Topic hub · 46 pages
Payroll and employees
Payroll for Ontario employers explained: remittances, CPP and EI, T4 and T4A slips, records of employment, taxable benefits and the cost of a first hire.
A repeating payroll cycle: pay employees, deduct at source, remit to the CRA and report at year-end.
Visual labels: Pay employees; Deduct at source; Remit to the CRA; Report at year-end.Payroll turns a promise of pay into a series of obligations: deductions from each cheque, remittances to the CRA, year-end slips and records that employees may need when their job ends. Remittance dates and accuracy matter because the CRA sets deadlines and penalties for late or incorrect amounts.
The material here follows that cycle. Definitions explain terms such as CPP contributions, EI premiums, T4 slips and records of employment. Articles look at what a hire really costs and how perks can become taxable benefits. Guides cover the steps for running a first payroll. The calculators estimate employer cost and deductions using simplified assumptions, so they are useful for planning rather than for running a payroll. Check the official CRA calculators and guidance before you remit, and ask an accountant to review how you classify workers, because that classification affects almost every other payroll rule.
General information, not advice for your situation. How these pages are written and checked.
Guides (10)
Step-by-step checklists and plain-language walkthroughs.
CPP and EI maximums for 2026: rates, ceilings and employer costs
The 2026 CPP, CPP2 and EI rates, earnings ceilings and maximum contributions for employees, employers and the self-employed, with worked examples and a note on 2027 figures.
Read the guide PayrollCRA mileage rate for 2026: the per-kilometre allowance rates
The CRA 2026 per-kilometre allowance rates are 73 cents for the first 5,000 km and 67 cents after that, 77 and 71 cents in the territories, and how employers and self-employed owners use them.
Read the guide PayrollEmployee expense reimbursement policy: a practical checklist
How to write a simple expense policy that separates reimbursements from allowances, keeps records the CRA expects and flags when a payment becomes a taxable benefit.
Read the guide PayrollGroup health benefits and tax: what employers need to know
Which employer-paid health, dental, life and disability premiums are taxable benefits, how a plan qualifies as a private health services plan, and what to report.
Read the guide PayrollHiring a summer student: a payroll checklist for Ontario employers
Pay rate, TD1, CPP at age 18, vacation pay, remittances, the ROE and the T4 for a short-term student hire in Ontario, in the order you will need them.
Read the guide PayrollOntario minimum wage 2026: rates and payroll costs
Ontario’s general minimum wage is $17.95 an hour from October 1, 2026. See the student and homeworker rates, recent increases and what CPP, EI and vacation pay add for employers.
Read the guide PayrollPaying family members through your business
How to pay a spouse or children through your business: reasonable wages, payroll deductions, EI rules for related persons, records to keep and TOSI on family dividends.
Read the guide PayrollRemote employees in another province: which payroll rules apply
Work out the province of employment for an employee who works from home outside your province, then set up deductions, TD1 forms and records so the right amounts are withheld.
Read the guide PayrollTips and gratuities: a payroll checklist for Ontario employers
Sort tips into controlled and direct, know what to withhold and report on the T4, and follow the Ontario rules on pooling, payout and posting before the next pay run.
Read the guide PayrollHiring your first employee: a payroll checklist
Organize your employee information, approvals and records before the first pay run.
Read the guideTools (4)
Free calculators and checklists that run in your browser.
Employee or contractor? Worker status checker
Seven questions on the factors the CRA weighs.
Open the tool PayrollEmployer payroll cost estimator
2026 CPP, CPP2 and EI for you and your employee.
Open the tool PayrollOntario bonus tax calculator 2026
What you keep of a bonus after tax, CPP and EI in 2026.
Open the tool PayrollOntario vacation pay calculator
Minimum 4% or 6% vacation pay and two or three weeks of time.
Open the toolArticles (10)
Longer explanations of the decisions behind the numbers, newest first.
- Payroll
Bonuses and tax withholding: what comes off a bonus
How employers withhold CPP, EI and income tax on a bonus in Ontario, why the cheque can look small, and what an employee can do about it, with 2026 figures.
Read the article - Payroll
Company car vs car allowance: how each is taxed in Canada
Compare a company-provided vehicle with a car allowance for your own vehicle: how each is taxed, what payroll must withhold, and what changes for owner-managers.
Read the article - Payroll
Contractor misclassification risks for Ontario businesses
What can go wrong when a worker you pay as a contractor is really an employee: how the CRA decides, what it can assess, the T4A duty and how to ask for a ruling.
Read the article - Payroll
Gifts and perks for employees: taxable benefits explained
Which employee gifts, awards and perks are taxable in Canada: the CRA’s $500 non-cash policy, gift cards, long-service awards, social events and how to report them.
Read the article - Payroll
How to calculate payroll deductions in Ontario
Work out CPP, CPP2, EI and income tax on an Ontario paycheque, what the employer share adds, and when the amounts are due to the CRA, using 2026 figures.
