Payroll Deductions And How Much Should You Be Paying in Mississauga?

November 7, 2022 | Written by: Sohail Afzal

Payroll Deductions And How Much Should You Be Paying in Mississauga?

In Mississauga, employees can make many different types of payroll deductions. The common ones are income tax, Canada Pension Plan (CPP), and Employment Insurance (EI). Each deduction has a specific percentage taken out of an employee’s paycheque, depending on their salary and how much they earn.

This article will discuss payroll deductions and how much you should be paying in Mississauga.

Income tax is the most common type of payroll deduction in Mississauga. The amount deducted from your paycheque depends on your salary and how much you earn. The Canadian government has a tax bracket system, it helps in calculating the amount of income tax that you owe. The tax bracket that you are in is based on your annual income.

The first step in calculating your income taxes is to calculate your taxable income. This is the total amount of money you have made in a year minus any deductions or exemptions you have to pay. Once you have calculated your taxable income, you can then use the tax bracket system to determine how much income tax you owe.

What Are Your Responsibilities As An Employer?

As an employer, you are responsible for deducting income tax from your employees’ paycheques and remitting the funds to the government. You are also responsible for withholding the Canada Pension Plan (CPP) and Employment Insurance (EI). The amount you withhold from each employee’s paycheque will depend on their salary and how much they earn.

CPP deductions are calculated as a percentage of an employee’s salary up to a maximum amount. For 2022, the CPP deduction rate is 5.45%, and the maximum amount that can be deducted is $3,166.60.

EI deductions are also calculated as a percentage of an employee’s salary up to a maximum amount. For 2022, the EI deduction rate is 1.58%, and the maximum amount that can be deducted is $856.36.

You are also responsible for paying your share of the CPP and EI premiums as an employer. The CPP premium is 9.9%, and the EI premium is 1.4%.

Which Payroll Deductions Does The Law?

Income tax, CPP, and EI deductions are all required by law. If you are an employer, you must deduct these amounts from your employees’ paycheques and remit the funds to the government. You can also choose to withhold other deductions, such as union dues or health insurance premiums.

It is important to note that payroll deductions are different from business expenses. Business expenses are costs incurred while running a business, and they can be deducted from your taxable income. Payroll deductions are amounts that are deducted from an employee’s paycheque and are not tax-deductible.

What Are The Penalties For Not Making Payroll Deductions?

Suppose you are an employer and do not make the required payroll deductions. In that case, you may be subject to penalties and interest charges. The Canadian government has several different enforcement tools that they can use to collect unpaid payroll deductions, including garnishing wages and levying bank accounts.

What Are Some Other Deductions?

Other deductions commonly withheld from paycheques include union dues, health insurance, and life insurance premiums. The law does not require these deductions, but your union or employer might require them.

What Are Your Year-End Payroll Responsibilities?

As an employer, you are responsible for preparing and filing a year-end T4 slip for each employee. The T4 slip shows the total amount of income that an employee earned in the previous year and any deductions made.

You are also responsible for remitting any outstanding payroll taxes to the government. This includes any unpaid income tax, CPP, or EI premiums.

GTA Accounting

GTA Accounting is the best accounting firm in Mississauga that can help you with payroll needs, from calculating deductions to preparing and filing T4 slips. We can also help you with your year-end payroll responsibilities. Contact us today to learn more about our services.

Sohail Afzal CPA Toronto

Sohail Afzal, CPA, CMA, MBA

Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.

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