Payroll Deductions Formulas - 115th Edition Effective January 1, 2022

T4127(E) Rev. 22/01

La version française de cette publication est intitulée Formules pour le calcul des retenues sur la paie – 115e édition.

Is this guide for you?

Use this guide if you are a payroll software provider or a company which develops its own in-house payroll solution.

This guide has the formulas you need to determine federal, provincial (except Quebec), and territorial income taxes, Canada Pension Plan (CPP) contributions, and employment insurance (EI) premium deductions. The formulas also let you calculate payroll deductions for income sources such as commission, pension, bonuses, and retroactive pay increases.

The formulas used in this guide to calculate statutory deductions have been approved for purposes of the Income Tax Act, the Canada Pension Plan, and the Employment Insurance Act, as well as their related regulations and any amendments proposed to these acts.

For more information on income amounts that are subject to payroll deductions, see the publication T4001, Employers’ Guide – Payroll Deductions and Remittances.

If you have questions about the formulas in this guide, contact your tax services office or tax centre. For the address and telephone numbers of your tax services office or tax centre, see the listings in the government section of your telephone book or visit canada.ca/taxes.

Distribution of this guide

This guide is available in electronic format only.

Electronic mailing lists – more ways to serve you!

We provide an electronic service that can notify you immediately, free of charge, of any changes for payroll deductions.

To subscribe, go to canada.ca/cra-email-lists and enter your business’s email address for each mailing list that you want to join.

Payroll Deductions Online Calculator

For verifying your payroll deductions, you can use the Payroll Deductions Online Calculator (PDOC). The calculator includes an option to help you make sure that enough Canada Pension Plan contributions and employment insurance premiums have been withheld for full-year employees.

It calculates payroll deductions for the most common pay periods, as well as the applicable province (except Quebec) or territory. The calculation is based on exact salary figures.

Effective January 1, 2022, PDOC users may choose to calculate personal tax credits by either entering the Total Claim value manually or by selecting the corresponding claim code.

PDOC is available at canada.ca/pdoc.

Payroll Deductions Tables

Using the following links you can download the publications T4032, Payroll Deductions Tables and T4008, Payroll Deductions Supplementary Tables. You can also choose to print only the pages or information that you need. For more information on payroll, see our webpage at canada.ca/payroll.

What’s new for January 1, 2022?

This guide reflects some income tax changes recently announced which, if enacted as proposed, would be effective January 1, 2022. We recommend that you use the Payroll Deductions Online Calculator (PDOC), the publication T4032 Payroll Deductions Tables, or the publication T4008 Payroll Deductions Supplementary Tables, and the formulas in this guide for withholding, starting with your first payroll in 2022.

Effective January 1, 2022, PDOC will accept direct entry of Total Claim Amount (TC) and Total Claim Amount Provincial or Territorial (TCP). 

Federal Changes

Indexing

For all federal and provincial or territorial indexed amounts for Income tax, Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Employment Insurance (EI), refer to Chapter 8. Information on provinces and territories that do not use indexing is also available in Chapter 8. Indexing means that the values are adjusted based on changes to the consumer price index.

Federal Basic Personal amount

On June 29, 2021, Bill C-30 received Royal Assent. For 2022, employers are to use the maximum BPAF of $14,398 for all employees unless the employee provides a new Form TD1. If the BPAF formula was previously implemented on your payroll system, you can continue to use it. Employees with net income above $155,625 can ask for additional tax to be deducted, by completing the form TD1.

Provincial and Territorial Changes

Below are the provincial and territorial tax changes effective January 1, 2022. The current and previous year figures for the most commonly used rates, amounts, and claim codes can be found in Chapter 8.

New Brunswick

Effective January 1, 2021, the tax rate applied to the first tax bracket was decreased from 9.68% to 9.40%. The prorated tax rate, effective July `1, 2021, was 9.12%.

Newfoundland and Labrador

On June 23, 2021, the Newfoundland and Labrador government enacted a law adjusting the tax brackets and tax rates for higher income earners. Tax rates have been adjusted for income above $139,780. New tax brackets have also been created for those making more than $250,000.

  • Tax rates for income between $139,780 and $195,693 increased from 17.3% to 17.8%.
  • Tax rates for income between $195,693 and $250,000 increased from 18.3% to 19.8%.
  • New tax bracket and rate for income between $250,000 and $500,000 is 20.8%.
  • New tax bracket and rate for income between $500,000 and $1,000,000 is 21.3%.
  • New tax bracket and rate for income more than $1,000,000 is 21.8%.

Nova Scotia

For 2022, employers are to use the maximum BPANS of $11,481 for all employees unless the employee provides a new Form TD1. If the BPANS formula was previously implemented on your payroll system, you can continue to use it.

Prince Edward Island

The legislated basic personal amount increased from $10,500 to $11,250.

Yukon

For 2022, employers are to use the maximum BPAYT of $14,398 for all employees unless the employee provides a new Form TD1. If the BPAYT formula was previously implemented on your payroll system, you can continue to use it.

Changes in the guide

  • The chapters for Personal Tax Credits Returns and Claim Codes (Chapter 2 and Chapter 3 respectively in the 2021 edition) have been consolidated to Chapter  in this edition, as both those chapters dealt with the calculation of personal tax credits.
  • For British Columbia and Ontario, a new Factor S2 has been added to name the value of the basic amount used in the calculation of Factor S.
  • 2022 indexing rates can be found only in Table 8.2.
  • See Tables 8.3 and 8.4 for updates to the Canada Pension Plan and Employment Insurance respectively.

Chapter 1 – General information

Rounding procedures

For all mathematical calculations in this guide, use the following rounding rules except when we specify otherwise.

For income tax deductions

If the figure calculated for an employee’s income tax deduction for a certain pay period has three or more digits after the decimal point, increase the second digit after the decimal point by one if the third digit is five or more, and drop the third digit. If the third digit after the decimal point is less than five, drop the third digit.

For Canada Pension Plan (CPP) basic exemption and contributions

Determine an employee’s basic exemption for a pay period by dividing the annual basic exemption by the number of pay periods in the calendar year. If the figure has three or more digits after the decimal point, drop the third digit after the decimal point.

When the employee’s contribution to CPP for the pay period has three or more digits after the decimal point, increase the second digit after the decimal point by one if the third digit is five or more, and drop the third digit. If the third digit after the decimal point is less than five, drop the third digit.

For Employment Insurance (EI) premiums

When the employee’s or employer’s EI premium for the pay period has three or more digits after the decimal point, increase the second digit by one if the third digit is five or more, and drop the third digit. If the third digit after the decimal point is less than five, drop the third digit.

Tax deductions comparison

When the tax deductions amount using Option 1 in this guide is compared to the tax deductions amount in the publication T4032, Payroll Deductions Tables, the amounts will not necessarily be the same. Any difference results from the fact that the amounts in the T4032 are based on:

  1. the mid-point of the range of remuneration under the “Pay” column;
  2. the federal tax credit for Canada Pension Plan or Quebec Pension Plan contributions and employment insurance premium deductions is based on the amount determined in item (i); and
  3. the midpoint of the “Claim code” amounts on federal, provincial, and territorial TD1 forms is used, except for code 1 where the actual basic personal non-refundable tax credit amount is used. For claim code 0, no personal tax credits amounts are used when calculating the tax deduction amounts.

Chapter 2 – Personal tax credits returns (Form TD1)

To determine federal total claim (TC), use the total claim amount on Form TD1. Employers are to update TC at the beginning of each year by using either indexing or claim codes.

To determine provincial or territorial total claim (TCP), use the total claim amount on the appropriate provincial or territorial Form TD1. Employers are to update TCP at the beginning of each year using either indexing or claim codes.

Since claim codes use a mid-point in a range, indexing is considered more accurate. 

A separate worksheet, TD1-WS, is available for employees or pensioners who want to calculate partial claims for some of the federal personal tax credit amounts.

Option 1 - Indexing of personal amounts

Each year, certain personal tax credit amounts are indexed based on changes to the consumer price index. Since only some of the amounts are indexed, we recommend that you record separately in your payroll records each item shown on the employee’s or pensioner’s TD1 form. This will allow you to automatically increase the applicable indexed claim amounts when necessary. This also means you will not have to ask your employees or pensioners to file a new TD1 form when indexing applies.

You can use the following method to calculate the value of TC or TCP (personal tax credits amount) when indexing applies:

Description

Amount

1. Enter the total claim amount reported on Form TD1

$
 

2. Minus: Prior year BPAF, BPANS, BPAYT

$
 

3. Minus: Any pension income amount, tuition fees, and full-time or part-time education amounts claimed on Form TD1*

$
 

4. Amount subject to annual indexing (line 1 minus line 2 and 3)

$
 

5. Enter the indexing factor that applies for the year**

$
 

6. Multiply line 4 by line 5 (rounded to the nearest dollar)

$
 

7. Add current year BPAF, BPANS, BPAYT***

$
 

8. Enter the amount from line 3 (non-indexed amounts)

$
 

9. Revised factor TC or TCP (total of personal tax credits amounts) (line 6 plus line 7 and 8)

$
 

* For Ontario only, do not include any amounts on line 3, since Ontario credits are indexed.

** Yukon personal amounts are not directly attributable to indexing, because they have harmonized amounts with the federal values.

