Resources Canada

back

Overview

With its educated workforce and large market, Canada can be an attractive destination to expand a business especially for U.S. companies who are looking to take that international step. With just a 4.6 percent unemployment rate the country’s citizens have one of the most stable economies in the west. However, Payroll regulations are different across the country’s 10 provinces and 3 territories. Here are a few aspects to keep in mind when it comes to payroll in Canada.

Canada Payroll Facts

  • Population : 35.2 Million
  • Working Population : 24.02 Million
  • Currency : Canadian Dollar
  • Minimum Wage : Varies by province
  • Identity Number : Social Insurance Number (SIN)
  • Number Of Pay Periods : 26
  • Main Languages : English and French
  • Capital City : Ottawa
  • Big Mac Index : $4.66 (C$5.97)
  • Fun Fact : Canadians can deduct a number of things from their tax. Even dog food.

Taxes

Tax year – Jan 1st to Dec 31st.
Employers are responsible for the normal elements of payroll management, which include deducting Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and income tax from their employees’ earned income.
Every company must open a payroll program account. An account number will be assigned to the organization in order to identify themselves when dealing with the Canada Revenue Agency.

Taxable incomeTax on this income
C$1,000 – C$45,282
15%
C$45,282- C$90563
20.5%
C$90,564 – C$140,388
26%
C$140,389 – C$200,000
29%

Healthcare & Benefits

Legislated benefits are mandatory, but only in Ontario.

Employers must provide the following benefits:

  • Employment Insurance: Both employer and employee contributions are required.
  • Canada Pension Plan: Both employer and employee contributions are required.

Workplace insurance coverage:
The requirements and premiums of Ontario’s Workplace Safety and Insurance Board vary, depending on your industry and work environment.
Unlike the US there is free healthcare in Canada. Canadian provincial healthcare plans (e.g. Ontario Health Insurance Plan (OHIP) for Ontarians, Albertan Health Insurance Plan (AHCIP) for Albertans, etc.) automatically provides coverage for Canadian residents that is paid for via Canadian taxes.

Expatriates

Foreign employees have the same rights as Canadian citizens. They are obligated to establish payroll deduction accounts with the Canada revenue agency and withhold social contributions for domestic workers. However foreign workers may not be entitled to the same social benefits.
Under the recently enacted legislation, a certified non-resident employer may not have to report the salary, wages, or other remuneration paid to a qualified non-resident employee if the amount is $10,000 or less if certain conditions are met.

Work Leave & Holidays

Couples who are expecting can split their 35 weeks of benefits.
Employees in Canada are entitled to as much as 71 weeks leave. Employment insurance covers this and includes maternity, paternity leave, sickness and compassionate care.
Employees are entitled to start out with two weeks of paid vacation in all provinces except Saskatchewan where employees are entitled to three weeks of paid annual leave. Federal employees are entitled initially to two weeks’ vacation, increasing to three weeks after six years of services.

There are 5 nationwide statutory holidays, and 6 additional holidays for federal employees. Each of the 13 provinces and territories observes a number of holidays in addition to the nationwide days.

Statutory Holidays
1st January
New Year’s Day
Variable Date March 20th and April 23
Good Friday
July 1st
Canada Day
First Monday in September
Labour Day
25th December
Christmas Day
Statutory Holidays for Federal Employees
Monday after Easter
Easter Monday
Monday on or before May 24th
Victoria Day
First Monday in August
August Civic Holiday
Second Monday in October
Thanksgiving
November 11th
Remembrance Day
December 26th
Boxing Day

As attractive as a destination that Canada is, setting up payroll can be a complicated process. The key is having all the information and right strategy for your business. Global payroll providers can remove the headache leaving you with more time to focus on other parts of your business.

To learn more about Canada tax and payroll speak with one of the Immedis experts here.