T4032-ON, Payroll Deductios Tables CPP, EI, ad icome tax deductios Otario Effective Jauary 1, 2016 T4032-ON
What s ew as of Jauary 1, 2016 The major chages made to this guide sice the last editio are outlied. This guide reflects some icome tax chages recetly aouced which, if eacted as proposed, would be effective Jauary 1, 2016. At the time of publishig, some of these proposed chages were ot law. We recommed that you use the ew payroll deductios tables i this guide for withholdig startig with the first payroll i Jauary 2016. The chages to the federal icome tax rates ad thresholds for Jauary 1, 2016 are: a tax rate of 20.5% for the icome threshold of $45,282.01 to $90,563.00; a tax rate of 33% for the icome threshold of $200,000.01 ad over. The federal icome tax thresholds have bee idexed for 2016. The federal Caada employmet credit has bee idexed to $1,161 for 2016. The federal basic persoal amout, the spouse or commo-law parter amout ad the amout for a eligible depedat have bee idexed to $11,474 for 2016. There are o chages to the Otario icome tax rates for 2016. The provicial icome thresholds, persoal amouts, surtax thresholds ad tax reductio amouts have bee idexed for 2016. Payroll Deductios Tables You ca dowload guides T4008, Payroll Deductios Supplemetary Tables, ad T4032, Payroll Deductios Tables, from our webpage at www.cra.gc.ca/payroll. You ca also choose to prit oly the pages or iformatio that you eed. Guide T4032, Payroll Deductios Tables, is also available o CD for use o ay computer with or without Iteret access. You ca order a copy at www.cra.gc.ca/orderforms or by callig 1-800-959-5525. Paper copies remai available for employers who do ot use a computer. To get a copy, call us at 1-800-959-5525. Payroll Deductios Olie Calculator For your 2016 payroll deductios, you ca use our Payroll Deductios Olie Calculator (PDOC). The olie calculator makes it easier to calculate payroll deductios. PDOC is available at www.cra.gc.ca/pdoc. PDOC calculates payroll deductios for the most commo pay periods, as well as the applicable provice (except Quebec) or territory. The calculatio is based o exact salary figures. Let us otify you We provide a electroic service that ca otify you immediately, free of charge, of ay chages for payroll deductios. To subscribe, visit our webpage at www.cra.gc.ca/lists ad eter your busiess s email address for each mailig list that you wat to joi. Special Notice Payroll Deductios Tables (T4032) Effective with the Jauary 1, 2017 editio, the Caada Reveue Agecy will o loger publish the paper ad CD versios of the guide T4032, Payroll Deductios Tables. The electroic versio of the guide will cotiue to be available o our website at www.cra.gc.ca/payroll. For employers who do ot have access to a computer, please call 1-800-959-5525 to receive a copy of the guide. A-1
Table of cotets A What s ew as of Jauary 1, 2016... A-1 Payroll Deductios Tables... A-1 Let us otify you... A-1 Who should use this guide?... A-3 What if your pay period is ot i this guide?... A-3 Which provicial or territorial tax table should you use?... A-3 Federal tax for 2016... A-3 Idexig for 2016... A-3 Tax rates ad icome thresholds... A-3 Chart 1 2016 federal tax rates ad icome thresholds... A-3 Caada employmet credit... A-4 Persoal amouts... A-4 Provicial tax for 2016... A-4 Provicial idexig for 2016... A-4 Tax rates ad icome thresholds... A-4 Chart 2 2016 Otario tax rates ad icome thresholds... A-4 Otario health premium... A-4 Surtax... A-5 Tax reductio... A-5 Persoal amouts... A-5 Caada Pesio Pla (CPP) ad Employmet Isurace (EI)... A-5 CPP cotributios for 2016... A-5 EI premiums for 2016... A-6 Persoal tax credits returs (TD1 forms)... A-6 Claim codes... A-6 Explaatio of claim codes... A-6 Claim code 0... A-6 Claim codes 1 to 10... A-6 Idexig of claim codes amouts... A-6 Chart 3 2016 federal claim codes... A-6 Chart 4 2016 Otario claim codes... A-7 Form TD1X, Statemet of Commissio Icome ad Expeses for Payroll Tax Deductios... A-7 How to use the tables i this