*** Use the maximum BPAF, BPANS, BPAYT. If the BPAF, BPANS, BPAYT formulas were previously implemented on your payroll system, you can continue to use these formulas. If a current year Form TD1 is provided, use the amount from Line 1 of the Form TD1 instead.

If no Form TD1 is on file for the employee or pensioner, use BPAF, BPANS, BPAYT formula at the end of this chapter.

No indexing applies to Nova Scotia, Prince Edward Island, and Alberta.

Option 2 – Claim codes

The claim code depends on the total personal amount (TC) an employee claims on Form TD1. Once the claim code has been established, the same code can be used every year. For example, if an employee was at claim code 3 in 2021, then that employee will remain at claim code 3 in 2022. If an employee submits a new Form TD1, use the total claim amount to determine the new claim code. 

Claim code 0

This code represents no claim amount allowed. If the federal claim code is 0 because the employee is a non-resident, the provincial claim code must also be 0.

Federal, provincial, and territorial claim codes

The claim amounts that correspond to the federal claim codes are different than the claim amounts that correspond to the provincial or territorial claim codes. In Chapter 8, you will find a listing of claim codes and amount ranges.

Note 

If you have received a new Form TD1 and the basic personal amount is not the maximum BPAF, BPANS or BPAYT, you will need to create your own claim code charts by following the instructions below. Otherwise, use the claim code chart using the maximum BPAF, BPANS and BPAYT in Table 8.5, 8.11 and 8.17 respectively.

The Federal and Yukon Claim Code chart income range is $2,430 between all claim codes once the BPAF or BPAYT has been calculated. For example, if the Federal BPAF is $12,719 for a particular employee, then claim code 2 range would be $12,719 – $15,149 and so forth up to claim code 10. Based on above example, to calculate the non refundable tax credits for the BPAF of $12,719 , find the mid-point between $12,719 and $15,149, this amount will be the total claim (Factor TC) for your calculation, multiply this TC by lowest federal tax rate.

The Nova Scotia Claim Code chart income range is $1,600 between all claim codes, once the BPANS has been calculated. For example, if BPANS is $11,481 for a particular employee, then the claim code 2 range would be $11,481 – $13,081 and so forth up to claim code 10. Based on above example, to calculate the non refundable tax credits for the BPANS of $11,481, find the mid-point between $11,481 and $13,081, this amount will be the total claim (Factor TCP) for your calculation, multiply this TCP by lowest provincial tax rate.

Effective January 1, 2022, PDOC will accept direct entry of TC and TCP. To verify your calculations using PDOC simply input the amount for TC and TCP obtained from the appropriate claim code table.

 

If federal Form TD1 is not submitted by the employer or pensioner, TC is calculated using the BPAF formula.

Federal Basic Personal Amount (BPAF) Formula

Where NI* ≤ $155,625, BPAF = $14,398

Where $155,625 < NI* < $221,708, BPAF= $14,398 - (NI* - $155,625) × ($1,679 / $66,083)***

Where NI* ≥ $221,708, BPAF = $12,719

* Variable NI represents Net Income for the year from the employer  = A + HD

** If the BPAF has three or more digits after the decimal point, increase the second digit after the decimal point by one if the third digit is five or more, and drop the third digit. If the third digit after the decimal point is less than five, drop the third digit

*** Note that there is no rounding on this division

If the appropriate provincial or territorial Form TD1 is not submitted by the employer or pensioner, TCP is the province or territory's Basic Personal Amount. For Nova Scotia and Yukon, use the BPANS and BPAYT formulas respectively. 

Nova Scotia Basic Personal Amount (BPANS) Formula

BPANS = Where A ≤ $25,000, BPANS is equal to $11,481;

Where $25,000  < A < $75,000, BPANS is equal to:

$11,481 – [(A – $25,000) × 6%)];*

Where A ≥ $75,000, BPANS is equal to $8,481

* If Nova Scotia’s basic personal amount (BPANS) has three or more digits after the decimal point, increase the second digit by one if the third digit is five or more, and drop the third digit. If the third digit after the decimal point is less than five, drop the third digit.

Yukon Basic Personal Amount (BPAYT) Formula

The Yukon Basic Personal Amount (BPAYT) formula mirrors the federal Basic Personal Amount (BPAF).

BPAYT = BPAF

Chapter 3 – Glossary

Table 3.1 Glossary

Glossary
Factor Meaning (for complete details, see the formulas)
A Annual taxable income
B Gross bonus, retroactive pay increase, vacation pay when vacation is not taken, accumulated overtime payment or other non-periodic payment
B1 Gross bonuses, retroactive pay increases, vacation pay when vacation is not taken, accumulated overtime payments or other non-periodic payments year-to-date (before the pay period)
BPAF Federal Basic Personal Amount
BPANS  Basic Personal Amount for Nova Scotia
BPAYT Basic Personal Amount for Yukon
C Canada (or Quebec) Pension Plan contributions for the pay period
CEA Canada Employment Amount, a non refundable tax credit used in the calculation for K4 and K4P
D Employee’s year to date (before the pay period) Canada Pension Plan contribution with the employer (cannot be more than the annual maximum)
DQ Employee’s year to date (before the pay period) Quebec Pension Plan contribution with the employer (cannot be more than the annual maximum)
D1 Employee's year-to-date employment insurance premium with the employer
E Total commission expenses deductions reported on Form TD1X
EI Employment insurance premiums for the pay period
F Payroll deductions for the pay period for employee contributions to a registered pension plan (RPP) for current and past services, a registered retirement savings plan (RRSP), to a pooled registered pension plan (PRPP), or a retirement compensation arrangement (RCA). For tax deduction purposes, employers can deduct amounts contributed to an RPP, RRSP, PRPP, or RCA by or on behalf of an employee to determine the employee's taxable income
F1 Annual deductions such as child care expenses and support payments, requested by an employee or pensioner and authorized by a tax services office or tax centre
F2 Annual alimony or maintenance payments required by a legal document dated before May 1, 1997, to be payroll-deducted authorized by a tax services office or tax centre
F3 Employee registered pension plan or registered retirement savings plan contributions deducted from the current non-periodic payment. You can also use this field or design another to apply other tax-deductible amounts to the non-periodic payment, such as union dues
F4 Employee registered pension plan or registered retirement savings plan contributions deducted from the year-to-date non-periodic payments. You can also use this field or design another to apply other tax-deductible amounts to the non-periodic payment, such as union dues
G Gross commission amount including gross salary at the time of payment, plus any taxable benefits for commission-remunerated employees who have filled out Form TD1X. When an employee has not filed Form TD1X, tax is calculated the regular way
HD Annual deduction for living in a prescribed zone, as shown on Form TD1
I Gross remuneration for the pay period. This includes overtime earned and paid in the same pay period, pension income, qualified pension income, and taxable benefits, but does not include bonuses, retroactive pay increases, or other non-periodic payments
I1 Total remuneration for the year reported on Form TD1X. This include commission payments, salary (where applicable), non-periodic payments, and taxable benefits
IE Insurable earnings for the pay period including insurable taxable benefits, bonuses, and retroactive pay increases
K Federal constant. The constant is the tax overcharged when applying the 20.5%, 26%, 29%, and 33% rates to the annual taxable income A
KP Provincial or territorial constant
K1 Federal non-refundable personal tax credit (the lowest federal tax rate is used to calculate this credit)
K1P Provincial or territorial non-refundable personal tax credit (the lowest tax rate of the province or territory is used to calculate this credit)
K2 Federal Canada Pension Plan contributions and employment insurance premiums tax credits for the year (the lowest federal tax rate is used to calculate this credit). Note: If an employee has already contributed the maximum CPP and EI, for the year with the employer, use the maximum CPP and EI deduction to determine the credit for the rest of the year. If, during the pay period in which the employee reaches the maximum, the CPP and  EI, when annualized, is less than the annual maximum, use the maximum annual deduction(s) in that pay period
K2P Provincial or territorial Canada Pension Plan contributions and employment insurance premiums tax credits for the year (the lowest provincial or territorial tax rate is used to calculate this credit). If an employee reaches the maximum CPP or EI for the year with an employer, the instructions in the note for the K2 factor also apply to the K2P factor. For employees paid by commission, use the federal K2 formula for commissions and replace the lowest federal rate in the K2 formula with the lowest provincial or territorial tax rate
K2Q Quebec Pension Plan contributions, employment insurance premiums, and Quebec Parental Insurance Plan premiums federal tax credits for the year (the lowest federal tax rate is used to calculate this credit)
K3 Other federal non-refundable tax credits (such as medical expenses and charitable donations) authorized by a tax services office or tax centre
K3P Other provincial or territorial non-refundable tax credits (such as medical expenses and charitable donations) authorized by a tax services office or tax centre
K4 Federal non-refundable tax credit calculated using the Canada employment amount (the lowest federal tax rate is used to calculate this credit)
K4P Territorial non-refundable tax credit calculated using the provincial or territorial Canada employment amount (the lowest territorial tax rate is used to calculate this credit)
L Additional tax deductions for the pay period requested by the employee or pensioner as shown on Form TD1
LCF Federal labour-sponsored funds tax credit
LCP Provincial or territorial labour-sponsored funds tax credit 
M Accumulated federal and provincial or territorial tax deductions (if any) to the end of the last pay period
M1 Year-to-date tax deducted on all payments included in B1
N The number of days since the last commission payment. The minimum basic exemption amount of $67.30 is included in the formula in line with CPP legislation
NI Net income for the year from the employer
P The number of pay periods in the year
PI Pensionable income for the pay period, or the gross income plus any taxable benefits for the pay period, including bonuses and retroactive pay increases where applicable
PR The number of pay periods left in the year (including the current pay period)
R Federal tax rate that applies to the annual taxable income A
S Provincial tax reduction (only applies to Ontario and British Columbia)
S1 Annualizing factor
S2 Basic amount used in the calculation of Factor S (only applies to Ontario and British Columbia)
T Estimated federal and provincial or territorial tax deductions for the pay period
T1 Annual federal tax deduction
T2 Annual provincial or territorial tax deduction (except Quebec)
T3 Annual basic federal tax
T4 Annual basic provincial or territorial tax
TB Tax deductions, i.e., bonuses or retroactive pay increases, payable now
TC “Total claim amount” reported on federal Form TD1. If Form TD1 is not filed by the employee or pensioner, calculate TC using BPAF formula, and for non-resident individuals, TC is $0. If the claim code is E, T = $0. If the province is Ontario, even if the claim code is E, the Ontario Health Premium is payable on annual income over $20,000
TCP "Total claim amount" reported on the provincial or territorial Form TD1. If this form is not filed, TCP is the provincial or territorial basic personal amount, refer to Table 8.2.  For Nova Scotia and Yukon, use BPANS and BPAYT formulas respectively.
U1 Union dues for the pay period paid to a trade union, an association of public servants, or dues required under the law of a province to a parity or advisory committee or similar body
V Provincial or territorial tax rate for the year (does not apply to Quebec, outside Canada, or in Canada beyond the limits of any province or territory)
V1 Provincial surtax calculated on the basic provincial tax (only applies to Prince Edward Island and Ontario)
V2 Additional tax calculated on taxable income (only applies to the Ontario Health Premium)
Y Additional provincial tax reduction amount based on the number of eligible dependants used in the calculation of Factor S (only applies to Ontario)
YTD Year-to-date, not including current pay period

