There are two main pieces of federal Canadian payroll legislation
—the Canada Pension Plan (CPP) Act and the Employment Insurance (EI) Act.EI and the CPP in a nutshell
EI provides temporary financial assistance for those who are currently unemployed. There is a diverse range of reasons for joblessness that are covered by the legislation, including upgrading skills, illness, pregnancy and caring for a new child. Meanwhile, the CPP protects contributors and their families in the event of loss of income caused by retirement, disability or death. Both EI and the CPP are jointly administered by the Canada Revenue Agency and Human Resources and Skills Development Canada.
All employers are required to deduct funds from workers' paychecks, then remit the deducted amounts to the Canada Revenue Agency on behalf of their employees. Employed individuals are also expected to contribute their share of EI and CPP premiums.Keeping up with Canadian payroll compliance changes
In December of last year, the Canadian Taxpayers Federation announced Canadian payroll tax updates that were unpopular among many of the country's citizens. Specifically, a payroll tax increase of a combined $306 for workers and employers was introduced on January 1 with the aim of benefiting EI and the CPP.
Last year, the Canadian Payroll Association (CPA) released Pay Statement Guidelines
as a reference for payroll practitioners working to meet the legislative requirements related to pay statements.
"A challenge for many payroll professionals is having their employers understand that payroll is a profession based on legislative compliance with 191 provincial and federal regulatory requirements," the association wrote. The CPA also cited statistics that indicated more than 30 percent of surveyed non-unionized employees were unable to determine basic information regarding their hours worked and rates of pay.
Although the changes are federally mandated, citizens in some provinces are affected differently than others. For instance, health taxes in British Columbia and Ontario aren't indexed to inflation. Consequently, B.C.'s Medical Services Premium health tax rose by 6.4 percent for couples and 5.8 percent for single individuals and those with children, according to Tax News