DEDUCTIONS
 
Canada Pension Plan (CPP) | Employment Insurance (EI) | Canada Income Tax (CIT) | End of Page
 
 
Canada Pension Plan (CPP)
 
Every working person between the ages of 18 and 70 is required to contribute 3.9% of their earnings to the Canada Pension Plan (CPP). Their employer is required to contribute and equal amount.
 
Example:
 
1. Chris is a lab tech who makes $1416.67 per month. Knowing the Canada Pension Plan deduction rate is 3.9%, how much of each pay cheque goes towards CPP?
 
a) Convert the CPP rate to a decimal
 
3.9% ------> 0.039
 
b) Multiply Chris' wage by the deduction rate.
 
($1416.67)(0.039) = $55.25
 
Chris contributes $55.25 to the CPP every pay cheque.
 

 

Employment Insurance (EI)
 
Employment Insurance (EI) is paid by both the employee and the employer. The employee pays 2.4% of their salary, and the employer pays 1.4 times what the employee pays.
 
Example:
 
2. Kellie is a nurse who makes $34 000 per year. On her last pay cheque she paid 2.4% of her salary to EI. How much does Kellie pay to EI on each of her bi-weekly pay cheques? How much does her employer pay per cheque?
 
a) Convert the EI rate to a decimal
 
2.4% ------> 0.024
 
b) Calculate how many cheques Kellie gets per year.
 
52 weeks / one cheque every two weeks
 
= 26 cheques per year
 
c) Determine how much Kellie makes per cheques
 

 $ 34 000
 = $1307.69 

 26
   
d) Multiply the wage by the EI deduction
 
($1307.69)(0.024) = $31.38
 
Kellie contributes $32.38 to EI every two weeks.
 
e) Kellie's employer contributes 1.4 times Kellie's contribution
 
($31.38)(1.4) = $43.93
 
Kellie's employer contributes $43.32 to EI on a bi-weekly basis.
 

 

Canadian Income Tax (CIT)
 
Any working person making between $6400 and $29 000 yearly is required to contribute 17% of their earnings to Canada Income Tax (CIT). This amount increases as a persons salary increases.
 
Example:
 
3. Rob is a handyman whose gross pay was $16 325.41 last year. With this amount, he fits into the first federal tax bracket which is stated at 17% How much money did Rob contribute to CIT last year?
 
a) Convert the CIT rate to a decimal
 
17% ------> 0.17
 
b) Multiply Rob's wage by the deduction rate.
 
($16 325.14)(0.17) = $2775.3197
 
Rob contributed $2775.32 to the CIT last year.
 
 

Related Sites:

 

 

Top of Page
 
Mini Lessons