guide... A-7 CPP tables (Sectio B)... A-7 EI table (Sectio C)... A-8 Tax deductios tables... A-8 Federal (Sectio D)... A-8 Provicial (Sectio E)... A-8 Example... A-8 Additioal iformatio about payroll deductios... A-8 Deductig tax from icome ot subject to CPP cotributios or EI premiums... A-8 Step-by-step calculatio of tax deductios... A-9 Example Tax to deduct for all icome... A-9 Calculate aual taxable icome... A-9 Calculate federal tax... A-9 Calculate provicial tax... A-10 Calculate total tax ad the tax deductio for the pay period... A-10 Your opiio couts!... A-11 This guide uses plai laguage to explai the most commo tax situatios. If you eed more help, cotact your tax services office. Page A-2
Who should use this guide? This guide is iteded for the employer ad the payer. It cotais tables for federal ad provicial tax deductios, CPP cotributios ad EI premiums. It will help you determie the payroll deductios for your employees or pesioers. For more iformatio o deductig, remittig, ad reportig payroll deductios, see the followig employers guides: T4001, Employers Guide Payroll Deductios ad Remittaces T4130, Employers Guide Taxable Beefits ad Allowaces RC4110, Employee or Self-employed? RC4120, Employers Guide Filig the T4 Slip ad Summary RC4157, Deductig Icome Tax o Pesio ad Other Icome, ad Filig the T4A Slip ad Summary These guides are available o our website at www.cra.gc.ca. You ca also get the guides by fillig out the order form available o our website or by callig 1-800-959-5525. Note You may wat to keep the 2015 editio of Payroll Deductios Tables util the ed of 2016. That editio may help you to resolve ay pesioable ad isurable earigs review (PIER) deficiecies that we idetify i processig your 2015 T4 retur. What if your pay period is ot i this guide? This guide cotais the most commo pay periods: weekly, biweekly (every two weeks), semi-mothly, ad mothly. If you have uusual pay periods, such as daily (240 workig days), or 10, 13, or 22 pay periods a year, see the guide T4008, Payroll Deductios Supplemetary Tables, or the Payroll Deductios Olie Calculator (PDOC) to determie tax deductios. Which provicial or territorial tax table should you use? Before you decide which tax table to use, you have to determie your employee s provice or territory of employmet. This depeds o whether or ot you require the employee to report for work at your place of busiess. If the employee reports for work at your place of busiess, the provice or territory of employmet is cosidered to be the provice or territory where your busiess is located. To withhold payroll deductios, use the tax table for that provice or territory of employmet. If you do ot require the employee to report for work at your place of busiess, the provice or territory of employmet is the provice or territory i which your busiess is located ad from which you pay your employee s salary. For more iformatio ad examples, see Chapter 1, Geeral Iformatio i Guide T4001, Employers Guide Payroll Deductios ad Remittaces. Federal tax for 2016 Idexig for 2016 For 2016, the federal icome thresholds, the persoal amouts ad the Caada employmet credit have bee icreased based o chages i the cosumer price idex. The federal idexig factor for Jauary 1, 2016 is 1.3%. The tax credits correspodig to the claim codes i the tables have bee idexed accordigly. Employees will automatically receive the idexig icrease, whether or ot they file Form TD1, 2016 Persoal Tax Credits Retur. Tax rates ad icome thresholds For 2016, the tax rates ad icome thresholds are: Chart 1 2016 federal tax rates ad icome thresholds Aual taxable icome ($) Federal tax rate (%) Costat ($) From To R K 0.00 to 45,282.00 15% 0 A-3
