Insurable earnings

What the label covers

Insurable earnings are the earnings from insurable employment, which includes most jobs in Canada under a contract of service. For an amount to count, the CRA says it has to be paid in cash by the employer and received and enjoyed by the person in respect of that job.

In practice, premiums are generally deducted from salary and wages, commissions, bonuses, honorariums, certain tips and gratuities, and most taxable benefits received in cash. Payroll software usually applies these rules for you, but someone still has to set each pay code correctly.

Why it is not the same as taxable income

Employment income on a T4 and insurable earnings are separate measures, and they often differ. A non-cash benefit can raise taxable employment income while generally not being insurable, because it is not paid in cash. Whether a particular payment is insurable depends on its nature, so check the CRA’s benefit guidance rather than assuming.

Insurable earnings also have no age limit and start from the first dollar, unlike the CPP calculation described in the pensionable earnings entry. They stop at the yearly maximum, which is $68,900 for 2026 outside Quebec.

An illustrative example

Suppose an employee earns a $60,000 salary and a $3,000 bonus in 2026, both paid in cash. Insurable earnings are $63,000, and the 1.63% employee premium is $1,026.90. Because $63,000 is below the maximum, no cap applies. The employer’s share and the cost to the business are covered in the EI premiums entry. These numbers are round and illustrative.

If the same employee also received a taxable benefit that was not paid in cash, the T4 would show higher employment income than insurable earnings. The gap is normal, but it should be explainable from your payroll records.

Where mistakes show up

Each year the CRA compares the EI premiums and insurable earnings reported on T4 slips with the amounts that should have been calculated. A mismatch can lead to a pensionable and insurable earnings review. The CRA also notes that an employer is treated as having deducted the required amounts even if they were not actually withheld.

The yearly maximum applies to each job with a different employer. A new employer must deduct premiums without counting what a previous employer withheld, and any overpayment is refunded to the employee through their tax return.

What to discuss with your accountant

Bring your payroll register, the pay codes you use for bonuses, allowances and benefits, and last year’s T4 summary. Ask which payments are insurable, how mid-year starts and second jobs are handled, and whether your T4 slips will reconcile to your remittances. If you pay owners or family members, ask how their status affects coverage.