Payroll Tax Calculator Ontario

Ontario payroll taxes are mandatory deductions from employee wages that fund government programs. This calculator helps you estimate the payroll taxes you'll owe based on your employees' earnings.

How Ontario Payroll Taxes Work

Ontario payroll taxes are calculated on each employee's gross wages and include several components. The main types of payroll taxes in Ontario are:

Employment Insurance (EI) premiums
Canada Pension Plan (CPP) contributions
Income Tax deductions
Provincial Sales Tax (PST) remittances (if applicable)

The employer is responsible for withholding these taxes from employee paychecks and remitting them to the government. Failure to pay these taxes can result in penalties and legal consequences.

Key Components of Payroll Taxes

Employment Insurance (EI)

EI premiums fund unemployment benefits for workers. The current rate is 1.63% of insurable earnings, with a maximum contribution base of $58,100 in 2023.

Canada Pension Plan (CPP)

CPP provides retirement income. Employers contribute 5.1% of insurable earnings, with a maximum contribution base of $63,500 in 2023.

Income Tax

Federal and provincial income taxes are withheld from paychecks. The federal rate is 15% in 2023, while Ontario's provincial rate is 5.05%.

Provincial Sales Tax (PST)

Some Ontario employers must remit PST on certain goods and services. The rate varies by product category.

Calculation Method

The total payroll tax is calculated by summing up all the individual tax components. The formula is:

Total Payroll Tax = EI Premiums + CPP Contributions + Federal Income Tax + Provincial Income Tax + PST (if applicable)

Where:

EI Premiums = EI Rate × Insurable Earnings
CPP Contributions = CPP Rate × Insurable Earnings
Federal Income Tax = Federal Tax Rate × Taxable Earnings
Provincial Income Tax = Provincial Tax Rate × Taxable Earnings
PST = PST Rate × Taxable Sales (if applicable)

Insurable earnings are typically the first $58,100 of an employee's earnings, while taxable earnings are the portion of wages subject to income tax.

Worked Example

Let's calculate the payroll taxes for an employee earning $60,000 per year in Ontario.

Component	Calculation	Amount
EI Premiums	1.63% × $58,100	$947.43
CPP Contributions	5.1% × $58,100	$2,963.10
Federal Income Tax	15% × $58,100	$8,715.00
Provincial Income Tax	5.05% × $58,100	$2,963.55
Total		$15,539.11

For this employee, the total payroll taxes would be approximately $15,539.11 per year.

Frequently Asked Questions

What are the current payroll tax rates in Ontario?: The current rates are 1.63% for EI, 5.1% for CPP, 15% federal income tax, and 5.05% provincial income tax.
When are payroll taxes due?: Payroll taxes are typically due on a monthly or quarterly basis, depending on your payroll schedule.
What happens if I don't pay my payroll taxes?: Failure to pay payroll taxes can result in penalties, interest charges, and potential legal action.
Are there any exemptions for payroll taxes?: Certain industries and types of employment may have specific exemptions or reduced tax rates.
How can I reduce my payroll tax burden?: You can reduce payroll taxes by optimizing your pay structure, taking advantage of tax credits, and managing your payroll efficiently.