Statutory Deductions

This section explains the mandatory deduction language that turns gross pay into take-home pay and creates employer remittance work. It covers the umbrella term source deductions, income tax withholding, and the payroll concepts that feed CPP and EI calculations.

Start Here

• Source Deductions explains the Canadian umbrella term for income tax, CPP, and EI amounts withheld from pay.
• Income Tax Deduction explains the payroll withholding line many employees notice first on the pay stub.
• TD1 explains the form payroll uses as an input for income tax withholding.
• Federal Income Tax Deduction explains the federal portion inside payroll tax withholding.
• Provincial Income Tax Deduction explains the province-linked payroll tax withholding layer.
• CPP explains Canada Pension Plan payroll contributions.
• CPP2 explains the second additional CPP layer that can appear for higher pensionable earnings.
• EI explains Employment Insurance payroll premiums.
• Pensionable Earnings explains the earnings base that matters for CPP treatment.
• Insurable Earnings explains the earnings base that matters for EI treatment.

Questions This Section Answers

• Why does gross pay not match net pay?
• How is income tax deduction different from CPP and EI?
• How is federal income tax deduction different from provincial income tax deduction in payroll?
• Why can CPP-related deductions change later in the year for higher earnings?
• Which employee form helps payroll determine income tax withholding?
• Why does payroll track separate earnings bases for different deductions?
• How do CPP and EI fit inside the broader source-deductions concept?

Continue To

• Source Deductions & Remittances for how employers remit the amounts payroll created.
• Pay Basics for the employee-facing amounts deductions change.
• Employment Status, ROE & Termination for insurable hours and related records.

In this section

• CPP
  What CPP means in Canadian payroll, how it appears on a paycheque, and why payroll tracks pensionable earnings separately.
• CPP2
  What CPP2 means in Canadian payroll and how the second additional CPP contribution can appear beside regular CPP deductions.
• EI
  What EI means in Canadian payroll, how it appears on a paycheque, and why payroll tracks insurable earnings.
• Federal Income Tax Deduction
  What federal income tax deduction means in Canadian payroll and how it fits inside source deductions on a paycheque.
• Income Tax Deduction
  What an income tax deduction means in Canadian payroll and how it differs from CPP, EI, and the employee's final tax bill.
• Insurable Earnings
  What insurable earnings mean in Canadian payroll and why EI calculations use this base instead of gross pay alone.
• Pensionable Earnings
  What pensionable earnings mean in Canadian payroll and why CPP calculations use this base instead of gross pay alone.
• Provincial Income Tax Deduction
  What provincial income tax deduction means in Canadian payroll and how province-specific withholding sits beside federal tax deductions.
• Source Deductions
  What source deductions means in Canadian payroll and how the term connects employee deductions to employer remittance.
• TD1
  What TD1 means in Canadian payroll and how the form affects income tax withholding during payroll processing.