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 ad over 33% 19,683 Caada employmet credit The o-refudable Caada employmet credit is built ito the federal payroll deductios tables. The federal Caada employmet amout is the lesser of the followig amouts: $1,161; ad the idividual s employmet icome for the year. The maximum aual o-refudable tax credit is $174.15. Pesio icome is ot eligible for this credit. If you are payig pesio icome, use the Payroll Deductios Olie Calculator to fid the tax deductio. Persoal amouts Most of the federal persoal amouts for 2016 are revised. Basic persoal amout... $ 11,474 Spouse or commo-law parter amout... $ 11,474 Amout for a eligible depedat... $ 11,474 For more detailed iformatio o the persoal amouts, see Form TD1. Provicial tax for 2016 Provicial idexig for 2016 For 2016, the provicial icome thresholds, the persoal amouts, ad the tax reductio amouts are idexed. They have bee icreased based o chages i the cosumer price idex. The idexig factor for Jauary 1, 2016, is 1.5%. The tax credits correspodig to the claim codes i the tables have bee idexed accordigly. Employees will automatically receive the idexig icrease, whether or ot they file Form TD1ON, 2016 Otario Persoal Tax Credits Retur. Tax rates ad icome thresholds For 2016, the provicial tax rates ad icome thresholds are: Chart 2 2016 Otario tax rates ad icome thresholds Aual taxable icome ($) Provicial tax rate (%) Costat ($) From To V 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 Otario health premium 220,000.01 ad over 13.16% 7,073 For 2016, the Otario health premium is: whe taxable icome is less tha or equal to $20,000, the premium is $0; whe taxable icome is greater tha $20,000 ad less tha or equal to $36,000, the premium is equal to the lesser of (i) $300 ad (ii) 6% of taxable icome greater tha $20,000; A-4
whe taxable icome is greater tha $36,000 ad less tha or equal to $48,000, the premium is equal to the lesser of (i) $450 ad (ii) $300 plus 6% of taxable icome greater tha $36,000; whe taxable icome is greater tha $48,000 ad less tha or equal to $72,000, the premium is equal to the lesser of (i) $600, ad (ii) $450 plus 25% of taxable icome greater tha $48,000; whe taxable icome is greater tha $72,000 ad less tha or equal to $200,000, the premium is equal to the lesser of (i) $750 ad (ii) $600 plus 25% of taxable icome greater tha $72,000; ad whe taxable icome is greater tha $200,000, the premium is equal to the lesser of (i) $900 ad (ii) $750 plus 25% of taxable icome greater tha $200,000. Surtax For 2016, the Otario s surtax is revised: where the basic provicial tax payable is less tha or equal to $4,484, the surtax is $0; where the basic provicial tax payable is greater tha $4,484 ad less tha or equal to $5,739, the surtax is 20% of the basic provicial tax payable over $4,484; where the basic provicial tax payable is greater tha $5,739, the surtax is 20% of the basic provicial tax payable over $4,484, plus 36% of the basic provicial tax payable over $5,739. Tax reductio For 2016, Otario s tax reductio amouts are revised as follows: Basic persoal amout... $ 231 Amout for each depedat uder age 18... $ 427 Amout for each depedat with a disability that the employee or pesioer has claimed o Form TD1ON... $ 427 The reductio is equal to twice the idividual s persoal amouts mius the provicial tax payable before reductio. The reductio caot be more tha the provicial tax payable before reductio. The reductio is il whe the provicial tax payable before reductio is more tha twice the persoal amouts. Because of the way the reductio for depedats with disabilities is determied, we iclude oly the basic persoal amout i the provicial tax tables. Persoal amouts For 2016, most of the provicial o-refudable persoal tax credits are revised. Basic persoal amout... $ 10,011 Spouse or commo-law parter amout... $ 9,350 Amout for a eligible depedat... $ 9,350 For more detailed iformatio o the persoal amouts, see Form TD1ON, 2016 Otario Persoal Tax Credits Retur. Caada Pesio Pla (CPP) ad Employmet Isurace (EI) CPP cotributios for 2016 Maximum pesioable earigs... $54,900 Aual basic exemptio... $3,500 Maximum cotributory earigs... $51,400 Cotributio rate (%)... 4.95 Maximum employee cotributio... $2,544.30 Maximum employer cotributio... $2,544.30 You stop deductig CPP whe the employee reaches the maximum aual cotributio for the year. Note As a employer, you have to remit these deductios alog with your share of CPP cotributios. For more iformatio, see Chapter 2, Caada Pesio Pla cotributios i guide T4001, Employer s Guide Payroll Deductios ad Remittaces. A-5
