How Paycheq estimates tax

Paycheq estimates the federal and provincial tax, CPP and EI on each cheque with the Canada Revenue Agency's payroll formulas, the same ones employers' payroll systems use.

What it uses

  • CRA's T4127 Payroll Deductions Formulas, for your province of employment.

  • The tables in effect on your payday. Rates and amounts change each January 1, and some change again on July 1. Paycheq switches on the right date.

  • Your settings: Province for tax, Pay frequency, your TD1 claims, and anything under Each cheque, such as RRSP, union dues, extra tax withheld, taxable benefits and other deductions.

  • Your year to date, so CPP and EI stop at the yearly maximum.

Seeing the working

On the Pay tab, open a pay period and scroll to How this was worked out. It shows each step of the formula, and which tables and rules were used.

Suggested image: the How this was worked out card.

While a pay period is still going

Deductions use the rate for a cheque of about your recent average, so they don't jump each time you add a shift. Once the period ends, they're worked out on the real total.

Why it can differ from your cheque

Some employers use CRA's tables instead of the formulas, round in a different order, or take deductions Paycheq doesn't know about. See "Why your estimate can differ from your cheque."

Good to know

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