Line 9060 - Salaries, wages, and benefits (including employer's contributions)

You can deduct gross salaries and other benefits you pay to employees.

Do not include:

• salaries and wages such as direct wage costs or subcontracts;
• drawings of the owner(s) of the business described at Line 9932 - Drawings;
• salaries or drawings of the owner(s) of the business since salaries or drawings paid or payable to you or your partners are not deductible.

The Canada Pension Plan (CPP) is for all workers, including the self-employed. Employers, employees and most self-employed individuals must contribute to the CPP. The CPP can provide basic benefits when you retire or if you become disabled. When you die, the CPP can provide benefits to your surviving spouse/common-law partner and your dependent children under 25. For more information on contribution and benefits, go to Service Canada.

Quebec workers including the self-employed are covered under the Quebec Pension Plan (QPP).

As the employer, you can deduct your part of the following amounts payable on employees' remuneration:

• CPP or QPP contributions;
• Employment insurance (EI) premiums;
• Provincial parental insurance plan premiums (an income replacement plan for residents of Quebec - go to Revenu Québec for details); and
• Workers' Compensation amounts for your employees.

For information on making payroll deductions, go to Payroll.

You can also deduct any premiums you pay for an employee for a sickness, an accident, a disability, or an income insurance plan.

You can deduct the salary you pay to your child, as long as you meet all these conditions:

• you pay the salary;
• the work your child does is necessary for earning business or professional income; and
• the salary is reasonable when you consider your child's age, and the amount you pay is what you would pay someone else.

Keep documents to support the salary you pay your child. If you pay your child by cheque, keep the cancelled cheque. If you pay cash, have the child sign a receipt.

Instead of cash, you can pay your child with a product from your business. When you do this, claim the value of the product as an expense and add to your gross sales an amount equal to the value of the product. Your child has to include the value of the product in his or her income.

You can also deduct the salary you pay to your spouse or common-law partner. When you pay your spouse or common-law partner a salary, use the same rules that apply to paying your child.

Report the salaries you pay to your children and spouse or common-law partner on T4 slips, the same as you would for other employees. However, you cannot claim as an expense the value of board and lodging you provide to your dependent children and your spouse or common-law partner.

Forms and publications

• Guide T4002, Business and Professional Income
• Form T2125, Statement of Business or Professional Activities

Related topics

• Canada Pension Plan (CPP)
• Quebec Pension Plan (QPP)
• Employment Insurance (EI)
• Revenu Québec
• Line 8340 - Direct wage costs
• Line 8360 - Subcontracts
• Details of equity section of Form T2125
• Marital status
• Payroll

Date modified:

2017-01-03