Canada Issues Changes for Source Deduction Amounts for 2017

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By Jared Mondschein

Nov. 16 — The 2017 formulas for calculating payroll withholding and contribution amounts were released by the Canadian Revenue Agency said Nov. 16.

Pending legislative approval, the changes take effect Jan. 1, 2017.

The 105th edition of guide T4127 provides the latest formulas to determine federal, provincial and territorial income and social taxes. The guide also clarifies how to calculate payroll deductions for special cases such as commission, pension income, bonuses and retroactive pay increases.

In the latest iteration of T4127, the federal income tax thresholds effective Jan. 1, 2017, have been adjusted to reflect changes based on the 2017 consumer price index factor of 1.4 percent. It also includes the 2017 rates for Canada Pension Plan and Quebec Pension Plan contributions as well as employment insurance premium deductions.

The maximum Canada Pension Plan pensionable earnings effective Jan. 1, 2017, are $55,300 ($41,141), and the basic exemption for the year is $3,500 ($2,603). The contribution rate for employees is 4.95 percent.

The Quebec Pension Plan contribution rate for employees, which is the same rate for employers is 5.4 percent effective Jan. 1, 2017. The maximum an employee can contribute for the year is $2,797.20 ($2,081).

The maximum annual insurable earnings in 2017 for employment insurance are $51,300 ($38,166) while the premium rate is 1.63 percent, for a maximum annual premium of $836.19 ($622). In Quebec, the employment insurance premium rate for 2017 is 1.27 percent and the maximum annual premium is $651.51 ($484).

Provincial changes for 2017 only consist of indexing of taxes. The income tax thresholds in Alberta, British Columbia, Manitoba, New Brunswick, Nunavut, Ontario, Saskatchewan and the Yukon Territory were all indexed at rates determined by each provincial government.

Furthermore, Ontario’s provincial surtax and provincial tax reduction were both indexed. British Columbia’s provincial tax reduction was also indexed.

There were no 2017 changes for payroll withholding and contribution amounts for Nova Scotia, Prince Edward Island and Quebec.

To contact the reporter on this story: Jared Mondschein at jmondschein@bna.comTo contact the editor on this story: Michael Baer at mbaer@bna.com

For More Information

The payroll deduction formulas for 2017 are available at http://www.cra-arc.gc.ca/E/pub/tg/t4127-jan/t4127-jan-17e.html. More information on payroll issues in Canada is available in the Canada country primer.

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