T4032-YT-7-20(E)

This guide uses plain language to explain the most common tax situations. If you need more help, contact your tax services office.

What's new as of July 1, 2020

Payroll Deductions Tables

You can download Guides T4008, Payroll Deductions Supplementary Tables, and T4032, Payroll Deductions Tables, from our webpage at canada.ca/payroll. You can also choose to print only the pages or information that you need.

Payroll Deductions Online Calculator

For your 2020 payroll deductions, you can use our Payroll Deductions Online Calculator (PDOC). The online calculator makes it easier to calculate payroll deductions. PDOC is available at canada.ca/pdoc.

PDOC calculates your payroll deductions. It calculates deductions for any pay period, province (except Quebec) and territory. The calculation is based on exact salary figures.

Let us notify you

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

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

Special Notice

Payroll Deductions Tables (T4032)

Effective with the January 1, 2017 edition, the Canada Revenue Agency is no longer publishing the paper and CD versions of the Guide T4032, Payroll Deductions Tables. The digital versions of the guide continue to be available on our website at canada.ca/payroll .

Who should use this guide?

This guide is intended for the employer and the payer. It contains tables for federal and provincial tax deductions, CPP contributions and EI premiums. It will help you determine the payroll deductions for your employees or pensioners.
For more information on deducting, remitting, and reporting payroll deductions, go to the following employers’ guides:

• T4001, Employers’ Guide – Payroll Deductions and Remittance
• T4130, Employers’ Guide – Taxable Benefits and Allowances
• RC4110, Employee or Self-employed?
• RC4120, Employers’ Guide – Filing the T4 Slip and Summary
• RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary

These guides are available on our website at canada.ca/taxes.

Note

You may want to refer to the 2019 edition of Payroll Deductions Tables until the end of 2020 to resolve any pensionable and insurable earnings review (PIER) deficiencies that we identify in processing your 2019 T4 return.

What if your pay period is not in this guide?

This guide contains the most common pay periods: weekly, biweekly (every two weeks), semi-monthly, and monthly. If you have unusual pay periods, such as daily (240 working days), or 10, 13, or 22 pay periods a year, go to the Guide T4008, Payroll Deductions Supplementary Tables, or the Payroll Deductions Online Calculator (PDOC) to determine tax deductions.

Which provincial or territorial tax table should you use?

Before you decide which tax table to use, you have to determine your employee’s province or territory of employment. This depends on whether or not you require the employee to report for work at your place of business.
If the employee reports for work at your place of business, the province or territory of employment is considered to be the province or territory where your business is located.
To withhold payroll deductions, use the tax table for that province or territory of employment.
If you do not require the employee to report for work at your place of business, the province or territory of employment is the province or territory in which your business is located and from which you pay your employee’s salary.
For more information and examples, go to Chapter 1, “General Information,” in Guide T4001, Employers’ Guide – Payroll Deductions and Remittances.

Federal tax for 2020

Indexing for 2020

For 2020, the federal income thresholds, the personal amounts, and the Canada employment amount have been changed based on changes in the consumer price index.
The federal indexing factor for January 1, 2020 is 1.9%. The tax credits corresponding to the claim codes in the tables have been indexed accordingly. Employees will automatically receive the indexing change, whether or not they file Form TD1, 2020 Personal Tax Credits Return.

Tax rates and income thresholds

For 2020, the federal tax rates and income thresholds are:

Chart 1 – 2020 federal tax rates and income thresholds

Canada employment amount

The non-refundable Canada employment amount is built into the federal payroll deductions tables. The federal Canada employment amount is the lesser of:

• $1,245 and
• the individual’s employment income for the year

The maximum annual non-refundable tax credit is $186.75.
Pension income is not eligible for this credit. If you are paying pension income, use the Payroll Deductions Online Calculator to find the tax deduction.

Personal amounts

The federal personal amounts for 2020 are:

For more detailed information on the personal amounts, go to Form TD1.

