Payroll Taxes

1. FEDERAL EMPLOYMENT INSURANCE AND FEDERAL CANADA PENSION PLAN 

Employers in Canada are required to pay Canada Pension Plan contributions and Employment Insurance premiums to the CRA. These payments are calculated as a percentage of payroll, subject to yearly maximums. Employees are also required to pay Canada Pension Plan contributions and Employment Insurance premiums. The employer is required to withhold the employee contributions/premiums from the employee’s salary and remit these to the CRA together with the employer contributions/premiums. 

In certain cases, contributions to these plans may not be necessary. If there is a social security agreement between Canada and non-resident employee’s home jurisdiction, there may be no Canada Pension Plan contributions required. In some cases, the non-resident employee will need to obtain a certificate evidencing social security coverage in their home jurisdiction. 

2. PROVINCIAL PAYROLL TAXES 

Certain provinces also impose payroll taxes or premiums. For example, Ontario imposes an Employer Health Tax based on the employer’s payroll and the employer may be required to pay premiums to the Workplace Safety and Insurance Board.