EI premiums for 2016 Maximum aual isurable earigs... $50,800 Premium rate (%)... 1.88 Maximum aual employee premium... $955.04 You stop deductig EI whe the employee reaches the maximum aual premium. Note As a employer, you have to remit these deductios alog with your share of EI premiums. For more iformatio, see Chapter 3, Employmet Isurace premiums i guide T4001, Employer s Guide Payroll Deductios ad Remittaces. Persoal tax credits returs (TD1 forms) You may have to ask your employees or your pesioers to complete a federal ad a provicial persoal tax credits retur usig a federal Form TD1 ad a provicial Form TD1. For more iformatio, see Chapter 5, Deductig icome tax i guide T4001, Employers Guide Payroll Deductios ad Remittaces. Claim codes The total persoal amout a employee claims o a TD1 form will determie which claim code you use. For 2016, the claim amouts that correspod to the federal claim codes are ot the same as the claim amouts that correspod to the provicial claim codes. See Chart 3 ad Chart 4. Explaatio of claim codes Claim code 0 This code represets o claim amout. If the federal claim code is 0 because the employee is a o-residet, the provicial claim code must also be 0. This code may also be used if the employee idicated they have more tha oe employee or payer at the same time ad have etered 0 o the frot page of Form TD1 for 2016. Claim codes 1 to 10 The claim code amouts do ot appear o either the federal or the provicial TD1 form. You match the Total claim amout reported o your employee s or pesioer s TD1 forms with the appropriate claim codes. The, you look up the tax for the employee s pay uder the claim code i the federal ad provicial tax tables for the pay period. Idexig of claim codes amouts The credits that apply to each federal ad provicial claim code have bee automatically icreased i the tax tables by the idexig factor for the curret year. If your employee did ot complete the federal ad provicial TD1 forms for 2016, you cotiue to deduct icome tax usig the same claim code that you used last year. Chart 3 2016 federal claim codes Total claim amout ($) Claim code No claim amout 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 A-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 ad over No withholdig X The employer has to calculate the tax maually E Chart 4 2016 Otario claim codes Total claim amout ($) Claim code No claim amout 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 ad over No withholdig X The employer has to calculate the tax maually E Form TD1X, Statemet of Commissio Icome ad Expeses for Payroll Tax Deductios If your employees wat you to adjust their tax deductios to allow for commissio expeses, they have to complete Form TD1X, Statemet of Commissio Icome ad Expeses for Payroll Tax Deductios. You deduct tax from your employees commissio pay usig the Total claim amout o their TD1 forms i the followig situatios: if your employees do ot complete a Form TD1X; or if they tell you i writig that they wat to cacel a previously completed Form TD1X. How to use the tables i this guide Use the tables i this guide to determie the CPP cotributios, EI premiums, federal tax, ad provicial tax that you will deduct from your employees remueratio. CPP tables (Sectio B) The aual basic exemptio is built ito the CPP tables. Fid the pages i Sectio B that correspod to your pay period. To fid the rage that icludes your employee s gross pay (this icludes ay taxable beefits), look dow the Pay colum. I the shaded colum ext to the Pay colum, you will fid the CPP cotributio that you should withhold from your employee s pay. A-7