All factor definitions appear only in the Glossary unless further details are required in specific situations.

Chapter 4 – Option 1 – Tax formula

This option determines the federal and provincial or territorial tax deductions on salary, wages, taxable benefits, pension income, commissions, and other periodic payments. This option can also be used to calculate the tax on a bonus or other non-periodic payment.

We use Option 1, with the exception of a few factors, to determine the tax deduction amounts in the publications T4032, Payroll Deductions Tables, and T4008, Payroll Deductions Supplementary Tables, for each province and territory, as well as for Canada beyond the limits of any province or territory and outside Canada.

Outline of Option 1

In general, the Option 1 steps are as follows:

  1. Determine the taxable income for the pay period (pay minus allowable deductions) and multiply it by the number of pay periods in the year to get an estimated annual taxable income amount. This annual taxable income amount is factor A.
  2. Calculate the basic federal tax on the estimated annual taxable income, after allowable federal non-refundable tax credits. The basic federal tax is factor T3.
  3. Calculate the annual federal tax payable. This is factor T1.
  4. Calculate the basic provincial or territorial tax on the estimated annual taxable income, after allowable provincial or territorial personal tax credits. The annual basic provincial or territorial tax is factor T4.
  5. Calculate the annual provincial or territorial tax deduction. This is factor T2.
  6. To get the estimated federal and provincial or territorial tax deductions for a pay period, add the federal and provincial or territorial tax, and divide the result by the number of pay periods. This is factor T.

Special rules apply to determine the annual income for employees paid by commissions. A calculation is provided to determine the tax deductions for bonuses, retroactive pay increases, and other non-periodic payments.

Note

If an employee or a pensioner has income from another source from which no tax has been deducted (for example, investment income or support payments), they could have a tax liability when they file an income tax and benefit return for the year. The employee or pensioner can ask for more tax deductions, factor L, using Form TD1.

Step 1 - Formula to calculate annual taxable income (A)

A = Annual taxable income
= [P × (I – F – F2 – U1 )] – HD – F1
If the result is negative, T = L.

Only for employees paid by commission:

A = I1 – F* – F2* – U1* – HD – F1 – E
If the result is negative, T = L.

* Estimated deduction amounts for the year. For registered retirement savings plan (RRSP) contributions included in F, you will need to find out from your employee paid by commission the estimated or expected annual deduction. We recommend that you caution employees not to exceed their RRSP contribution limit for the year.

P = The number of pay periods in the year:
Weekly P = 52 (or 53 where applicable)
Biweekly P = 26 (or 27 where applicable)
Semi-monthly P = 24
Monthly P = 12
Other P = 10, 13, 22, or any other number of pay periods for the year

F2 = In situations where a garnishment or a similar order of a court or competent tribunal states that the alimony or maintenance payment cannot be more than a certain percentage of the employee’s net salary (net salary as defined in the garnishment or order), more calculations may be required, as follows:

  1. Calculate the tax deduction amount and the net salary amount using the alimony or maintenance amount shown in the garnishment or order.
  2. Determine the alimony or maintenance payment to be withheld (F2). This will be either the maximum allowable as a percentage of the employee’s net salary calculated in 1. or the amount shown in the garnishment or order, whichever is less.
  3. Determine the tax deduction for the pay period using the F2 amount in 2.

F1 = If the F1 amount is implemented after the first pay period in the year, F1 must be adjusted using the following formula:

(P × F1) / PR

Step 2 - Formula to calculate basic federal tax (T3)

T3 = Annual basic federal tax
= (R × A) – K – K1 – K2 – K3 – K4
If the result is negative, T3 = $0.

Only for employees in Quebec:
(R × A) – K – K1 – K2Q – K3 – K4
If the result is negative, T3 = $0.

R and K are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1 = 0.15 × TC

K2 = [(0.15 × (P x C, maximum $3,499.80)) + (0.15 x (P × EI, maximum $952.74))]

Only for employees in Quebec:

K2Q = Quebec Pension Plan contributions, employment insurance premiums, and Quebec Parental Insurance Plan premiums federal tax credits for the year

= [(0.15 × (P × C, maximum $3,776.10)) + (0.15 × (P × EI, maximum $723.60)) + (0.15 × (P × IE × 0.00494, maximum 434.72))]*

In either case, for the rest of the pay periods in the year, (P × C), (P × EI), or (P × IE × 0.00494) (as applicable) is replaced by the maximum annual deduction(s). This modification ensures that the employee will get the maximum CPP, EI, and QPIP tax credit for the rest of the pay periods in the year.

If you want to use a year-to-date method to calculate CPP, EI, and QPIP federal tax credits, (P × C) and (P × EI) can be modified as follows:

(P × C) is changed to the lesser of:
(i) $3,499.80; 
(ii) Year-to-date C + (PR × C)

(P × EI) is changed to the lesser of:
(i) $952.74; 
(ii) Year-to-date EI + (PR × EI)

Only for employees in Quebec:

(P × EI) is changed to the lesser of:
(i) $723.60; 
(ii) Year-to-date EI + (PR × EI)

(P × IE × 0.00494) is changed to the lesser of:
(i) $434.72; 
(ii) Year-to-date QPIP + (PR × IE × 0.00494)

Only for employees paid by commission:

K2 = [(0.15 × (0.0570 × (I1 – $3,500)*, maximum $3,499.80)) + (0.15 × (0.0158 × I1, maximum $952.74))]
* If the resulting amount is negative, enter $0.

Only for employees in Quebec:

K2Q = [(0.15 × (0.0615 × (I1 – $3,500)*, maximum $3,776.10)) + (0.15 × (0.0120 × I1, maximum $723.60)) + (0.15 × (0.00494 × I1, maximum $434.72))]
* If the resulting amount is negative, enter $0.

Note

The preceding is subject to the rules in Chapter 6 – “Canada Pension Plan (CPP)” and Chapter 7 – “Employment Insurance (EI)” of this document and the instructions in Guide T4001 Employers’ Guide – Payroll Deductions and Remittances.

K3 = If the K3 amount is implemented after the first pay period in the year, K3 must be adjusted using the following formula:

(P × K3) / PR

K4 = The lesser of:
(i) 0.15 × A*; 
(ii) 0.15 × CEA
CEA is an indexed amount. See Table 8.2 Other rates and amounts.

*  For the Canada employment amount, A is the annual gross income from office or employment before deductions. Only include the amounts from office or employment, this is the same amount you normally report in box 14 of the T4 slip(s).

Step 3 - Formula to calculate the annual federal tax payable (T1)

T1 = Annual federal tax deduction, except for employees in Quebec, outside Canada, and in Canada beyond the limits of any province or territory

= (T3 – LCF)*
* If the result is negative, enter $0.

Only for employees in Quebec:

T1 = [(T3 – LCF)* – (0.165 × T3)]*
* If the result is negative, enter $0.

Only for employees outside Canada and in Canada beyond the limits of any province or territory:

T1 = [T3 + (0.48 × T3) – LCF]*
* If result is negative, enter $0.

LCF = The lesser of:
(i) $750;
(ii) 15% of the amount deducted or withheld during the year for the acquisition, by the employee, of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation

Note

If the shares are invested in a registered retirement savings plan, the amount invested can be used to determine the annual taxable income amount.

