Full Guide to Canadian Payroll for Foreign Companies

Canadian payroll means withholding income tax, CPP (QPP in Québec), and EI from every pay, adding the employer's share, remitting it all to the CRA on schedule, and issuing T4 slips (RL-1 in Québec) each February. Here is how each piece works for a foreign employer.

Canadian payroll involves several mandatory deductions and remittances that differ from U.S. payroll. Understanding these requirements is essential for any foreign company hiring Canadian employees.

Mandatory payroll deductions

What must be deducted from Canadian employee paychecks, who pays, and where to find the current rates.

Mandatory Canadian payroll deductions
DeductionWho paysHow it worksOfficial rates
Income tax Employee (withheld by you)Federal and provincial tax based on the employee’s province of residence, earnings, and TD1 formsCRA payroll
Canada Pension Plan (CPP) Employee and employer, equal sharesContributions on earnings up to the first ceiling, plus CPP2 on earnings between the first and second ceilingsCurrent CPP rates
Employment Insurance (EI) Employee; employer pays 1.4×Premiums on insurable earnings up to the yearly maximumCurrent EI rates
Québec: QPP and QPIP Employee and employerQPP replaces CPP; QPIP adds parental insurance and lowers the EI rate; remitted to Revenu QuébecRevenu Québec

Rates and maximums change every January, so we link to the official pages rather than repeat figures that go out of date.

Remittance requirements

The CRA sets your remittance frequency from your average monthly withholding amount:

  • Regular (monthly): average monthly withholding under $25,000, due by the 15th of the following month.
  • Quarterly: small employers under $3,000 with a clean compliance history; the CRA tells you if you qualify.
  • Accelerated: $25,000 or more, remitted two to four times a month.

What you remit:

  • Employee income tax deductions
  • CPP contributions (employer and employee portions)
  • EI premiums (employer and employee portions)
  • In Québec, QPP, QPIP, and Québec income tax, remitted to Revenu Québec

Late remittances result in penalties and interest charges, and the CRA can require more frequent remittances from repeat offenders. The CRA requirements guide lists the penalty rates and deadlines.

Year-end tax slips

T4 slip (Statement of Remuneration Paid)

Employers must issue T4 slips to all employees, and file the T4 Summary with the CRA, by the last day of February following the tax year. The T4 reports:

  • Total earnings
  • Income tax deducted
  • CPP contributions
  • EI premiums
  • Other deductions and taxable benefits

T4A slip

Used for contractors and consultants: fees for services paid during the year are reported on a T4A when they total more than $500.

Provincial variations

Québec has additional requirements:

  • Québec Pension Plan (QPP) instead of CPP
  • Québec Parental Insurance Plan (QPIP)
  • Separate remittances to Revenu Québec
  • RL-1 slips (the Québec equivalent of the T4)

Most other provinces follow federal CPP and EI rules, but provincial income tax varies significantly: use the tax tables for each employee's province of residence. The province explorer summarizes the differences.

Or let an employer of record run it

With InfraDev as the employer of record, Canadian payroll runs under our accounts and our name.

InfraDev handles

  • Accurate calculation of all deductions
  • Timely remittances to the CRA and Revenu Québec
  • T4 and RL-1 slips issued and filed
  • Provincial variations applied for each employee
  • One point of contact for payroll questions
How our employer of record works

Hiring in Canada without running payroll yourself?

Tell us about the role and province. We'll confirm the total employment cost and timing on a short call.

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