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Payroll Deductions 2018 Ontario Calculator

Reviewed by Calculator Editorial Team

Payroll deductions are amounts withheld from an employee's paycheck to cover various mandatory and voluntary contributions. In Ontario, these deductions include Employment Insurance (EI), Canada Pension Plan (CPP), and income tax. This calculator helps you determine the total payroll deductions for 2018 based on your employee's gross salary.

What are payroll deductions?

Payroll deductions are amounts subtracted from an employee's gross pay to cover various obligations. These can be mandatory (like taxes and insurance) or voluntary (like retirement contributions). Common payroll deductions include:

  • Income tax (federal and provincial)
  • Canada Pension Plan (CPP)
  • Employment Insurance (EI)
  • Union dues
  • Health benefits
  • Retirement contributions

Understanding these deductions helps employers manage payroll accurately and ensures employees receive the correct net pay.

Ontario payroll deductions in 2018

In 2018, Ontario payroll deductions were based on specific rates and thresholds set by the government. Key deductions included:

Employment Insurance (EI)

The EI premium rate for 2018 was 1.63% of the employee's insurable earnings, up to the maximum insurable earnings limit of $55,900.

Canada Pension Plan (CPP)

The CPP contribution rate was 5.95% of the employee's pensionable earnings, with a maximum pensionable earnings limit of $57,400.

Income Tax

Ontario's income tax rates for 2018 ranged from 5.05% to 13.16%, depending on the taxable income. The federal tax rates were also applied.

Note: These rates are specific to 2018 and may have changed in subsequent years. Always verify current rates with official government sources.

How to calculate payroll deductions

Calculating payroll deductions involves several steps. Here's a simplified process:

  1. Determine the employee's gross salary
  2. Calculate EI premiums (1.63% of insurable earnings)
  3. Calculate CPP contributions (5.95% of pensionable earnings)
  4. Calculate income tax (federal and provincial rates)
  5. Sum all deductions to get the total payroll deductions

Formula

Total Deductions = EI Premium + CPP Contribution + Income Tax EI Premium = Gross Salary × 1.63% CPP Contribution = Gross Salary × 5.95% Income Tax = (Gross Salary - Deductions) × Tax Rate

The exact tax rate depends on the employee's tax bracket, which varies based on their taxable income.

Example calculation

Let's calculate the payroll deductions for an employee with a gross salary of $50,000 in 2018.

Step 1: Calculate EI Premium

EI Premium = $50,000 × 1.63% = $815

Step 2: Calculate CPP Contribution

CPP Contribution = $50,000 × 5.95% = $2,975

Step 3: Calculate Income Tax

Assuming a taxable income of $45,000 (after deductions), the Ontario tax rate for this bracket was 13.16%.

Income Tax = $45,000 × 13.16% = $5,922

Total Deductions

Total Deductions = $815 (EI) + $2,975 (CPP) + $5,922 (Income Tax) = $9,712

This example uses simplified values. Actual calculations may vary based on specific tax brackets and deductions.

Frequently Asked Questions

What are the main payroll deductions in Ontario?

The main payroll deductions in Ontario include Employment Insurance (EI), Canada Pension Plan (CPP), and income tax (federal and provincial). Other common deductions are union dues, health benefits, and retirement contributions.

How do I calculate EI premiums?

EI premiums are calculated at 1.63% of the employee's insurable earnings, up to the maximum insurable earnings limit of $55,900 in 2018.

What is the CPP contribution rate in 2018?

The CPP contribution rate in 2018 was 5.95% of the employee's pensionable earnings, with a maximum pensionable earnings limit of $57,400.

How are income taxes calculated for payroll?

Income taxes are calculated based on the employee's taxable income and the applicable federal and provincial tax rates. The exact rate depends on the employee's tax bracket.

Can I use this calculator for other years?

This calculator is specifically designed for 2018 Ontario payroll deductions. Rates and thresholds may have changed in other years, so always verify current rates with official government sources.