Yukon tax for 2020

Yukon indexing for 2020

For 2020, the Yukon income thresholds, the personal amount, and the Canada employment amount have been changed based on changes in the consumer price index.
The indexing factor for January 1, 2020, is 2.2%. The tax credits corresponding to the claim codes in the tables have been indexed accordingly. Employees will automatically receive the indexing change, whether or not they file Form TD1YT, 2020 Yukon Personal Tax Credits Return.

Tax rates and income thresholds

For July 1, 2020, the Yukon tax rates and income thresholds are:

Chart 2 – 2020 Yukon tax rates and income thresholds

Canada employment amount

The non-refundable Canada employment amount is built into the territorial payroll deductions tables. The territorial Canada employment amount is the lesser of:

• $1,245 and
• the individual’s employment income for the year

The maximum annual non-refundable tax credit is $79.68.
Pension income is not eligible for this credit. If you are paying pension income use the Payroll Deductions Online Calculator to find the tax deduction.

Personal Amounts

For more detailed information on the personal amounts, go to Form TD1YT, 2020 Yukon Personal Tax Credits Return.

Canada Pension Plan (CPP) and Employment Insurance (EI)

CPP contributions for 2020

Maximum pensionable earnings $58,700

Annual basic exemption $3,500

Maximum contributory earnings $55,200

Contribution rate (%) 5.25

Maximum employee contribution $2,898.00

Maximum employer contribution $2,898.00

You stop deducting CPP when the employee reaches the maximum annual contribution for the year.
Note
As an employer, you have to remit these deductions along with your share of CPP contributions.
For more information, go to Chapter 2, “Canada Pension Plan contributions” in Guide T4001, Employer’s Guide – Payroll Deductions and Remittances.

EI premiums for 2020

Maximum annual insurable earnings $51,700

Premium rate (%) 1.66

Maximum annual employee premium $858.22

Maximum annual insurable earnings $54,200

Premium rate (%) 1.58

Maximum annual employee premium $856.36

You stop deducting EI when the employee reaches the maximum annual premium.
Note
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.

Personal tax credits returns (TD1 forms)

You may have to ask your employees or your pensioners to complete a federal and a provincial personal tax credits return using a federal Form TD1 and a provincial Form TD1.

For more information, see Chapter 5, “Deducting income tax” in Guide T4001, Employers’ Guide – Payroll Deductions and Remittances.

Claim codes

The total personal amount an employee claims on a TD1 will determine which claim code you use. The claim amounts that correspond to the federal claim codes are not the same as the claim amounts that correspond to the provincial claim codes. See Chart 3 and Chart 4.

Explanation of claim codes

Claim code 0

This code represents no claim amount. If the federal claim code is “0” because the employee is a non-resident, the provincial claim code must also be “0.” This code may also be used if the employee indicated they have more than one employer or payer at the same time and have entered “0” on the front page of Form TD1 for 2018.

Claim codes 1 to 10

The claim code amounts do not appear on either the federal or the provincial TD1 form.

You match the “Total claim amount” reported on your employee’s or pensioner’s TD1 forms with the appropriate claim codes. Then, you look up the tax for the employee’s pay under the claim code in the federal and provincial tax tables for the pay period.

Indexing of federal claim codes amounts

The credits that apply to each federal and territorial claim code have been automatically changed in the tax tables by the indexing factor for the current year. If your employee did not complete the federal and territorial TD1 forms for 2020, you continue to deduct income tax using the same claim code that you used last year.

Chart 3 – 2020 federal claim codes

Note:
Due to the December 9, 2019 announcement, legislative changes to the Federal Basic Personal Amount, the Claim Code Chart cannot be produced with ranges, as was previously done. Accordingly, the Federal Claim Code Chart will not be produced with this edition.

Chart 4 – 2020 Yukon claim codes

Form TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions

If your employees want you to adjust their tax deductions to allow for commission expenses, they have to complete Form TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions.

You deduct tax from your employees’ commission pay using the “Total claim amount” on their TD1 forms in the following situations:

• if your employees do not complete a Form TD1X or
• if they tell you in writing that they want to cancel a previously completed Form TD1X

How to use the tables in this guide

Use the tables in this guide to determine the CPP contributions, EI premiums, federal tax, and provincial tax that you will deduct from your employees’ remuneration.