EI table (Sectio C) Fid the page i Sectio C that correspods to the Isurable earigs of your employee. To fid the rage that icludes your employee s isurable earigs, look dow the Isurable earigs colum. Whe you use the table i this guide to determie the EI premiums, look up the isurable earigs for the period ot the gross remueratio. I the shaded colum ext to the Isurable earigs colum, you will fid the EI premium that you should withhold from your employee s pay. Tax deductios tables If you are usig the icome tax tables i this guide to determie your employees ad pesioers total tax deductios, you have to look up the amouts i the federal tax table ad the provicial tax table. To determie the total tax you deduct for the pay period, you must add the federal ad provicial tax amouts. Eve if the period of employmet for which you pay a salary is less tha a full pay period, you must cotiue to use the tax deductios table that correspods to your regular pay period. Federal (Sectio D) Fid the pages i Sectio D that correspod to your pay period. To fid the rage that correspods to your employee s taxable icome (this icludes ay taxable beefits), look dow the Pay colum. I the row uder the applicable claim code, you will fid the amout of federal tax that you should withhold from your employee s pay (for more iformatio, see the sectio called Claim codes ad Chart 3). Provicial (Sectio E) Fid the pages i Sectio E that correspod to your pay period. To fid the rage that icludes your employee s taxable icome (this icludes ay taxable beefits), look dow the Pay colum. I the row uder the applicable claim code, you will fid the amout of provicial tax that you should withhold from your employee s pay (for more iformatio, see the sectio called Claim codes ad Chart 4). Example You are a employer i Otario. Sara, your employee, ears $615 a week i 2016. She has a federal claim code 1 ad a provicial claim code 1. To determie Sara s federal tax deductios, you look at the weekly federal tax deductios table ad fid the rage for her weekly salary, which is 610-618. The federal tax deductios for $615 weekly uder claim code 1 is $49.85. To determie Sara s provicial tax deductios, you use the weekly provicial tax deductios table. I the Otario tax deductios table, the provicial tax deductio for $615 weekly uder claim code 1 is $25.20. Sara s total tax deductio is $75.05 ($49.85 + $25.20). This amout of taxes will be icluded i your remittace to us. Additioal iformatio about payroll deductios Deductig tax from icome ot subject to CPP cotributios or EI premiums We have built the tax credits for CPP cotributios ad EI premiums ito the federal ad provicial tax deductios tables i this guide. However, certai types of icome, such as pesio icome, are ot subject to CPP cotributios ad EI premiums. As a result, you will have to adjust the amout of federal ad provicial icome tax you are deductig. To determie the amout of tax to deduct from icome ot subject to CPP cotributios or EI premiums, use the Payroll Deductios Olie Calculator, available at www.cra.gc.ca/pdoc. O the Salary calculatio ad/or o the Commissio calculatio scree, go to Step 3 ad select the CPP exempt ad/or EI exempt optio before clickig o the Calculate butto. A-8
Step-by-step calculatio of tax deductios You ca use the followig step-by-step calculatios to calculate the tax deductios for ay employee or pesioer who ears more tha the maximum amouts icluded i the tax deductios tables. The example shows you how to determie the amout of tax to deduct from all icome. However, if you desig your ow payroll program or spreadsheets to calculate tax deductios, do ot use either of these calculatios. Istead, see guide T4127, Payroll Deductios Formulas for Computer Programs. Example Tax to deduct for all icome This example applies to a perso who ears $1,100 weekly ad cotributes $80 to a registered retiremet savigs pla (RRSP). This perso claims the basic persoal amout. Calculate aual taxable icome Descriptio Sub-amouts Amouts (1) Gross remueratio for the pay period (weekly) $ 1,100.00 (2) Mius the other amouts authorized by a tax services office 0.00 the RRSP cotributios* 80.00 * This amout has to be deducted at source. * Note If you have a employee you paid by commissio, subtract the total expeses reported o Form TD1X from the gross remueratio reported o Form TD1X if applicable. 