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The short answer
Before the first payday, add a payroll (RP) program account to your business number, then deduct CPP, EI and income tax from each pay and remit them, with your employer share, to the CRA. For 2026 the CPP rate is 5.95% each for employee and employer on earnings between the $3,500 basic exemption and $74,600, and EI is 1.63% for the employee up to $68,900 insurable earnings, with the employer paying 1.4 times that. Most new employers remit by the 15th of the month after payday, or quarterly if they qualify.
What source deductions are
When a Canadian company pays an employee, it acts as a collector for the CRA. From every pay you hold back three amounts: Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and income tax. You then add your own employer share of CPP and EI and send the total to the CRA. The money you withheld belongs to the government from the moment you hold it, which is why the CRA treats late remittances strictly.
Outside Quebec, all of this goes to the CRA. A Quebec employer deducts Quebec Pension Plan contributions instead of CPP, at different rates, and deals with Revenu Québec for provincial tax; the Quebec figures are published by Retraite Québec. The rest of this article uses the rules for the other provinces.
Step 1: open the payroll account
Your corporation's business number (BN) carries separate program accounts, each with a two-letter code. The CRA's registration page lists RP as the payroll account, alongside RT for GST/HST and RC for corporate income tax. Registering through Business Registration Online is the fastest route if you have a CRA business account; the RC1 form by mail is the fallback. If your BN is new, the basics are in getting a CRA business number.
- Confirm the worker is an employee, not a contractor (the CRA's tests are summarised in employee or contractor).
- Add the RP account to your BN before the first pay.
- Collect the employee's SIN and federal and provincial TD1 forms, which set their tax credits.
- Calculate each pay with the CRA's Payroll Deductions Online Calculator (PDOC) or the published tables.
- Remit by the due date for your remitter type.
- File T4 slips and the summary by the last day of February after the year ends.
The 2026 rates
| Deduction | Employee | Employer | Earnings band |
|---|---|---|---|
| CPP | 5.95% | 5.95% (matches) | $3,500 to $74,600 a year; maximum $4,230.45 each |
| CPP2 (second tier) | 4% | 4% | $74,600 to $85,000; maximum $416 each (secondary source) |
| EI | 1.63% | 1.4 times the employee premium | Up to $68,900; maximum $1,123.07 employee, $1,572.30 employer |
| Income tax | Per PDOC or tables | None | Depends on province and TD1 claims |
The CPP figures come from the CRA rates page and the EI figures from the CRA premiums page, both for 2026. The CPP2 band and maximum come from a trade publication summarising the CRA's announcement, so confirm them on the CRA page before your first pay above $74,600. Rates change every January; check the pages each year.
Worked example (illustrative)
Example: an Ontario employee paid $4,000 a month, twelve pays a year. The monthly share of the CPP basic exemption is $3,500 ÷ 12 = $291.67.
- Employee CPP: ($4,000 − $291.67) × 5.95% = $220.65
- Employer CPP: $220.65
- Employee EI: $4,000 × 1.63% = $65.20
- Employer EI: $65.20 × 1.4 = $91.28
- CPP and EI to remit: $220.65 + $220.65 + $65.20 + $91.28 = $597.78, plus the income tax PDOC gives for that employee
PDOC prorates the exemption exactly by pay period, so its CPP figure can differ by a few cents. Use PDOC's figure on the payslip.
When to remit, and what lateness costs
The CRA's due-date page sets out four remitter types, based on your average monthly withholding amount (AMWA):
| Remitter type | Who | Due |
|---|---|---|
| Quarterly | New employers generally, if monthly withholding is under $1,000 and compliance is perfect; or AMWA under $3,000 with the account open 12 months | 15 April, 15 July, 15 October, 15 January |
| Regular | AMWA up to $24,999.99 | 15th of the month after you paid |
| Accelerated, threshold 1 | AMWA $25,000 to $99,999.99 | 25th of the same month and 10th of the next |
| Accelerated, threshold 2 | AMWA $100,000 or more | Third working day after the 7th, 14th, 21st and month end |
The CRA may set a different frequency on your statement of account, so follow what it tells you. If a due date falls on a weekend or a CRA-recognised holiday, the payment is on time if it arrives or is processed by the next business day. Late remittances attract a penalty of 3% (1 to 3 days late), 5% (4 to 5 days), 7% (6 to 7 days) or 10% (more than 7 days, or nothing sent), with daily compounding interest on top.
What first-time employers often miss
- Deducting from the first pay even if the RP account is not yet open: the obligation starts when you pay.
- Forgetting the employer share: the CRA expects employee plus employer CPP and EI in one remittance.
- Treating a payroll advance or bonus as outside payroll: bonuses go through PDOC's bonus calculation.
- Provincial extras: in Ontario, for example, most employers with staff must also register with WSIB within 10 days of hiring the first employee.
If you also employ people in Nigeria, those staff are not on Canadian payroll at all; the Nigerian rules are in employing staff in Nigeria.
Where Pryme fits
Canadian payroll runs through your Canadian bank and the CRA. Where Pryme helps is the Nigerian side of a Canadian business: the Pryme Business Account holds naira, US dollars, sterling and euros, and payroll and bulk payouts pay Nigeria-based staff in naira. The Finance agent prepares the run and a person approves it; the app shows any rate and fee before you approve.
Questions people ask
How do I register for a payroll account with the CRA?
Add an RP program account to your business number, most quickly through Business Registration Online with a CRA business account, or by mailing form RC1.
How much CPP and EI does an employer pay in 2026?
Employers match the employee's CPP at 5.95% (up to $4,230.45) and pay EI at 1.4 times the employee premium, up to $1,572.30 per employee.
When do I remit source deductions as a new employer?
New employers are generally quarterly remitters if monthly withholding is under $1,000 with perfect compliance; otherwise most remit by the 15th of the month after payday.
What is the penalty for late payroll remittance in Canada?
3% if 1 to 3 days late, 5% for 4 to 5 days, 7% for 6 to 7 days and 10% after 7 days or if nothing is sent, plus interest.
Sources
- CRA: Due dates for remitting source deductions (modified 11 Jun 2026) · accessed Oct 2026
- CRA: CPP contribution rates, maximums and exemptions (modified 31 Oct 2025) · accessed Oct 2026
- CRA: EI premium rates and maximums (modified 16 Sep 2025) · accessed Oct 2026
- CRA: Register as a resident with a Canadian business (modified 19 Oct 2026) · accessed Oct 2026
- Advisor.ca: CRA announces CPP maximum pensionable earnings for 2026 (31 Oct 2025) · accessed Oct 2026
- WSIB: Do you need to register with us? (updated 30 Jul 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.