Tax calculation formula for bonuses, retroactive pay increases, and other non-periodic payments

Introduction

Generally, the tax on a bonus (or retroactive pay increase) is calculated by finding the tax on the total of regular annual income plus any previous bonuses plus the current bonus and subtracting the tax on the total of regular annual income plus any previous bonuses. The difference will be the tax on the current bonus.

In the optional year-to-date method outlined below, instead of annualizing the current income, use year-to-date income values and year-to-date deductions as the annual income with and without the bonus. In either case the tax on the bonus is as follows:

TB = The difference between:
(i) the annual tax amount (T1 + T2) based on the instructions in Step 1 below; and
(ii) the annual tax amount (T1 + T2) based on the instructions in Step 2 below

(1) Regular bonus calculation

Step 1

Determine the annual tax (T1 + T2) based on the annual taxable income (factor A) with the non-periodic payment payable now. The formula to calculate factor A is as follows:

A = ([P × (I – F – F2 – U1)] – HD – F1)* + (B – F3)** + (B1 – F4)**

* If the result is negative, enter $0.
** Result cannot be negative, and result cannot be negative after deducting CPP and EI.

Note

If the result above is less than or equal to $5,000, deduct 15% tax (10% in Quebec) from the bonus or retroactive pay increase.

Step 2

Determine the annual tax (T1 + T2) based on the annual taxable income (factor A) without the non-periodic payment payable now. The formula to calculate factor A is as follows:

A = ([P × (I – F – F2 – U1)] – HD – F1)* + (B1 – F4)**

* If the result is negative, enter $0.
** Result cannot be negative, and result cannot be negative after deducting CPP and EI.

If there is no current I, use the most recent I.

(2) Year-to-date bonus calculation (optional)

Step 1

Determine the annual tax (T1 + T2) based on the annual taxable income (factor A) with the non-periodic payment payable now. The annual taxable income (factor A) is based on a year-to-date concept, plus the estimated income for the rest of the pay periods in the year. YTD means year-to-date (before this pay period). The formula to calculate factor A is as follows:

A = [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B – F3)** + (B1 – F4)**

* If the result is negative, enter $0.
** Result cannot be negative, and result cannot be negative after deducting CPP and EI.

Note

If the result above is less than or equal to $5,000, deduct 15% tax (10% in Quebec) from the bonus or retroactive pay increase.

Step 2

A = [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B1 – F4)**

* If the result is negative, enter $0.
** Result cannot be negative, and result cannot be negative after deducting CPP and EI.

Example for year-to-date bonus calculation method

In this example, an employee got a retroactive pay increase from $1,000 to $1,100 per week that applies to 25 weeks. Therefore, a retroactive pay increase payment of $2,500 is payable now. $1,000 will be directed to the employee’s RRSP. Thirty pay periods have passed and 22 pay periods remain in the year. Year-to-date income is $30,000, year-to-date RPP is $1,350, and year-to-date union dues are $150. The current income is $1,100 with RPP withheld of $45 and union dues of $5. The employee received a previous bonus of $1,000 with only CPP, EI, and tax withheld from it.

Step 1

A = Annual taxable income with the non-periodic payment payable now
= [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B – F3)** + (B1 – F4)**
= [($30,000 – $1,350 – $0 – $150) + (22 × ($1,100 – $45 – $0 – $5)) – $0 – $0] + ($2,500 – $1,000) + ($1,000 – $0)
= $28,500 + (22 × $1,050) + $1,500 + $1,000
= $54,100

Step 2

A = Annual taxable income without the non-periodic payment payable now
= [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B1 – F4)**
= [($30,000 – $1,350 – $0 – $150) + (22 × ($1,100 – $45 – $0 – $5)) – $0 – $0] + ($1,000 – $0)
= $28,500 + (22 × $1,050) + $1,000
= $52,600

After you have calculated the annual taxable income, factor A, in steps 1 and 2, calculate the factors T1 and T2 in the same way as for regular remuneration.

Note

The formula above can be used to calculate the tax deductions on non-periodic payments such as accumulated overtime not paid in the same pay period earned, paid vacation not taken by the employee, and bonuses. 

Step 4 - Formula to calculate annual basic provincial or territorial tax (T4)

T4 = (V × A) – KP – K1P – K2P – K3P – K4P
If the result is negative, T4 = $0.

Step 5 - Formulas to calculate the annual provincial or territorial tax deduction (T2)

T2 = T4 + V1 + V2 – S – LCP
If the result is negative, T2 = $0.

Only for employees in Quebec:

T2 = $0

Only for employees outside Canada and in Canada beyond the limits of any province or territory:

T2 = $0

Alberta

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P

V and KP are based on 2022 values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.10 × TCP

K2P = [(0.10 × (P × C, maximum $3,499.80)) + (0.10 × (P × EI, maximum $952.74))]

V1, S, and LCP = $0

British Columbia

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P

V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.0506 × TCP

K2P = [(0.0506 × (P × C, maximum $3,499.80)) + (0.0506 × (P × EI, maximum $952.74))]

V1 = $0

S = Where A ≤ $21,867, S is equal to the lesser of:
(i) T4; 
(ii) S2

= Where A > $21,867 ≤ $35,659, S is equal to the lesser of:
(i) T4; 
(ii) S2 – [(A – $21,867) × 3.56%]

= Where A > $35,659

= $0

LCP = The lesser of:
(i) $2,000; 
(ii) 15% of the amount deducted or withheld during the year for the acquisition by the employee of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation

Manitoba

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.108 × TCP

K2P = [(0.108 × (P × C, maximum $3,499.80)) + (0.108 × (P × EI, maximum $952.74))]

V1 and S = $0

LCP = The lesser of:
(i) $1,800; 
(ii) 15% of the amount deducted or withheld during the year for the acquisition by the employee of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation

New Brunswick

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.094 × TCP

K2P = [(0.094 × (P × C, maximum $3,499.80)) + (0.094 × (P × EI, maximum $952.74))]

V1 and S = $0

LCP = The lesser of:
(i) $2,000; 
(ii) 20% of the amount deducted or withheld during the year for the acquisition by the employee of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation

Newfoundland and Labrador

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.087 × TCP

K2P = [(0.087 × (P × C, maximum $3,499.80)) + (0.087 × (P × EI, maximum $952.74))]

V1, S and LCP = $0

Northwest Territories

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.059 × TCP

K2P = [(0.059 × (P × C, maximum $3,499.80)) + (0.059 × (P × EI, maximum $952.74))]

V1, S, and LCP = $0

Nova Scotia

T2 = T4 + V1 – S – LCP

If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.0879 × TCP

K2P = [(0.0879 × (P × C, maximum $3,499.80)) + (0.0879 × (P × EI, maximum $952.74))]

V1 and S = $0

LCP = The lesser of:
(i) $2,000; 
(ii) 20% of the amount deducted or withheld during the year for the acquisition by the employee of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation

Nunavut

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.040 × TCP

K2P = [(0.040 × (P × C, maximum $3,499.80)) + (0.040 × (P × EI, maximum $952.74))]

V1, S, and LCP = $0

Ontario

T2 = T4 + V1 + V2 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.0505 × TCP

K2P = [(0.0505 × (P × C, maximum $3,499.80)) + (0.0505 × (P × EI, maximum $952.74))]

V1 = Where T4 ≤ $4,991

    V1 = $0

    Where T4 < $4,991 ≤ $6,387

    V1 = 0.20 × (T4 – $4,991)

    Where T4 > $6,387

    V1 = 0.20 × (T4 – $4,991) + 0.36 × (T4 – $6,387)

V2 = Where A ≤$20,000, V2 = $0
Where $20,000 < A ≤ $36,000, V2 = the lesser of:
(i) $300; 
(ii) 0.06 × (A – $20,000)

Where $36,000 < A ≤ $48,000, V2 = the lesser of:
(i) $450; 
(ii) $300 + (0.06 × (A – $36,000))

Where $48,000 < A ≤ $72,000, V2 = the lesser of:
(i) $600; 
(ii) $450 + (0.25 × (A – $48,000))

Where $72,000 < A ≤ $200,000, V2 = the lesser of:
(i) $750; 
(ii) $600 + (0.25 × (A – $72,000))

Where A > $200,000, V2 = the lesser of:
(i) $900; 
(ii) $750 + (0.25 × (A – $200,000))

Note
The Ontario Health Premium (OHP) is not reduced by the Ontario tax reduction (factor S). The OHP is not related to the employer health tax for Ontario. Include the OHP in the total federal and provincial tax deducted on T4 slips.

S = The lesser of:
(i) T4 + V1; 
(ii) [2 × (S2 + Y)] – [T4 + V1]

If the result is negative, S = $0.

Where:
Y = The total of the following amounts as shown on Form TD1ON or for which the employee or pensioner has made a written or electronic request:

  • $475 multiplied by the number of disabled dependants; and
  • $475 multiplied by the number of dependants under age 19 
Note
If Y is not used, any over deduction of tax will be considered when the individual files their income tax and benefit return. When possible, use the Y factor.

