- DEDUCTIONS
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- Canada
Pension Plan (CPP)
| Employment Insurance (EI) | Canada
Income Tax (CIT) | End of Page
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- 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.
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- 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?
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- a) Convert the CPP rate
to a decimal
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- 3.9% ------> 0.039
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- b) Multiply Chris' wage
by the deduction rate.
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- ($1416.67)(0.039) =
$55.25
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- Chris contributes $55.25
to the CPP every pay cheque.
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- 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.
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- Example:
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- 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?
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- a) Convert the EI rate
to a decimal
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- 2.4% ------> 0.024
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- b) Calculate how many
cheques Kellie gets per year.
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- 52 weeks / one cheque
every two weeks
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- = 26 cheques per year
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- c) Determine how much
Kellie makes per cheques
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- d) Multiply the wage
by the EI deduction
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- ($1307.69)(0.024) =
$31.38
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- Kellie contributes $32.38
to EI every two weeks.
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- e) Kellie's employer
contributes 1.4 times Kellie's contribution
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- ($31.38)(1.4) = $43.93
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- Kellie's employer contributes
$43.32 to EI on a bi-weekly basis.
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- 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.
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- Example:
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- 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?
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- a) Convert the CIT rate
to a decimal
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- 17% ------> 0.17
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- b) Multiply Rob's wage
by the deduction rate.
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- ($16 325.14)(0.17) =
$2775.3197
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- Rob contributed $2775.32
to the CIT last year.
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