Payroll Tax Calculator Ontario 2016

Calculate your Ontario payroll taxes for 2016 with this professional calculator. Understand the deductions for Employment Insurance (EI), Canada Pension Plan (CPP), and federal payroll taxes with transparent formulas and assumptions.

How Payroll Taxes Work in Ontario 2016

In 2016, Ontario employers were required to deduct several payroll taxes from employee wages before distributing the net pay. These taxes included:

Employment Insurance (EI) premiums
Canada Pension Plan (CPP) contributions
Federal payroll deductions

Key Assumptions for 2016

EI premium rate: 1.63%
CPP employer contribution rate: 2.78%
Federal payroll deductions: 1.98% (combined CPP + EI)
Maximum insurable earnings: $55,900

The total payroll tax rate for employers in Ontario in 2016 was 5.39%. This included both the employer's share of CPP and EI premiums, plus the federal payroll deductions.

Taxable vs. Non-Taxable Income

Not all wages were subject to payroll taxes. The following were typically excluded:

Statutory holiday pay
Certain bonuses and commissions
Tips and gratuities
Certain severance pay

Payroll Tax Formula

The total payroll tax for an employee in Ontario for 2016 can be calculated using this formula:

Total Payroll Tax = (Gross Wages × EI Rate) + (Gross Wages × CPP Rate) + (Gross Wages × Federal Rate)

Where:

EI Rate = 1.63%
CPP Rate = 2.78%
Federal Rate = 1.98%

For example, with $50,000 in gross wages:

Total Payroll Tax = ($50,000 × 1.63%) + ($50,000 × 2.78%) + ($50,000 × 1.98%)

= $815 + $1,390 + $990 = $3,295

Net Pay Calculation

The net pay after deductions would be:

Net Pay = Gross Wages - Total Payroll Tax

= $50,000 - $3,295 = $46,705

Worked Example

Let's calculate the payroll taxes for an employee earning $45,000 in gross wages in 2016.

Component	Rate	Calculation	Amount
EI Premiums	1.63%	$45,000 × 1.63%	$728.50
CPP Contributions	2.78%	$45,000 × 2.78%	$1,251.00
Federal Payroll Deductions	1.98%	$45,000 × 1.98%	$891.00
Total Payroll Tax			$2,870.50
Net Pay			$42,129.50

This means the employer would deduct $2,870.50 from the employee's $45,000 gross wages, resulting in a net pay of $42,129.50.

Frequently Asked Questions

What was the total payroll tax rate in Ontario for 2016?: The total payroll tax rate for employers in Ontario in 2016 was 5.39%, which included EI, CPP, and federal payroll deductions.
Were there any changes to payroll taxes in Ontario in 2016?: Yes, the EI premium rate increased from 1.4% to 1.63% in 2016, while the CPP employer contribution rate remained at 2.78%.
How were payroll taxes calculated for employees earning over $55,900?: For earnings above the maximum insurable earnings of $55,900, the payroll taxes were calculated based on the maximum insurable earnings only.
Were there any exemptions from payroll taxes in 2016?: Yes, certain types of wages such as statutory holiday pay, tips, and gratuities were typically exempt from payroll taxes.
How did payroll taxes affect the employer's bottom line?: Payroll taxes reduced the employer's net profit by the amount deducted from employee wages, which was 5.39% of gross wages in 2016.