LCP = $0

Prince Edward Island

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.098 × TCP

K2P = [(0.098 × (P × C, maximum $3,499.80)) + (0.098 × (P × EI, maximum $952.74))]

V1 = Where T4 ≤$12,500
V1 = $0
Where T4 > $12,500
V1 = 0.10 × (T4 – $12,500)

S and LCP = $0

Quebec

In this publication, we refer to the annual provincial or territorial tax deduction as factor T2. However, factor T2 does not apply in the province of Quebec. Quebec administers its own provincial income tax and Quebec Pension Plan contributions. If you have questions about the formulas for Quebec, please contact Revenu Québec:

Revenu Québec
3800, rue de Marly
Québec (Québec) G1X 4A5

Telephone: 1-800-567-4692
Outside Canada: 1-418-659-4692

Quebec employers whose employees receive income from tips and gratuities should review the section called “Calculating payroll deductions for employees in the hotel and restaurant business in Quebec,” in the publication T4032QC, Payroll Deductions Tables.

Saskatchewan

T2 = T4 + V1 – S – LCP
If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.105 × TCP

K2P = [(0.105 × (P × C, maximum $3,499.80)) + (0.105 × (P × EI, maximum $952.74))]

V1 and S = $0

LCP = The lesser of:
(i) $875; and
(ii) 17.5% of the amount deducted or withheld during the year for the acquisition by the employee of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation

Yukon

T2 = T4 + V1 – S – LCP

If the result is negative, T2 = $0.

Where:
T4 = (V × A) – KP – K1P – K2P – K3P – K4P
V and KP are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

K1P = 0.064 × TCP

K2P = [(0.064 × (P × C, maximum $3,499.80)) + (0.064 × (P × EI, maximum $952.74))]

K4P = The lesser of:

(i) 0.064 × A*; and
(ii) 0.064 × CEA
CEA is an indexed amount. See Table 8.2 Other rates and amounts in Chapter 8.

* For the Canada employment amount, A is the annual gross income from office or employment before deductions. Only include the amounts from office or employment, this is the same amount you normally report in box 14 of the T4 slip(s).

V1, S and LCP = $0

Outside Canada and in Canada beyond the limits of any province or territory:

V, V1, V2, S, and LCP = $0

Step 6 - Formula to calculate the estimated federal and provincial or territorial tax deductions (T) for the pay period

T = [(T1 + T2) / P] + L
You can round the resulting amount to the nearest multiple of $0.05 or $0.01.

Only for employees in Quebec, outside Canada, and in Canada beyond the limits of any province or territory:

T = (T1 / P) + L
You can round the resulting amount to the nearest multiple of $0.05 or $0.01.

For employees paid by commission who have filled out Form TD1X:

T = The tax to be deducted on the current commission payment (factor G)
= [(T1 + T2) / (I1 / (G – F – F1))] + L
You can round the resulting amount to the nearest multiple of $0.05 or 0.01.

Note

The F and F1 amounts used here are additional amounts that were not known or considered when calculating the Annual taxable income (A) variable.

Chapter 5 – Option 2 – Tax formula based on cumulative averaging

Option 2 formulas are intended for employees whose pay varies considerably from one pay period to the next. In the Option 2 formulas, the amount of tax to be deducted is based on the projected annual taxable income (including bonuses) compared to the amount of tax already deducted in the year. Option 2 works well for employees who are employed for a full calendar year. If the employee’s income is relatively stable for each pay period, there will not be much difference in the tax deductions with Option 2 compared to Option 1.

The following sections explain in detail how Option 2 works. The initial YTD used in this option means year-to-date and applies to payments or deductions for the current year, but not the payment payable now and the deductions for the current pay period.

Calculation of income

In Option 2, the actual year-to-date income plus the current income is projected over the rest of the pay periods in the year. For example, an employee received a total of $20,000 in 20 previous pay periods and $500 in the current pay period, and there are 5 pay periods left. The projected income for the year using Option 2 will be $25,380.95 [($20,000 + $500) × 26/21].

To determine year-to-date income, you have to use the year-to-date taxable income. Therefore, you will have to store and use the year-to-date values for each pay period factor, such as RPP (factor F) and union dues (U1).

Calculation of tax for the pay period

For Option 2, you calculate the tax on the projected income for the year, and then find the tax amount that is proportional to the number of pay periods that have occurred (including the current pay period). Compare the result to the tax deducted in the year-to-date. The difference is the tax payable on the current income.

Continuing the above example, if the total federal and provincial or territorial tax on $25,380.95 is $3,560.17, the proportional year-to-date tax is $2,875.52 ($3,560.17/26 × 21). If the total tax deducted year-to-date is $2,736.40, the tax on the current income of $500 is $139.12 ($2,875.52 – $2,736.40). The tax values used in this example are fictitious.

Special situations

When you change tax options to Option 2 during the year, we recommend that you reset the S1 factor to the first pay period. For example, if your pay period is weekly and the tax option is changed for the first pay period after July 1, then S1 should be reset to 52/1 instead of 52/27. In this way, the tax deductions that have been made under the previous option are not considered when calculating the deductions under the new option. This modification could also apply when an employee starts employment with you during the year.

When there are tax changes during the year, the first pay period after the change will show a significant adjustment to balance the new annual tax with the tax deducted at the old rates. We recommend that you reduce this impact by resetting the S1 factor or by averaging the tax increase or decrease over the rest of the pay periods.

Note

If an employee or a pensioner has income from another source from which no tax has been deducted (for example, investment income or rental income), they could have a tax liability when they file an income tax and benefit return for the year. The employee or pensioner can ask for more tax deductions, factor L, using Form TD1.

Formula to calculate annual taxable income (A)

A = Projected annual taxable income
= [S1 × (I – F – F2 – U1)] + B1 – HD – F1
If the result is negative, A = $0.

S1 = This is a set of two numbers: the number of total pay periods (or the employee’s pay periods if the employees worked less than the total pay periods) divided by the applicable number of the current pay period, as in the chart below. Also, see the information under “Special situations.”

Table 5.1 S1 Examples
Examples 52pp 26pp 24pp 12pp
1st pay period, S1 = 52/1 26/1 24/1 12/1
2nd pay period, S1 = 52/2 26/2 24/2 12/2
3rd pay period, S1 = 52/3 26/3 24/3 12/3
Etc., last pay period, S1 = 52/52 26/26 24/24 12/12

I = Gross pay for the pay period. This includes overtime earned and paid in the same pay period, pension income, qualified pension income, and taxable benefits, plus IYTD, but does not include amounts in factor B.

F = Payroll deductions for the pay period for employee contributions to a registered pension plan for current and past services, a registered retirement savings plan (RRSP), or a retirement compensation arrangement plus FYTD.

Note

For full details, see the description under Option 1.

F2 = Alimony or maintenance payments required by a legal document dated before May 1, 1997, to be deducted at source from the employee’s salary for the pay period plus F2YTD. The legal document could be a garnishment or a similar order of a court or competent tribunal.

Note

For full details, see the description under Option 1.

U1 = Union dues for the pay period, plus U1YTD.

B1 = Year-to-date (before this pay period) non-periodic payments such as bonuses, retroactive pay increases, vacation pay when vacation is not taken, and accumulated overtime. Since tax on a current non-periodic payment is calculated separately, do not include the current non-periodic payment in calculating A.

Note

For overtime earned and paid in the same pay period, the payment is included with the I factor. Also, when the employee gets vacation pay and takes vacation, the income is included in the I factor. If you want to make deductions such as RRSP contributions from the bonus payment, see the instructions in Option 1 for using factors F3 and F4.

Formula to calculate basic federal tax (T3)

T3 = (R × A) – K – K1 – K2 – K3 – K4
If the result is negative, T3 = $0.

Only for employees in Quebec:

T3 = (R × A) – K – K1 – K2Q – K3 – K4
If the result is negative, T3 = $0.

R and K are based on 2022 index values for A see the Rates (R, V), income thresholds (A), and constants (K, KP) for 2022 Table 8.1 in Chapter 8.

A = Projected annual taxable income

K1 = 0.15 × TC

K2 = [(0.15 × ((0.0570 × ((S1 × PI) + B1 – $3,500)*, maximum $3,499.80)) + (0.15 × ((0.0158 × ((S1 × IE) + B1), maximum $952.74))]

Only for employees in Quebec:

K2Q = [(0.15 × (0.0615 × ((S1 × PI) + B1 – $3,500)*, maximum $3,776.10)) + (0.15 × (0.0120 × ((S1 × IE) + B1), maximum $723.60)) + (0.15 × (0.00494 × S1 × IE) + B1), maximum $434.72))]

Note

* If the result is negative, enter $0.

Where:

PI = Pensionable income for the pay period, or the gross income plus any taxable benefits for the pay period, plus PIYTD

IE = Insurable earnings for the pay period including insurable taxable benefits for the pay period, plus IEYTD

The above has to follow the rules in Chapter 6 – “Canada Pension Plan (CPP)” and Chapter 7 – “Employment Insurance (EI)” of this publication and the instructions contained in Guide T4001, Employers’ Guide – Payroll Deductions and Remittances.

K4 = The lesser of:
(i) 0.15 × A*; 
(ii) 0.15 × CEA

CEA is an indexed amount. See Table 8.2 Other rates and amounts in Chapter 8.

* For the Canada employment amount, A is the annual gross income from office or employment before deductions. Only include the amounts from office or employment, this is the same amount you normally report in box 14 of the T4 slip (s).

