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What comes off your paycheque in Ontario

, 5 minute read

Your first pay stub is usually a surprise. The hours are right, the rate is right, and the amount that lands in your account is still smaller than hours times rate. Three deductions explain most of the gap.

Canada Pension Plan (CPP)

CPP is a public pension you pay into from your first job. Your employer takes a percentage of your pay above a small basic exemption (the first $3,500 you earn in a year is exempt, spread across your pay periods) and matches it with the same amount of its own.

Two things surprise students. First, CPP is taken even on a small cheque, because the exemption is spread thin across the year. Second, you only contribute from age 18, so a 17-year-old's pay has no CPP line at all.

Employment Insurance (EI)

EI is the insurance that pays benefits if you lose your job or take parental or sickness leave. It is a smaller percentage of your gross pay, with no exemption, so it starts from the first dollar. Your employer pays a larger share on top.

Income tax

Income tax is withheld from each cheque as if you earned the same amount every pay period for a whole year. That is the key to why students often get money back: if you only work part of the year, or fewer hours during term, the withholding assumed a bigger annual income than you really had.

The refund is not a bonus. It is your own money, withheld too early. Filing a return every spring, even with a small income, is how you get it back, and it also keeps you eligible for credits like the GST/HST credit.

Why the numbers change between cheques

  • Hours change. Withholding is worked out per cheque, so a busy two weeks is taxed as if every period were that busy.
  • Vacation pay. In Ontario most workers earn at least 4% vacation pay. Some employers add it to every cheque, others pay it later.
  • Year-end limits. CPP and EI stop once you hit the year's maximum. Most students never do.

How CampusWage handles it

For each job you can switch on real deductions: CampusWage works out CPP, EI and income tax from the CRA's published tables for the year, so the take-home it shows is close to your actual deposit. With Pro, the Tax and benefits screen adds up the year and estimates your refund before you file.

This is general information, not tax advice. The CRA's payroll deductions guide is the official source.