Read the article - Payroll
Late payroll remittance penalties in Canada: rates and fixes
How the CRA penalizes late or missing payroll remittances: the 3%, 5%, 7% and 10% scale, daily compound interest, correcting errors, director liability and asking for relief.
Read the article - Payroll
Paying yourself a salary from your corporation: how it works
How an owner-manager actually pays a salary: payroll account, TD1, CPP on both halves, EI and the 40% rule, remittances, the T4 and what happens when deductions are missed.
Read the article - Payroll
T4 slips and year-end payroll reporting for 2026
What an Ontario employer needs for 2026 T4 slips: the early-2027 deadline, e-filing rules, reconciling remittances to the T4 Summary, taxable benefits and late penalties.
Read the article - Payroll
When an employee leaves: final pay and ROE for employers
What an Ontario employer does when someone leaves: the Record of Employment deadline, deductions on vacation and notice pay, separation payments on the ROE and T4 follow-up.
Read the article - Payroll
Before your first hire, budget for more than wages
Plan the accounting side of a first hire: worker status, employer costs, payroll responsibilities, remittance timing and the cash needed between paydays.
Read the article
Encyclopedia terms (22)
Definitions with examples, in alphabetical order.
- Automobile allowance
An automobile allowance pays an employee for using their own vehicle for work. See when it is not taxable, the 2026 per-kilometre rates and why flat allowances are taxable.
- CPP contributions
How CPP contributions work in 2026: employee and employer rates, the CPP2 band above $74,600, and what self-employed people pay, with an illustrative example.
- Directors’ liability
Directors’ liability explained: when the CRA can hold a corporation’s directors personally responsible for unremitted payroll deductions and GST/HST, and what due diligence means.
- EI premiums
How EI premiums work in 2026: the 1.63% employee rate, the employer’s 1.4 times share, insurable earnings and the optional self-employed program.
- Insurable earnings
What counts as insurable earnings for EI: the pay that attracts premiums, how it differs from taxable income, and where it appears on a T4 slip.
- Operating expense benefit
Learn what an automobile operating expense benefit is, how the 2026 per-kilometre rate and the optional half-of-standby method work, and how it is reported.
- Payroll remittance
Understand payroll remittances, employer contributions and remitter schedules, including why paying net wages does not complete an employer's obligations.
- PD7A remittance voucher
A PD7A is the CRA statement and voucher regular and quarterly remitters use to pay source deductions. See what it shows, when it arrives and how it differs from PD7R and PD7D.
- PDOC (Payroll Deductions Online Calculator)
PDOC is the CRA’s online calculator for payroll deductions. See what it works out, what it does not replace and how to check a pay run with it.
- Pensionable earnings
What counts as pensionable earnings for CPP, who contributes, how proration works at ages 18 and 70, and how it differs from insurable earnings.
- PIER report
What a CRA PIER report is: the yearly check of CPP and EI on your T4s, what the letter contains, the 30-day reply window and how to respond.
- Record of employment (ROE)
Understand when an employer must issue a record of employment, what an interruption of earnings is, and the electronic and paper ROE deadlines.
- Remitter type
Your remitter type tells you how often payroll deductions are due to the CRA. See the four types, the AMWA thresholds and how to read your own due dates.
- Retiring allowance
Learn what counts as a retiring allowance, how it differs from wages in lieu of notice, how tax is withheld, and which T4 codes report it.
- Source deductions
Source deductions are the CPP, EI and income tax an employer withholds from pay. See what you must deduct, why it is held in trust and the penalties for failing to deduct.
- Standby charge
Learn what an automobile standby charge is, when an employer-provided car creates one, how it is calculated and how it is reported on the T4.
- T4 slip
A T4 slip reports what an employer paid an employee and deducted in a calendar year. See what goes on it, the end-of-February deadline and when to file electronically.
- T4 summary
A T4 summary totals every T4 slip for one payroll account and compares the deductions with what you remitted. See the key lines, the balance-due check and an example.
- T4A slip
Learn what a T4A slip reports, when payers must issue one, how fees for services in box 048 fit, and the filing deadline.
- Taxable benefit
Learn what makes an employer-provided benefit taxable, how cash, near-cash and non-cash benefits differ, and how they are valued and reported.
- TD1 form
A TD1 is the personal tax credits return an employee gives an employer so the right income tax is withheld. See who completes it, when to update it and what happens without one.
- YMPE (year’s maximum pensionable earnings)
The YMPE is the yearly ceiling on earnings for CPP contributions: $74,600 for 2026, with a $85,000 second ceiling, and how it differs from EI’s maximum.
Who this affects (3)
Industries where this topic comes up often.
Payroll
Your team paid correctly and on time, with source deductions, remittances and year-end slips handled for you.
What it involvesTalk it through with an accountant
Reading helps you ask better questions. When the rules meet your own records, a conversation settles what applies. Sora’s payroll service is the closest match to this topic.
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