Formula to calculate the federal tax payable (T1)

T1 = Annual federal tax deduction except for Quebec, outside Canada, and in Canada beyond the limits of any province or territory
= (T3 – LCF)*
* If the result is negative, enter $0.

Only for Quebec:

T1 = (T3 – LCF)* – (0.165 × T3)
* If the result is negative, enter $0.

Only for outside Canada or in Canada beyond the limits of any province or territory:

T1 = [T3 + (0.48 × T3) – LCF]*
* If the result is negative, enter $0.

LCF = The lesser of:
(i) $750;
(ii) 15% of the amount deducted or withheld during the year for the acquisition by the employee of approved shares of the capital stock of a prescribed labour-sponsored venture capital corporation

Note

If the shares are invested in an RRSP, then the amount invested can be used to determine the annual taxable income amount.

Formula to calculate provincial and territorial tax payable (T2)

We have not repeated the entire explanation for the provincial and territorial variables. Effective January 1, 2022, the variables for Option 2 are the same as for Option 1, except for factor K2P, which is as follows:

K2P = [(Lowest provincial or territorial tax rate × (0.0570 × ((S1 × PI) + B1 – $3,500)*, maximum $3,499.80)) + (lowest provincial or territorial tax rate × (0.0158 × ((S1 × IE) + B1), maximum $952.74))]
* If the result is negative, enter $0.

Replace the lowest provincial or territorial tax rate with the appropriate rate for the province or territory that applies to the employee or pensioner.

Only for Quebec:

T2 = $0

Only for outside Canada or in Canada beyond the limits of any province or territory:

T2 = $0

Formula to calculate the estimated federal and provincial or territorial tax deductions (T) for the pay period

T = [((T1 + T2 – M1) / S1) – M]* + L
* If the result is negative, T = L.
The resulting amount can be rounded to the nearest multiple of $0.05 or $0.01.

Only for employees in Quebec, outside Canada, and in Canada beyond the limits of any province or territory:

T = Estimated federal tax deduction for the pay period**
= [((T1 – M1) / S1) – M]* + L
* If the result is negative, T = L.
** The resulting amount can be rounded to the nearest multiple of $0.05 or $0.01.

M = Do not include any year-to-date extra tax deductions requested by the employee, factor L. Tax already deducted on non-periodic payments such as bonuses, is included in factor M1.

M1 = Accumulated federal and provincial (or territorial) tax deductions on non-periodic payments such as bonuses, if any, to the last pay period. Do not include any year-to-date extra tax deductions for the year requested by the employee, factor L or any tax included in factor M. The T factor (tax deduction for the pay period) will not include the tax on the non-periodic payment. The tax to be deducted on a current non periodic payment is kept in another field TB.

TB = Estimated federal and provincial or territorial tax deduction on a non-periodic payment for the pay period

= Step 1 minus Step 2 below (if negative, TB = $0)

Step 1
Projected annual taxable income including B1 and B payable now
= [S1 × (I – F – F2 – U1)] + B1 + B – HD – F1

Step 2
Projected annual taxable income including B1, but not B payable now
= [S1 × (I – F – F2 – U1)] + B1 – HD – F1

Chapter 6 – Canada Pension Plan (CPP)

Formula to determine CPP contributions for employees receiving salary or wages

C = The lesser of:
(i) $3,499.80* – D*; 
(ii) 0.0570* × [PI – ($3,500 / P)]
If the result is negative, C = $0.

* For employees employed in Quebec
use the QPP max contribution amount of $3,776.10 instead of $3,499.80;
use DQ instead of D; and,
use the QPP contribution rate of 0.0615 instead of 0.0570.

Formula to determine CPP contributions—only for employees paid by commission

C = The lesser of:
(i) $3,499.80* – D; 
(ii) 0.0570* × [G – ($3,500 × N / 365, minimum $67.30)]
If the result is negative, C = $0.

* For employees employed in Quebec
use the QPP max contribution amount of $3,776.10 instead of $3,499.80;
use DQ instead of D; and,
use the QPP contribution rate of 0.0615 instead of 0.0570.

Formula to determine CPP contributions for employees who were transferred by their employer from Quebec to a location outside Quebec during the year receiving salary or wages

C = The lesser of:
(i) $3,499.80 – [(DQ x (0.0570/0.0615))* + D]; 
(ii) 0.0570 × [PI – ($3,500 / P)]
If the result is negative, C = $0.

*No rounding required for this factor.

Formula to determine CPP contributions for employees who were transferred by their employer from Quebec to a location outside Quebec during the year paid by commission

C = The lesser of:
(i) $3,499.80 – [(DQ x (0.0570/0.0615))* + D]; 
(ii) 0.0570 × [G – ($3,500 × N / 365, minimum $67.30)]
If the result is negative, C = $0.

* No rounding required for this factor.

Note

For these formulas, round the resulting amount to the nearest $0.01. The maximum amount for the year [amount (i) above] will vary according to the rules in the section called “Special CPP Situations.”

Each employer needs to deduct CPP contributions based on the employee’s pensionable income, without regard to any other earnings the employee may have had with another employer in the same year. Accordingly, you must use the maximum above even if the employee works for you less than 12 months. Similarly, you are not entitled to a refund of the employer’s share of CPP if the employee works for you less than 12 months.

For payments where the employee receives remuneration such as a bonus, retroactive pay increase, vacation pay when vacation is not taken, or accumulated overtime pay, and the payment is not included with the regular remuneration for the current pay period, you should introduce a code or use the factor B with the record. Also do this if a non-periodic payment is made and no regular remuneration is paid in the pay period. You do this to avoid allowing the basic exemption for the pay period ($3,500 / P) in the formula described above.

The basic exemption amount ($3,500 / P) used to determine the employee’s contributions for the pay period has to stay the same throughout the year, regardless of whether an employee has worked in each week of the pay period.

Also, you should determine the number of pay periods at the start of the year (for example, for weekly, you can have 52 or 53 pay periods and, for biweekly, you can have 26 or 27 pay periods.) This is to make sure that you have deducted employee contributions properly.

Special CPP situations

You will have to either start or stop deducting CPP contributions under the following circumstances:

Your employee turns 18 – Start deducting CPP contributions for the first pay dated in the month after the employee turns 18.

Your employee turns 70 – Deduct CPP contributions up to and including the last pay dated in the month in which the employee turns 70.

For step (i) in each calculation of C above, the maximum contribution must be prorated for the special situations. For detailed information, refer to T4001 Employers’ Guide- Payroll Deductions and Remittances.

Employee’s CPP basic exemption for various pay periods

Table 6.1 Employee’s CPP basic exemption for various pay periods
Pay period Basic exemption ($)
Annually (1) 3,500.00
Semi-annually (2) 1,750.00
Quarterly (4) 875.00
Monthly (12) 291.66
Semi-monthly (24) 145.83
Biweekly (26) 134.61
Biweekly (27) 129.62
Weekly (52) 67.30
Weekly (53) 66.03
22 pay periods 159.09
13 pay periods 269.23
10 pay periods 350.00
Daily (240) 14.58
Hourly (2000) 1.75

Chapter 7 – Employment Insurance (EI)

Formula to calculate Employment Insurance (EI) premiums

As an employer, you have to remit these deductions along with your share of EI premiums. For more information, go to Chapter 3, "Employment Insurance premiums," in Guide T4001, Employer’s Guide – Payroll Deductions and Remittances.

The formula below will allow you to determine, in your payroll calculations, the premium payable by an insured person under the Employment Insurance Act. The formula is:

EI = The lesser of:
(i) $952.74 – D1; 
(ii) 0.0158 × IE

Only for employees in Quebec:

EI = the lesser of
(i) $723.60 – D1; 
(ii) 0.0120 × IE*

* Round the resulting amount(s) in (ii) to the nearest $0.01.

Note

When an employee changes province of employment during the year but stays with the same employer, the maximum premium for the year is based on the province where the first $60,300 of insurable earnings is paid.

Example:

An employee makes $30,000 of insurable earnings in Ontario, changes their province of employment to Quebec, and makes an extra $40,000 with the same employer. The employee’s maximum premium is calculated as follows:

In Ontario: $30,000 × 1.58% = $474.00
In Quebec: $30,300 × 1.20% = $363.60
Totals:         $60,300                = $837.60

QPIP premiums and maximum insurable earnings will be updated on the following link of the Revenu Quebec QPIP premium website once the information is available. The rate of 0.00494 remains unchanged for 2022.

Chapter 8 – Rates and amounts

To download the Chapter 8 tables in comma-separated value (CSV) format see the T4127 Payroll Deductions Formulas website.

