Can you clarify payroll deductions for me?
For calendar 2016 the following
are limits/exemptions for employee deductions:
||Max Earnings $54,900
||Deduction Rate 4.95%
||Max Earnings $50,800
||Deduction Rate 1.88%
||Max Earnings $88,000
Note that the Ontario government is calculating personal income taxes separately from
the Federal government. For calendar 2016 there are two personal exemption amounts:
Federal $11,474 and Provincial $10,011. Please update your
payroll program accordingly.
CPP Deductions. Employers are not required to deduct
CPP from any employee who is under 18 or over 69 years old. Employee’s between the age of 60 and 69 and collecting CPP Benefits are now required to contribute to CPP.
EI Deductions. Employers are required to deduct EI
from all employees except employees who would be exempt through blood or
marriage. This exemption will include spouses, siblings, children, parents, aunts and
uncles. All shareholders of a corporation who are employees are exempt from EI deductions.
WCB Deductions. The rules have changed significantly
over the past few years on required coverage but basically every employee who is not a
shareholder or director has to be covered (ie: included in your payment calculations) for each filing.
Please note that the dividends paid by a company (that is operating under CU Class 700) to shareholders, regardless of their day to day involvement with the company, are part of the WSIB premium calculation.
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