CPP tables (Section B)

The annual basic exemption is built into the CPP tables.

• Find the pages in Section B that correspond to your pay period
• To find the range that includes your employee’s gross pay (this includes any taxable benefits), look down the “Pay” column
• In the column next to the “Pay” column, you will find the CPP contribution that you should withhold from your employee’s pay

EI table (Section C)

• Find the page in Section C that corresponds to the “Insurable earnings” of your employee
• To find the range that includes your employee’s insurable earnings, look down the “Insurable earnings” column. When you use the table in this guide to determine the EI premiums, look up the insurable earnings for the period not the gross remuneration
• In the column next to the “Insurable earnings” column, you will find the EI premium that you should withhold from your employee’s pay

Tax deductions tables

If you are using the income tax tables in this guide to determine your employees’ and pensioners’ total tax deductions, you have to look up the amounts in the federal tax table and the provincial tax table.

To determine the total tax you deduct for the pay period, you must add the federal and provincial tax amounts.

Even if the period of employment for which you pay a salary is less than a full pay period, you must continue to use the tax deductions table that corresponds to your regular pay period.

Federal (Section D)

• Find the pages in Section D that correspond to your pay period
• To find the range that corresponds to your employee’s taxable income (this includes any taxable benefits), look down the “Pay” column
• In the row under the applicable claim code, you will find the amount of federal tax that you should withhold from your employee’s pay (for more information, see the section called “Claim codes” and Chart 3)

Territorial (Section E)

• Find the pages in Section E that correspond to your pay period
• To find the range that includes your employee’s taxable income (this includes any taxable benefits), look down the “Pay” column
• In the row under the applicable claim code, you will find the amount of provincial tax that you should withhold from your employee’s pay (for more information, see the section called “Claim codes” and Chart 4)

Example

You are an employer in Yukon. Sara, your employee, earns $1,018 a week in 2020. She has a federal claim code 1 and a territorial claim code 1.
To determine Sara’s federal tax deductions, you look at the weekly federal tax deductions table and find the range for her weekly salary, which is 1016-1024. The federal tax deduction for $1,018 weekly under claim code 1 is $106.10.
To determine Sara’s territorial tax deductions, you use the weekly territorial tax deductions table. In the Yukon tax deductions table, the territorial tax deduction for $1,018 weekly under claim code 1 is $46.35.
Sara’s total tax deduction is $152.45 ($106.10 + $46.35). This amount of taxes will be included in your remittance to us.

Additional information about payroll deductions

Deducting tax from income not subject to CPP contributions or EI premiums

We have built the tax credits for CPP contributions and EI premiums into the federal and provincial tax deductions tables in this guide. However, certain types of income, such as pension income, are not subject to CPP contributions and EI premiums. As a result, you will have to adjust the amount of federal and provincial income tax you are deducting.

To determine the amount of tax to deduct from income not subject to CPP contributions or EI premiums, use the Payroll Deductions Online Calculator, available at canada.ca/pdoc. On the “Salary calculation” and/or on the “Commission calculation” screen, go to Step 3 and select the “CPP exempt” and/or “EI exempt” option before clicking on the “Calculate” button.

Step-by-step calculation of tax deductions

You can use the following step-by-step calculations to calculate the tax deductions for any employee or pensioner who earns more than the maximum amounts included in the tax deductions tables.

The example shows you how to determine the amount of tax to deduct from all income.

However, if you design your own payroll program or spreadsheets to calculate tax deductions, do not use either of these calculations. Instead, see Guide T4127, Payroll Deductions Formulas.

Example Tax to deduct for all income

This example applies to a person who earns $1,200 weekly and contributes $80 to a registered retirement savings plan (RRSP).
This person claims the basic personal amount.

Calculate annual taxable income

Calculate federal tax

Calculate territorial tax

Calculate total tax and the tax deduction for the pay period