Payroll Deductions Tables - CPP, EI, and income tax deductions - Ontario

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Payroll Deductions Tables - CPP, EI, and income tax deductions - Ontario

T4032-ON (E) Rev. 16

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

Table of contents

Section A

Section B

Section C

Section D

Section E

What's new as of January 1, 2016

The major changes made to this guide since the last edition are outlined.

This guide reflects some income tax changes recently announced which, if enacted as proposed, would be effective January 1, 2016. At the time of publishing, some of these proposed changes were not law. We recommend that you use the new payroll deductions tables in this guide for withholding starting with the first payroll in January 2016.

The changes to the federal income tax rates and thresholds for January 1, 2016 are:

  • a tax rate of 20.5% for the income threshold of $45,282.01 to $90,563.00;
  • a tax rate of 33% for the income threshold of $200,000.01 and over.

The federal income tax thresholds have been indexed for 2016.

The federal Canada employment credit has been indexed to $1,161 for 2016.

The federal basic personal amount, the spouse or common-law partner amount and the amount for an eligible dependant have been indexed to $11,474 for 2016.

There are no changes to the Ontario income tax rates for 2016.

The provincial income thresholds, personal amounts, surtax thresholds and tax reduction amounts have been indexed for 2016.

Payroll Deductions Tables

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

Guide T4032, Payroll Deductions Tables, is also available on CD for use on any computer with or without Internet access. You can order a copy at www.cra.gc.ca/orderforms or by calling 1-800-959-5525.

Paper copies remain available for employers who do not use a computer. To get a copy, call us at 1-800-959-5525.

Payroll Deductions Online Calculator

For your 2016 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 www.cra.gc.ca/pdoc.

PDOC 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.

Let us notify you

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

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

Special Notice

Payroll Deductions Tables (T4032)

Changes are coming in 2017. Effective with the January 1, 2017 edition, Canada Revenue Agency will no longer publish the paper and CD versions of the guide T4032, Payroll Deductions Tables. The electronic versions of the guides will continue to be available on our website at www.cra.gc.ca/payroll. For employers who do not have access to a computer, please call us at 1-800-959-5525 to receive a copy of the guide.

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 Remittances
  • 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 www.cra.gc.ca. You can also get the guides by completing the order form available on our website or by calling 1-800-959-5525.


Note


You may want to keep the 2015 edition of Payroll Deductions Tables until the end of 2016. That edition may help you to resolve any pensionable and insurable earnings review (PIER) deficiencies that we identify in processing your 2015 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 2016

Indexing for 2016

For 2016, the federal income thresholds, the personal amounts and the Canada employment credit have been changed based on changes in the consumer price index.

The federal indexing factor for January 1, 2016 is 1.3%. 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, 2016 Personal Tax Credits Return.

Tax rates and income thresholds

For 2016, the tax rates and income thresholds are as follows:

Chart 1 – 2016 federal tax rates and income thresholds
Annual taxable income ($)
From – To		 Federal tax rate (%)
R		 Constant ($)
K
0.00 to 45,282.00 15% 0
45,282.01 to 90,563.00 20.5% 2,491
90,563.01 to 140,388.00 26% 7,471
140,388.01 to 200,000.00 29% 11,683
200,000.01 and over 33% 19,683

Canada employment credit

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

  • $1,161; and
  • the individual's employment income for the year.

The maximum annual non-refundable tax credit is $174.15.

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

Most of the federal personal amounts for 2016 are revised.

Basic personal amount $ 11,474

Spouse or common-law partner amount $ 11,474

Amount for an eligible dependant $ 11,474

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

Provincial tax for 2016

Provincial indexing for 2016

For 2016, the provincial income thresholds, the personal amounts, and the tax reduction amounts are indexed. They have been increased based on changes in the consumer price index.

The indexing factor for January 1, 2016, is 1.5%. The tax credits corresponding to the claim codes in the tables have been indexed accordingly. Employees will automatically receive the indexing increase, whether or not they file Form TD1ON, 2016 Ontario Personal Tax Credits Return.

Tax rates and income thresholds

For 2016, the provincial tax rates and income thresholds are revised:

Chart 2– 2016 Ontario tax rates and income thresholds
Annual taxable income ($)
From – To		 Provincial tax rate (%)
V		 Constant ($)
KP
0.00 to 41,536.00 5.05% 0
41,536.01 to 83,075.00 9.15% 1,703
83,075.01 to 150,000.00 11.16% 3,373
150,000.01 to 220,000.00 12.16% 4,873
220,000.01 and over 13.16% 7,073

Ontario health premium

For 2016, the Ontario health premium is:

  • when taxable income is less than or equal to $20,000, the premium is $0;
  • when taxable income is greater than $20,000 and less than or equal to $36,000, the premium is equal to the lesser of (i) $300 and (ii) 6% of taxable income greater than $20,000;
  • when taxable income is greater than $36,000 and less than or equal to $48,000, the premium is equal to the lesser of (i) $450 and (ii) $300 plus 6% of taxable income greater than $36,000;
  • when taxable income is greater than $48,000 and less than or equal to $72,000, the premium is equal to the lesser of (i) $600, and (ii) $450 plus 25% of taxable income greater than $48,000;
  • when taxable income is greater than $72,000 and less than or equal to $200,000, the premium is equal to the lesser of (i) $750 and (ii) $600 plus 25% of taxable income greater than $72,000; and
  • when taxable income is greater than $200,000, the premium is equal to the lesser of (i) $900 and (ii) $750 plus 25% of taxable income greater than $200,000.

Surtax

For 2016, the Ontario's surtax is revised:

  • where the basic provincial tax payable is less than or equal to $4,484, the surtax is $0;
  • where the basic provincial tax payable is greater than $4,484 and less than or equal to $5,739, the surtax is 20% of the basic provincial tax payable over $4,484;
  • where the basic provincial tax payable is greater than $5,739, the surtax is 20% of the basic provincial tax payable over $4,484, plus 36% of the basic provincial tax payable over $5,739.

Tax reduction

For 2016, Ontario's tax reduction amounts are revised:

Basic personal amount $ 231

Amount for each dependant under age 18 $ 427

Amount for each dependant with a disability that the employee or pensioner has claimed on Form TD1ON $ 427

The reduction is equal to twice the individual's personal amounts minus the provincial tax payable before reduction. The reduction cannot be more than the provincial tax payable before reduction. The reduction is nil when the provincial tax payable before reduction is more than twice the personal amounts. Because of the way the reduction for dependants with disabilities is determined, we include only the basic personal amount in the provincial tax tables.

Personal amounts

For 2016, most of the provincial non-refundable personal tax credits are revised.

Basic personal amount $ 10,011

Spouse or common-law partner amount $ 9,350

Amount for an eligible dependant $ 9,350

For more detailed information on the personal amounts, go to Form TD1ON, 2016 Ontario Personal Tax Credits Return.

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

CPP contributions for 2016

Maximum pensionable earnings $54,900

Annual basic exemption $3,500

Maximum contributory earnings $51,400

Contribution rate (%) 4.95

Maximum employee contribution $2,544.30

Maximum employer contribution $2,544.30

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 2016

Maximum annual insurable earnings $50,800

Premium rate (%) 1.88

Maximum annual employee premium $955.04

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, go to 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 form will determine which claim code you use. For 2016, 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. Go to 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 2016.

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 claim codes amounts

The credits that apply to each federal and provincial 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 provincial TD1 forms for 2016, you continue to deduct income tax using the same claim code that you used last year.

Chart 3 – 2016 federal claim codes
Total claim amount ($) Claim code
No claim amount 0
11,474.00 1
11,474.01 to 13,666.00 2
13,666.01 to 15,858.00 3
15,858.01 to 18,050.00 4
18,050.01 to 20,242.00 5
20,242.01 to 22,434.00 6
22,434.01 to 24,626.00 7
24,626.01 to 26,818.00 8
26,818.01 to 29,010.00 9
29,010.01 to 31,202.00 10
31,202.01 and over X
The employer has to calculate the tax manually
No withholding E
Chart 4 – 2016 Ontario claim codes
Total claim amount ($) Claim code
No claim amount 0
10,011.00 1
10,011.01 to 12,168.00 2
12,168.01 to 14,325.00 3
14,325.01 to 16,482.00 4
16,482.01 to 18,639.00 5
18,639.01 to 20,796.00 6
20,796.01 to 22,953.00 7
22,953.01 to 25,110.00 8
25,110.01 to 27,267.00 9
27,267.01 to 29,424.00 10
29,424.01 and over X
The employer has to calculate the tax manually
No withholding E

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 shaded 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 shaded 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, go to the section called "Claim codes" and Chart 3).

Provincial (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, go to the section called "Claim codes" and Chart 4). .

Example


You are an employer in Ontario. Sara, your employee, earns $615 a week in 2016. She has a federal claim code 1 and a provincial 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 610-618. The federal tax deductions for $615 weekly under claim code 1 is $49.85.

To determine Sara's provincial tax deductions, you use the weekly provincial tax deductions table. In the Ontario tax deductions table, the provincial tax deduction for $615 weekly under claim code 1 is $25.20.

Sara's total tax deduction is $75.05 ($49.85 + $25.20). 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 www.cra.gc.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, go to Guide T4127, Payroll Deductions Formulas for Computer Programs.