Table 8.1 Rates (R, V), income thresholds (A), and constants (K, KP) for 2022

Rates (R, V), income thresholds (A), and constants (K, KP) for 2022
Province or territory Rates (R, V), income thresholds (A), and constants (K, KP) 1st 2nd 3rd 4th 5th 6th 7th 8th
Federal A 0 50,197 100,392 155,625 221,708      
Federal R 0.1500 0.2050 0.2600 0.2900 0.3300      
Federal K 0 2,761 8,282 12,951 21,819      
AB A 0 131,220 157,464 209,952 314,928      
AB V 0.1000 0.1200 0.1300 0.1400 0.1500      
AB KP 0 2,624 4,199 6,299 9,448      
BC A 0 43,070 86,141 98,901 120,094 162,832 227,091  
BC V 0.0506 0.0770 0.1050 0.1229 0.1470 0.1680 0.2050  
BC KP 0 1,137 3,549 5,319 8,214 11,633 20,035  
MB A 0 34,431 74,416          
MB V 0.1080 0.1275 0.1740          
MB KP 0 671 4,132          
NB A 0 44,887 89,775 145,955 166,280      
NB V 0.0940 0.1482 0.1652 0.1784 0.2030      
NB KP 0 2,433 3,959 5,886 9,976      
NL A 0 39,147 78,294 139,780 195,693 250,000 500,000 1,000,000
NL V 0.0870 0.1450 0.1580 0.1780 0.1980 0.2080 0.2130 0.2180
NL KP 0 2,271 3,288 6,084 9,998 12,498 14,998 19,998
NS A 0 29,590 59,180 93,000 150,000      
NS V 0.0879 0.1495 0.1667 0.1750 0.2100      
NS KP 0 1,823 2,841 3,613 8,863      
NT A 0 45,462 90,927 147,826        
NT V 0.0590 0.0860 0.1220 0.1405        
NT KP 0 1,227 4,501 7,236        
NU A 0 47,862 95,724 155,625        
NU V 0.0400 0.0700 0.0900 0.1150        
NU KP 0 1,436 3,350 7,241        
ON A 0 46,226 92,454 150,000 220,000      
ON V 0.0505 0.0915 0.1116 0.1216 0.1316      
ON KP 0 1,895 3,754 5,254 7,454      
PE A 0 31,984 63,969          
PE V 0.0980 0.1380 0.1670          
PE KP 0 1,279 3,134          
SK A 0 46,773 133,638          
SK V 0.1050 0.1250 0.1450          
SK KP 0 935 3,608          
YT A 0 50,197 100,392 155,625 500,000      
YT V 0.0640 0.0900 0.1090 0.1280 0.1500      
YT KP 0 1,305 3,213 6,169 17,169      

Table 8.2 Other rates and amounts for 2022

Other rates and amounts for 2022
 territory Basic amount Index rate LCP rate LCP amount CEA S2 T4 → V1 V1 rate Abatement Surtax
Federal BPAF 0.024 0.150 750 1,287          
AB 19,369                
BC 11,302 0.021 0.150 2,000   491        
MB 10,145 0.021 0.150 1,800            
NB 10,817 0.024 0.200 2,000            
NL 9,803 0.028                
NS BPANS 0.200 2,000            
NT 15,609 0.024                
NU 16,862 0.024                
ON 11,141 0.024       257 0 0.000    
ON             4,991 0.200    
ON             6,387 0.360    
PE 11,250         0 0.000    
PE             12,500 0.100    
QC                 0.165  
SK 16,615 0.024 0.175 875            
YT BPAYT 0.024     1,287          
Outside Canada                   0.480

For information on 2022 federal personal amounts, see the form TD1, Personal Tax Credits Return and the form TD1X, Commission Income and Expenses for Payroll Tax Deductions. For information on 2022 provincial or territorial personal amounts, see the respective form TD1AB, TD1BC, TD1MB, TD1NB, TD1NL, TD1NS, TD1NT, TD1NU, TD1ON, TD1PE, TD1SK, or TD1YT. For information on QC amounts, refer to Revenu Quebec.

Table 8.3 Canada Pension Plan / Quebec Pension Plan 2022 rates and amounts

Canada Pension Plan / Quebec Pension Plan rates and amounts
CPP/QPP YMPE Basic Exemption Max contributory earnings Employee contribution rate Employee max contribution Self-employed max contribution YMPE before rounding
CPP (Canada except QC) 64,900 3,500 61,400 0.0570 3,499.80 6,999.60 64,976.96
QPP (QC) 64,900 3,500 61,400 0.0615 3,776.10 7,552.20 64,976.96

Table 8.4 Employment Insurance 2022 rates and amounts

Employment Insurance rates and amounts
EI Annual max insurable earnings Employee contribution rate Employer contribution rate Annual max employee premium Annual max employer premium
Canada except QC 60,300 0.0158 0.02212 952.74 1,333.84 
QC 60,300 0.0120 0.01680 723.60 1,013.04

Claim codes for 2022

Table 8.5 Federal Claim Codes (using maximum BPAF)

Federal Claim Codes for 2022
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TC = ($) Option 1, K1 ($)
0 No claim amount No claim amount 0 0
1 0 14,398.00 14,398.00 2,159.70
2 14,398.01 16,828.00 15,613.00 2,341.95
3 16,828.01 19,258.00 18,043.00 2,706.45
4 19,258.01 21,688.00 20,473.00 3,070.95
5 21,688.01 24,118.00 22,903.00 3,435.45
6 24,118.01 26,548.00 25,333.00 3,799.95
7 26,548.01 28,978.00 27,763.00 4,164.45
8 28,978.01 31,408.00 30,193.00 4,528.95
9 31,408.01 33,838.00 32,623.00 4,893.45
10 33,838.01 36,268.00 35,053.00 5,257.95

Table 8.6 Alberta claim codes

Alberta claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 19,369.00 19,369.00 1,936.90
2 19,369.01 22,203.00 20,786.00 2,078.60
3 22,203.01 25,037.00 23,620.00 2,362.00
4 25,037.01 27,871.00 26,454.00 2,645.40
5 27,871.01 30,705.00 29,288.00 2,928.80
6 30,705.01 33,539.00 32,122.00 3,212.20
7 33,539.01 36,373.00 34,956.00 3,495.60
8 36,373.01 39,207.00 37,790.00 3,779.00
9 39,207.01 42,041.00 40,624.00 4,062.40
10 42,041.01 44,875.00 43,458.00 4,345.80

Table 8.7 British Columbia claim codes

British Columbia claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 11,302.00 11,302.00 571.88
2 11,302.01 13,845.00 12,573.50 636.22
3 13,845.01 16,388.00 15,116.50 764.89
4 16,388.01 18,931.00 17,659.50 893.57
5 18,931.01 21,474.00 20,202.50 1,022.25
6 21,474.01 24,017.00 22,745.50 1,150.92
7 24,017.01 26,560.00 25,288.50 1,279.60
8 26,560.01 29,103.00 27,831.50 1,408.27
9 29,103.01 31,646.00 30,374.50 1,536.95
10 31,646.01 34,189.00 32,917.50 1,665.63

Table 8.8 Manitoba claim codes

Manitoba claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 10,145.00 10,145.00 1,095.66
2 10,145.01 11,838.00 10,991.50 1,187.08
3 11,838.01 13,531.00 12,684.50 1,369.93
4 13,531.01 15,224.00 14,377.50 1,552.77
5 15,224.01 16,917.00 16,070.50 1,735.61
6 16,917.01 18,610.00 17,763.50 1,918.46
7 18,610.01 20,303.00 19,456.50 2,101.30
8 20,303.01 21,996.00 21,149.50 2,284.15
9 21,996.01 23,689.00 22,842.50 2,466.99
10 23,689.01 25,382.00 24,535.50 2,649.83

Table 8.9 New Brunswick claim codes

New Brunswick claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 10,817.00 10,817.00 1,016.80
2 10,817.01  13,216.00 12,016.50 1,129.55
3 13,216.01 15,615.00 14,415.50 1,355.06
4 15,615.01 18,014.00 16,814.50 1,580.56
5 18,014.01 20,413.00 19,213.50 1,806.07
6 20,413.01 22,812.00 21,612.50 2,031.58
7 22,812.01 25,211.00 24,011.50 2,257.08
8 25,211.01 27,610.00 26,410.50 2,482.59
9 27,610.01 30,009.00 28,809.50 2,708.09
10 30,009.01 32,408.00 31,208.50 2,933.60

Table 8.10 Newfoundand and Labrador claim codes

Newfoundland and Labrador claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 9,803.00 9,803.00 852.86
2 9,803.01 11,920.00 10,861.50 944.95
3 11,920.01 14,037.00 12,978.50 1,129.13
4 14,037.01 16,154.00 15,095.50 1,313.31
5 16,154.01 18,271.00 17,212.50 1,497.49
6 18,271.01 20,388.00 19,329.50 1,681.67
7 20,388.01 22,505.00 21,446.50 1,865.85
8 22,505.01 24,622.00 23,563.50 2,050.02
9 24,622.01 26,739.00 25,680.50 2,234.20
10 26,739.01 28,856.00 27,797.50 2,418.38

Table 8.11 Nova Scotia claim codes (using maximum BPANS)

Nova Scotia claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 11,481.00 11,481.00 1,009.18
2 11,481.01 13,081.00 12,281.00 1,079.50
3 13,081.01 14,681.00 13,881.00 1,220.14
4 14,681.01 16,281.00 15,481.00 1,360.78
5 16,281.01 17,881.00 17,081.00 1,501.42
6 17,881.01 19,481.00 18,681.00 1,642.06
7 19,481.01 21,081.00 20,281.00 1,782.70
8 21,081.01 22,681.00 21,881.00 1,923.34
9 22,681.01 24,281.00 23,481.00 2,063.98
10 24,281.01 25,881.00 25,081.00 2,204.62

