribution is 1.4 x employee EI contribution. January remittance for Mike is:
| Employee | Mike | Anna | John | |
| Employee EI Contribution | $110.6 | $86.9 | $63.2 | |
| Employee CPP Contribution | $382.38 | $296.88 | $211.38 | |
| Employee tax Deduction | $1432.87 | $975.41 | $547.58 | |
| Employer EI Contribution | $154.84 | $121.66 | $88.48 | |
| Employer CPP Contribution | $382.38 | $296.88 | $211.38 | |
| Total Monthly Remittance | $5,362.79 | |||
