The Challenges of Payroll in Canada and How to Find Help Overcoming Them

Payroll deductions online calculator

We live and work in a global economy where outsourcing and expansion often go hand in hand. As a business owner, you only do yourself and your business a disservice by narrowing your resource pool to within the borders of the United States. Many U.S. firms are branching out over our northern border to leverage the Canadian workforce while others look after them with longing.

For many U.S. business owners, expanding to Canada feels like a pipe dream. Fear and a lack of understanding of the jurisdictional differences between the payroll in Canada and the U.S. holds many employers back. And for good reason: it’s easy to make very costly mistakes by inappropriately relying on misinformation and erroneous practices around payroll in Canada. The good news is that misinformation can be corrected. Simply by educating yourself on payroll in Canada and leveraging the expertise of a payroll service, you can be well on your way to happy and productive Canadian employees in no time.

Key payroll difference between USA and Canada

Here are the most important differences between payroll in Canada and payroll in the United States.

  • Payroll deduction tables

    Each territory and province in Canada has its own payroll deduction table. Make sure you are using the payroll deduction table for the territory or province where your employee works, not the one for where he or she lives. Canadian payroll deduction tables do change periodically, as such the Canadian government regularly produces new deduction tables to help you stay within regulations. You can download these tables from the Canada Revenue Agency website or use their online calculator to help you determine the appropriate deduction amount based on your employee’s exact salary.
  • Payroll tax remittances

    Payroll tax remittances must be received by the Canadian Revenue Agency by the 15th of the month following when you made the deductions. Failing to remit your payroll taxes on time can result in fines. If your payroll tax remittance due date falls on a weekend or holiday, the due date rolls forward to the next business day.
  • Employment Insurance Premiums

    Each year, employers must withhold employment insurance from their employees’ paycheques up to a set maximum for the year. After that maximum has been met, you will no longer withhold any money for employment insurance until the following year. The amount to withhold is based on the employee’s wage. As with payroll deduction, the Canadian Revenue Agency publishes employee insurance deduction tables to help you determine the appropriate amount to withhold.
  • Canada Pension Plan Deductions

    One of the levels of Canada’s retirement income system is the Canada Pension Plan (CPP). The CPP pays retirement and disability benefits to former workers. It is essentially the basic benefits package all retirees and disabled workers are entitled to. To provide funding for the CPP, each Canadian employee over the age of 18 is required to have CPP deductions taken from his paycheck until the age of 70.
  • Benefits of outsourcing your payroll in Canada

    If you’re concerned about navigating payroll in Canada, you might consider contracting with an outsourced payroll service.
    Payroll outsourcing can be a wonderful thing not just for help navigating the regulations with payroll in Canada, but also because it means one less headache you have to deal with each pay period. By outsourcing your payroll, you can free up valuable time for more productive jobs.

    Outsourced payroll solutions allow business owners and employees to focus on core business ventures. Payroll outsourcing can be particularly beneficial for the small business owner. Over 85% of certified public accountants agree that small businesses – – in particular, those with 50 or fewer employees – – should employ a payroll management company for their expertise.

    Accounting can be tricky for small business owners, especially during tax season and when dealing with cross-border regulations such as processing payroll in Canada. Rather than risk falling out of compliance with your financial record keeping outsource your payroll to a payroll professional. Not only can payroll providers offer payroll services, but they can also provide HR Management services, and help with ESA and OSHA government remittances.


    In conclusion, don’t let fears about the regulations around payroll in Canada keep you from expanding your business.

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