Table 8.12 Northwest Territories claim codes

Northwest territories claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 15,609.00 15,609.00 920.93
2 15,609.01 18,293.00 16,951.00 1,000.11
3 18,293.01 20,977.00 19,635.00 1,158.47
4 20,977.01 23,661.00 22,319.00 1,316.82
5 23,661.01 26,345.00 25,003.00 1,475.18
6 26,345.01 29,029.00 27,687.00 1,633.53
7 29,029.01 31,713.00 30,371.00 1,791.89
8 31,713.01 34,397.00 33,055.00 1,950.25
9 34,397.01 37,081.00 35,739.00 2,108.60
10 37,081.01 39,765.00 38,423.00 2,266.96

Table 8.13 Nunavut claim codes

Nunavut claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 16,862.00 16,862.00 674.48
2 16,862.01 19,589.00 18,225.50 729.02
3 19,589.01 22,316.00 20,952.50 838.10
4 22,316.01 25,043.00 23,679.50 947.18
5 25,043.01 27,770.00 26,406.50 1,056.26
6 27,770.01 30,497.00 29,133.50 1,165.34
7 30,497.01 33,224.00 31,860.50 1,274.42
8 33,224.01 35,951.00 34,587.50 1,383.50
9 35,951.01 38,678.00 37,314.50 1,492.58
10 38,678.01 41,405.00 40,041.50 1,601.66

Table 8.14 Ontario claim codes

Ontario claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 11,141.00 11,141.00 562.62
2 11,141.01 13,541.00 12,341.00 623.22
3 13,541.01 15,941.00 14,741.00 744.42
4 15,941.01 18,341.00 17,141.00 865.62
5 18,341.01 20,741.00 19,541.00 986.82
6 20,741.01 23,141.00 21,941.00 1,108.02
7 23,141.01 25,541.00 24,341.00 1,229.22
8 25,541.01 27,941.00 26,741.00 1,350.42
9 27,941.01 30,341.00 29,141.00 1,471.62
10 30,341.01 32,741.00 31,541.00 1,592.82

Table 8.15 Prince Edward Island claim codes

Table 8.15 Prince Edward Island claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 11,250.00 11,250.00 1,102.50
2 11,250.01 12,850.00 12,050.00 1,180.90
3 12,850.01 14,450.00 13,650.00 1,337.70
4 14,450.01 16,050.00 15,250.00 1,494.50
5 16,050.01 17,650.00 16,850.00 1,651.30
6 17,650.01 19,250.00 18,450.00 1,808.10
7 19,250.01 20,850.00 20,050.00 1,964.90
8 20,850.01 22,450.00 21,650.00 2,121.70
9 22,450.01 24,050.00 23,250.00 2,278.50
10 24,050.01 25,650.00 24,850.00 2,435.30

Table 8.16 Saskatchewan claim codes

Table 8.16 Saskatchewan claim codes
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 16,615.00 16,615.00 1,744.58
2 16,615.01 18,753.00 17,684.00 1,856.82
3 18,753.01 20,891.00 19,822.00 2,081.31
4 20,891.01 23,029.00 21,960.00 2,305.80
5 23,029.01 25,167.00 24,098.00 2,530.29
6 25,167.01 27,305.00 26,236.00 2,754.78
7 27,305.01 29,443.00 28,374.00 2,979.27
8 29,443.01 31,581.00 30,512.00 3,203.76
9 31,581.01 33,719.00 32,650.00 3,428.25
10 33,719.01 35,857.00 34,788.00 3,652.74

Table 8.17 Yukon Claim Codes (using maximum BPAYT)

Table 8.17 Yukon Claim Codes (using maximum BPAYT)
Claim code Total claim amount ($) from Total claim amount ($) to Option 1, TCP = ($) Option 1, K1P ($)
0 No claim amount No claim amount 0.00 0.00
1 0.00 14,398.00 14,398.00 921.47
2 14,398.01 16,828.00 15,613.00 999.23
3 16,828.01 19,258.00 18,043.00 1,154.75
4 19,258.01 21,688.00 20,473.00 1,310.27
5 21,688.01 24,118.00 22,903.00 1,465.79
6 24,118.01 26,548.00 25,333.00 1,621.31
7 26,548.01 28,978.00 27,763.00 1,776.83
8 28,978.01 31,408.00 30,193.00 1,932.35
9 31,408.01 33,838.00 32,623.00 2,087.87
10 33,838.01 36,268.00 35,053.00 2,243.39

Table 8.18 Rates (R,V) income thresholds (A) and constants (K, KP) for 2021

Table 8.18 Rates (R,V) income thresholds (A) and constants (K, KP) for 2021
Province ou territoire Taux (R, V) seuils de revenu (A) et constantes (K, KP) 1st 2nd 3rd 4th 5th 6th 7th
Federal A 0 49,020 98,040 151,978 216,511    
Federal R 0.1500 0.2050 0.2600 0.2900 0.3300    
Federal K 0 2,696 8,088 12,648 21,308    
AB A 0 131,220 157,464 209,952 314,928    
AB V 0.1000 0.1200 0.1300 0.1400 0.1500    
AB KP 0 2,624 4,199 6,299 9,448    
BC A 0 42,184 84,369 96,866 117,623 159,483 222,420
BC V 0.0506 0.0770 0.1050 0.1229 0.1470 0.1680 0.2050
BC KP 0 1,114 3,476 5,210 8,045 11,394 19,623
MB A 0 33,723 72,885        
MB V 0.1080 0.1275 0.1740        
MB KP 0 658 4,047        
NB A 0 43,835 87,671 142,534 162,383    
NB V 0.0940 0.1482 0.1652 0.1784 0.2030    
NB KP 0 2,253 3,744 5,625 9,620    
NL A 0 38,081 76,161 135,973 190,363    
NL V 0.0870 0.1450 0.1580 0.1730 0.1980    
NL KP 0 2,209 3,199 5,238 7,142    
NS A 0 29,590 59,180 93,000 150,000    
NS V 0.0879 0.1495 0.1667 0.1750 0.2100    
NS KP 0 1,823 2,841 3,613 8,863    
NT A 0 44,396 88,796 144,362      
NT V 0.0590 0.0860 0.1220 0.1405            
NT KP 0 1,199 4,395 7,066      
NU A 0 46,740 93,480 151,978      
NU V 0.0400 0.0700 0.0900 0.1150      
NU KP 0 1,402 3,272 7,071      
ON A 0 45,142 90,287 150,000 220,000    
ON V 0.0505 0.0915 0.1116 0.1216 0.1316    
ON KP 0 1,851 3,666 5,166 7,366    
PE A 0 31,984 63,969        
PE V 0.0980 0.1380 0.1670        
PE KP 0 1,279 3,134        
SK A 0 45,677 130,506        
SK V 0.1050 0.1250 0.1450        
SK KP 0 914 3,524        
YT A 0 49,020 98,040 151,978 500,000    
YT V 0.0640 0.0900 0.1090 0.1280 0.1500    
YT KP 0 1,275 3,137 6,025 17,025   ,,

*The January 2021 edition published a rate of 0.0968 and the July 2021 edition published a prorated rate of 0.0912.

Table 8.19 Other rates and amounts for 2021

Table 8.19 Other rates and amounts for 2021
Province ou territoire Basic Amount Index Rate LCP Rate LCP Amount CEA S T4 → V1 V1 Rate Abatement Surtax
Federal BPAF 0.010 0.150 750 1,257          
AB 19,369                
BC 11,070 0.011 0.150 2,000   481        
MB 9,936 0.010                
NB 10,564 0.010 0.200 2,000            
NL 9,536 0.004 0.200 2,000            
NS BPANS 0.200
2,000            
NT 15,243 0.010                
NU 16,467 0.010                
ON 10,880 0.009       251 0 0.000    
ON             4,874 0.200    
ON             6,237 0.360    
PE 10,500           0 0.000    
PE             12,500 0.100    
QC                 0.165  
SK 16,225 0.010 0.175 875            
YT BPAYT 0.010 0.250 1,250 1,257          
Outside Canada                   0.480

 For information on 2021 federal personal amounts, see the form TD1, Personal Tax Credits Return and the form TD1X, Commission Income and Expenses for Payroll Tax Deductions. For information on 2021 provincial or territorial personal amounts, see the respective form TD1AB, TD1BC, TD1MB, TD1NB, TD1NL, TD1NS, TD1NT, TD1NU, TD1ON, TD1PE, TD1QC, TD1SK, or TD1YT. For information on QC amounts, refer to Revenu Quebec.

Table 8.20 Canada Pension Plan / Quebec Pension Plan indexes for 2021 rates and amounts

Table 8.20 Canada Pension Plan / Quebec Pension Plan indexes for 2021
CPP/QPP YMPE Basic Exemption Max contributory earnings Employee contribution rate Employee max contribution Self-employed max contribution YMPE before rounding
CPP (Canada except QC) 61,600 3,500 58,100 0.0545 3,166.45 6,332.90

61,647.97

QPP (QC) 61,600 3,500 58,100 0.0590 3,427.90 6,855.80

61,647.97

Table 8.21 Employment Insurance for 2021 rates and amounts

Table 8.21 Employment Insurance indexes for 2021
EI Annual max insurable earnings Employee contribution rate Employer contribution rate Annual max employee premium Annual max employer premium
Canada except QC 56,300 0.0158 0.02212 889.54 1,245.36
QC 56,300 0.0118 0.01652 664.34 930.08
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