Example Tax to deduct for all income


This example applies to a person who earns $1,100 weekly and contributes $80 to a registered retirement savings plan (RRSP).

This person claims the basic personal amount.

Calculate annual taxable income
Description Sub-amounts Amounts
(1) Gross remuneration for the pay period (weekly) $1,100.00
(2) Minus
  • the other amounts authorized by a tax services office
 0.00
  • the RRSP contributions*
80.00 − (80.00)
* This amount has to be deducted at source.
* Note
If you have an employee you paid by commission, subtract the total expenses reported on Form TD1X from the gross remuneration reported on Form TD1X if applicable.
(3) Net remuneration for the pay period (line 1 minus line 2) $1,020.00
(4) Annual net income ($1,020 × 52 weeks) $53,040.00
(5) Minus the annual deduction for living in a prescribed zone, reported on the federal Form TD1 n/a
(6) Annual taxable income (line 4 minus line 5) $53,040.00
Calculate federal tax
Description Sub-amounts Amounts
(7) Multiply the amount on line 6 by the federal tax rate based on chart 1 × 0.205
$10,873.20
(8) Minus the federal constant based on the annual taxable income on line 6 (go to chart 1) − (2,491.00)
(9) Federal tax (line 7 minus line 8) $8,382.20
(10) Minus the federal tax credits:
  • the total of personal tax credit amounts reported on the federal Form TD1
 $11,474.00
  • the CPP contributions for the pay period multiplied by the number of pay periods in the year (annual maximum $2,544.30)*
2,544.30
  • the EI premiums for the pay period multiplied by the number of pay periods in the year (annual maximum $955.04)*
955.04
  • the Canada employment credit (annual maximum $1,161.00)
 1,161.00
Total $16,134.34
* Note
When the maximum CPP contributions or EI premiums for the year is reached, use the maximum amount for later calculations
(11) Multiply the total on line 10 by the lowest federal tax rate for the year. × 0.15
(12) Total federal tax credits − (2,420.15)
(13) Total federal tax payable for the year (line 9 minus line 12) $5,962.05
Calculate provincial tax
Description Sub-amounts Amounts
(14) Basic provincial tax for Ontario:
Multiply the amount on line 6 by the provincial tax rate based on Chart 2		 $ 4,853.16
(15) Minus the provincial constant based on the annual taxable income on line 6 (go to Chart 2) − (1,703.00)
(16) Provincial tax on income for Ontario (line 14 minus line 15) $ 3,150.16
(17) Minus the provincial tax credits:
- the total of personal tax credit amounts reported on Form TD1ON $ 10,011.00
- the CPP contributions for the pay period multiplied by the number of pay periods in the year (annual maximum $2,544.30)* 2,544.30
- the EI premiums for the pay period multiplied by the number of pay periods in the year (annual maximum $955.04)* 955.04
Total $ 13,510.34
* Note
When the maximum CPP contributions or EI premiums for the year is reached, use the maximum amount for later calculations
(18) Multiply the total on line 17 by the lowest provincial tax rate for the year. × 0.0505
(19) Total provincial tax credits − (682.27)
(20) Basic provincial tax (line 16 minus line 19) 2,467.89
(21) Provincial surtax
- Where line 20 is less than or equal to $4,484, the surtax is $0
- Where line 20 is greater than $4,484 and less than or equal to $5,739, the surtax is 20% of line 20 that is more than $4,484 $ 0.00
- Where line 20 is greater than $5,739, the surtax is 20% of line 20 that is more than $4,484 plus 36% of line 20 that is more than $5,739 0.00
Provincial surtax + 0.00
(22) Total provincial tax including surtax $ 2,467.89
(23) Ontario health premium
Determine the premium based on the annual taxable income (line 6).
The premium is whichever amount is less:
(i) $600; or
(ii) $450 plus 25% of taxable income greater than $48,000 and less than or equal to $72,000: + 600.00
(24) Provincial tax payable before reduction (line 22 plus line 23) $ 3,067.89
(25) Minus the provincial tax reduction:
The lesser of:
(i) the total provincial tax payable on line 22; and $ 2,467.89
(ii) twice the applicable personal amounts $ 462.00
minus the amount on line (i) above. − (2,005.89)
If the result is negative, substitute $0. $ 0.00 − (0.00)
(26) Total provincial tax payable for the year (line 24 minus line 25) $ 3,067.89
Calculate total tax and the tax deduction for the pay period
Description Sub-amounts Amounts
(27) Total federal and provincial tax deductions for the year (line 13 plus line 26).
If the result is negative, substitute $0.		 $ 9,029.94
(28) Tax deduction for the pay period:
Divide the amount on line 27 by the number of pay periods in the year (52).		 $ 173.65

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Taxpayer Services Directorate
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Date modified:
2015-12-11