80.00 (3) Net remueratio for the pay period $ 1,020.00 (4) Aual et icome ($1,020 52 weeks) $ 53,040.00 (5) Mius the aual deductio for livig i a prescribed zoe, reported o Form TD1 /a (6) Aual taxable icome $ 53,040.00 Calculate federal tax Descriptio Sub-amouts Amouts (7) Multiply the amout o lie 6 by the federal tax rate based o Chart 1. 0.205 (8) Mius the federal costat based o the aual taxable icome o lie 6 (see Chart 1) $ 10,873.20 2,491.00 (9) Federal tax (lie 7 mius lie 8) $ 8,382.20 (10) Mius the federal tax credits: the total of persoal tax credit amouts reported o the federal Form TD1 $ 11,474.00 the CPP cotributios for the pay period multiplied by the umber of pay periods i the year (aual maximum $2,544.30)* 2,544.30 the EI premiums for the pay period multiplied by the umber of pay periods i the year (aual maximum $955.04)* 955.04 the Caada employmet credit (aual maximum $1,161.00) 1,161.00 Total $ 16,134.34 * Note Whe the maximum CPP cotributios or EI premiums for the year is reached, use the maximum amout for later calculatios (11) Multiply the total o lie 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 (lie 9 mius lie 12) $ 5,962.05 A-9
Calculate provicial tax Descriptio Sub-amouts Amouts (14) Basic provicial tax for Otario: Multiply the amout o lie 6 by the provicial tax rate based o Chart 2. $ 4,853.16 (15) Mius the provicial costat based o the aual taxable icome o lie 6 (See Chart 2) 1,703.00 (16) Provicial tax o icome for Otario (lie 14 mius lie 15) $ 3,150.16 (17) Mius the provicial tax credits: the total of persoal tax credit amouts reported o Form TD1ON $ 10,011.00 the CPP cotributios for the pay period multiplied by the umber of pay periods i the year (aual maximum $2,544.30)* 2,544.30 the EI premiums for the pay period multiplied by the umber of pay periods i the year (aual maximum $955.04)* 955.04 Total $ 13,510.34 * Note Whe the maximum CPP cotributios or EI premiums for the year is reached, use the maximum amout for later calculatios (18) Multiply the total o lie 17 by the lowest provicial tax rate for the year. 0.0505 (19) Total provicial tax credits 682.27 (20) Basic provicial tax (lie 16 mius lie 19) $ 2,467.89 (21) Provicial surtax Where lie 20 is less tha or equal to $4,484, the surtax is $0 Where lie 20 is greater tha $4,484 ad less tha or equal to $5,739, the surtax is 20% of lie 20 that is more tha $4,484 $ 0.00 Where lie 20 is greater tha $5,739, the surtax is 20% of lie 20 that is more tha $4,484 plus 36% of lie 20 that is more tha $5,739 0.00 Provicial surtax + 0.00 (22) Total provicial tax icludig surtax $ 2,467.89 (23) Otario health premium Determie the premium based o the aual taxable icome (lie 6) ad the explaatio o page A-4. The premium is whichever amout is less: (i) $600; or (ii) $450 plus 25% of taxable icome greater tha $48,000 ad less tha or equal to $72,000: + 600.00 (24) Provicial tax payable before reductio (lie 22 plus lie 23) $ 3,067.89 (25) Mius the provicial tax reductio: The lesser of: (i) the total provicial tax payable o lie 22; ad $ 2,467.89 (ii) twice the applicable persoal amouts mius the amout o lie (i) above. If the result is egative, substitute $0. $ 462.00 2,005.89 $ 0.00 0.00 (26) Total provicial tax payable for the year (lie 24 mius lie 25) $ 3,067.89 Calculate total tax ad the tax deductio for the pay period Descriptio Sub-amouts Amouts (27) Total federal ad provicial tax deductios for the year (lie 13 plus lie 26). If the result is egative, substitute $0. $ 9,029.94 (28) Tax deductio for the pay period: Divide the amout o lie 27 by the umber of pay periods i the year (52). $ 173.65 A-10
Your opiio couts! If you have ay commets or suggestios that would help us improve this guide, we would like to hear from you. Sed your commets to: Taxpayer Services Directorate Caada Reveue Agecy 395 Termial Aveue Ottawa ON K1A 0L5 A-11