Payroll taxes
in Canada.

SALARY PAYMENT IN Canadian Dollar (CAD, $)

CONTRACT LANGUAGES English

PAYROLL TAX 7.91%

PAYROLL CYCLE Monthly

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Canada

What is the average employer tax rate in Canada?

Generally, corporations incorporated in Canada, or conducting business through a permanent establishment in Canada are subject to both federal and provincial corporate income taxes. The total corporate tax burden usually amounts to 20-35 percent depending on the province/territory or operation.

As of June 2022, the Headline Corporate Income Tax (CITs) rates in Canada were as follows:

Canada – 2023 CIT tax rates

Taxable income (CAD)	Tax rate
Provincial/territorial	8% – 16%
Federal	15%

What is the average employee tax rate in Canada?

In 2023, the net average income tax rate for a single worker was 25.1%.

Canada enforces a progressive or graduated system of taxation on employee income, meaning the percentage of tax increases as income increases. Marginal tax brackets mean that tax is applied to portions of income, not the aggregate amount.

Federal personal income tax rates for 2023:

Canada – Individual Federal Income Tax

Taxable Income (CAD)	Tax rate	Tax Brackets
50,197	15%	on first $50,197
50,197 – 100,392	20.5%	on the next $50,195
100,392 – 155,625	26%	on the next $55,233
155,625 – 221,708	29%	on the next $66,083
221,708+	33%	on income above $221,708

Income tax is paid at both a federal level and provincial/territorial level with provinces & territories setting their own income tax rates and brackets.

Provincial/territorial rates are published in full by the Canada Revenue Agency.

Employer contributions in Canada

There are a number of employer contributions that employers are required to cover as part of the Canadian social security system.

These include; the Canada Pension Plan (CPP); Employment Insurance (EI); Employer Health Tax (EHT); and Worker Insurance.

Worker insurance is calculated based on the location of the employee, not the employer.

Taking Ontario rates as an example:

Canada – Employer contributions

Contribution item	Contribution rate
Canada Pension Plan (CPP)	5.7% with a max. contribution of CAD$3,499.80
Employment Insurance (EI)	2.212% with a max. contribution of CAD$1,333.84
Employer Health Tax (EHT)	0.98% to 1.95% of the total payroll amount
Worker Insurance	0.31%

So, total Employer Contributions (for an employer operating in the province of Ontario) would total between ≈9.612% and ≈10.1%.

By partnering with Horizons as your Global PEO, we can take on the responsibility of withholding all payroll taxes and employee income taxes, as well as making the required declarations to the relevant tax authorities.

Employee contributions in Canada

Employee contributions include the Canada Pension Plan (CPP); Employment Insurance (EI); and Worker Insurance.

Ontario rates give a good indication of employee contribution rates:

Canada – Employee contributions

Contribution item	Contribution rate
Canada Pension Plan (CPP)	5.7% with a max. contribution of CAD$3,499.80
Employment Insurance (EI)	1.58% with a max. contribution of CAD$952.74
Worker Insurance	0.31%

In Ontario, total employee contribution rates total ≈7.03%

Hiring in Canada, Made Easy

Your business can easily hire employees in Canada without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.

FAQs

What is the tax bureau of Canada called?

Canada Revenue Agency

Is there an employer payroll tax contribution in Canada?

Yes, employer payroll tax contributions in Canada include ‘CPP’, ‘EI’, ‘EHT’, and Worker Insurance.

How does the payroll tax system of Canada work?

Income taxes are paid annually via the Canada Revenue Agency’s online portal.

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