Payroll and benefits in Canada

Every country has its own requirements for running payroll — and employers in Canada will need to understand the rules, regulations, and customs that apply there. Read on for what you need to know.

Payroll frequency in Canada

Employers in Canada can choose between different payroll schedules. The most common frequencies are:

• Biweekly.
  
• Twice-monthly.
  
• Monthly.
  
• Every four weeks.
  

There is no federally mandated payroll frequency — the exact timing of payroll depends on the employer’s policies and the specifics outlined in the employment contract. However, employers must adhere to the pay schedule agreed upon with employees.

Federal and provincial income tax in Canada

Employees in Canada must pay both federal and provincial income tax, which employers must deduct from their wages. Federal income tax is charged on a progressive scale according to income, at the following rates:

• Up to CAD 57,375: 15%.
  
• Between CAD 57,375 and CAD 114,750: 20.5%.
  
• Between CAD 114,750 and CAD 177,882: 26%.
  
• Between CAD 177,882 and CAD 253,414: 29%.
  
• Over CAD 253,414: 33%.
  

Provincial income taxes depend on the province where the employee or the employer is based.

Other payroll contributions in Canada

Both employers and employees in Canada must also pay certain other contributions based on the employee’s wages. As of 2025, they are:

• Employment Insurance (EI): Employment Insurance provides temporary income support to unemployed workers. Both employers and employees contribute to EI, at a rate of 1.64% (employees) and 2.296% (employers). There is a special rate for employers in Quebec.
  
• Canada Pension Plan (CPP): The CPP provides retirement, disability, and survivor benefits to contributors. Both employers and employees contribute equally to the CPP at a rate of 5.95%. Earnings between CAD 71,300 and CAD 81,200 are subject to additional CPP contributions, known as CPP2.
  

Special payroll deductions in Quebec

The province of Quebec administers its own pension plan and mandates the following specific payroll deductions:

• Quebec Pension Plan (QPP): Similar to the CPP, with contribution rates and maximums set by Retraite Québec.
  
• Quebec Parental Insurance Plan (QPIP): Provides benefits to parents taking maternity, paternity, or adoption leave.
  Employment Insurance (EI): Administered federally, but with different rates for Quebec residents.
  

13th salary in Canada

In general, the 13th salary is not common in Canada. Some businesses do choose to offer year-end bonuses to their employees, which may be linked to company performance, individual performance, or other criteria. However, this is at the discretion of the employer and is not required by Canadian employment law.

Other requirements for running payroll in Canada

Employers in Canada are required to keep employment and payroll records for each employee for at least 36 months. They must also retain these records for at least 36 months after employment ends. There are specific requirements for the details that must be kept, which include the employee’s name, address, Social Insurance Number (SIN), and their rate of pay.

At the end of the year, employers must issue T4 slips to each employee, summarising their earnings and deductions over the year. They must also submit a T4 Summary to the Canada Revenue Agency by the last day of February following the calendar year to which it pertains.

Other requirements for running payroll in Canada vary by province or territory. For example, there is no federal obligation to provide employees with pay statements (or pay stubs) after each payroll cycle, but many jurisdictions require it. Employers in Canada should take the time to understand any additional provincial or territorial payroll requirements that may apply to their business.