Canadian payroll covers gross pay, required deductions, employee payments, CRA remittances and payroll records. If you need to know how to run payroll in Canada for the first time, the calculation is only one part of the process. Each pay run depends on correct business, employee and tax information.

Your first payroll requires the most setup. Confirm your business details, collect employee tax forms, document employment terms and set a pay schedule. From there, each payroll follows the same sequence: calculate gross pay, apply deductions, review the payroll register, pay employees, record the pay run, remit what’s owed to the CRA and keep the records.

This guide follows that sequence from setup through record retention. Provincial and territorial employment standards add requirements based on where employees work. This guide covers payroll outside Quebec, which runs its own pension, parental insurance and income tax programs.

What do employers need to run payroll in Canada?

To run payroll in Canada, employers need a CRA payroll account, complete employee information, federal and provincial or territorial TD1 forms, documented pay terms, a payroll calendar and a process for approvals, payments, remittances and records. Employers also need to confirm worker status and province of employment before payroll starts.

Start with worker status. Employees and self-employed workers follow different income tax, Canada Pension Plan (CPP) and Employment Insurance (EI) rules. A contract label doesn’t decide the relationship. The CRA looks at the facts of the work relationship as a whole.

Next, confirm your business number and CRA payroll program account. Open it before your first remittance is due, the CRA sets out how to open or update a payroll account.

For each employee, collect:

• Legal name, address, Social Insurance Number (SIN), date of birth and hire date.
• Pay rate and pay frequency.
• Federal and provincial or territorial TD1 forms.
• Regular hours, overtime terms, vacation, statutory holiday treatment, benefits, bonuses, commissions and authorized deductions.

You also need the employee’s province of employment. It determines which payroll deductions apply and doesn’t always match their home province. The CRA’s province of employment rules explain how that decision works.

Then set your payroll calendar with pay periods, pay dates, approval cut-offs, bank holidays and remittance deadlines.

If you switch payroll systems mid-year, transfer complete year-to-date payroll history for every employee paid that calendar year. Those totals feed future pay runs and year-end forms.

How do you run payroll in Canada in 10 steps?

To run payroll in Canada, confirm worker and tax setup, set the pay period, calculate gross pay, add taxable benefits, calculate deductions, check net pay against the payroll register, pay employees, then record, remit and save the pay run. Each step feeds the next, so the order matters.

1. Confirm worker status and province of employment

Use the worker status and province of employment from your setup records. Both affect the deductions and payroll rules that apply.

Where the employee lives doesn’t decide the province of employment. Where they report for work does. An employee who lives in Kenora, Ontario, and reports to your Winnipeg office is a Manitoba employee for payroll.

Check both before each pay run. A move, a new office or a switch to remote work can change the answer.

2. Set up the CRA payroll account and company tax profile

Confirm your business number, CRA payroll program account, legal business details and remitter type. Most new employers start as regular remitters. Regular remitters send deductions to the CRA by the 15th of the month after the month employees were paid. The CRA reassigns your remitter type as your average monthly withholding grows

3. Collect employee payroll information

Before each pay run, check what changed since the last one: a new TD1, a raise, a new address, new direct-deposit details or a new benefit election. Update the employee record first, then run payroll. A change entered after approval waits for the next pay run. For new hires, the record needs a Social Insurance Number (SIN) and completed federal and provincial or territorial TD1 forms before the first pay.

The CRA sets these requirements as part of new-employee payroll setup.

Add direct-deposit details, benefit elections and authorized deductions where they apply. Restrict payroll-record access to the people responsible for payroll.

4. Choose a pay schedule and set the payroll calendar

Choose weekly, biweekly, semi-monthly or monthly pay based on your business and the employment standards that apply to each employee.

Set the pay-period dates, payday, internal approval cut-off and direct-deposit cut-off. Add bank holidays now. Banks don’t move them for payday.

5. Calculate gross pay

Gross pay is what an employee earns before deductions. Start with regular wages or salary, then add overtime, commissions, bonuses, vacation pay, statutory holiday pay and other earnings that apply.

6. Check taxable benefits and special payments

Before you calculate deductions, check for taxable benefits, bonuses, commissions and other special payments. Determine which amounts are subject to CPP, EI and income tax, since their tax treatment differs by payment type.

Jordan has no taxable benefits or special payments, so his gross pay stays at $2,000.

7. Calculate deductions and employer contributions

Calculate CPP contributions, EI premiums and federal plus provincial or territorial income tax based on the amounts subject to each deduction. Add other authorized deductions that apply.

Use current CRA figures rather than a percentage from a past pay run. The Payroll Deductions Online Calculator and T4032 Payroll Deductions Tables provide current CPP, EI and income tax figures.

Here’s Jordan’s payroll breakdown from the January 2026 Ontario payroll tables with standard TD1 claims:

8. Calculate net pay and check the payroll register

Net pay is the amount left after employee deductions:

Gross pay − employee deductions = net pay

Review the payroll register before approval. Check gross pay, deductions, employer CPP and EI contributions, employee changes and total cash required.

9. Pay employees and issue pay statements

Approve the pay run once the register matches your source records. Pay employees by direct deposit, cheque or another permitted method, with bank lead times and holidays built into your schedule.

Pay-statement rules come from the employment standards that apply to each employee. For example, Ontario requires a wage statement on or before payday with details such as the pay period, gross wages, deductions and net wages.

Jordan’s pay statement shows $2,000 in gross wages, $397.84 in itemized deductions and $1,602.16 in net pay.

10. Record payroll, remit deductions and save your records

After payday, record wages, employer payroll costs and payroll liabilities in your books. Match employee payments to the payroll register and confirm the amount owed to the CRA. Remit that amount under your CRA due date.

Save the payroll register, pay statements, payment records and remittance confirmation with the pay run.

How do you calculate payroll in Canada?

To calculate payroll in Canada, start with gross pay, subtract CPP contributions, EI premiums, income tax deductions and other employee deductions to reach net pay, then add the employer’s CPP, EI and other employer costs to find the total payroll cost. Use current CRA payroll tables or the Payroll Deductions Online Calculator for statutory deductions.

As a reminder, Jordan’s $2,000 gross pay has $397.84 in total employee deductions for CPP, EI, federal and Ontario income tax.

The business then calculates the full cost of the pay run:

Gross pay+ employer contributions + other employer costs = total payroll cost

Jordan takes home $1,602.16. The business spends $2,156.63. Other employer costs, such as workers’ compensation premiums, come on top of that.

What happens after employees are paid?

After payday, employers need to settle what’s still open: remit payroll amounts, reconcile the pay run, correct errors, handle departures, complete year-end reports and retain payroll records. 

Remit payroll deductions and employer contributions

Pay the CRA under the remitter type assigned to your payroll account. Your CRA remitter type sets the remittance schedule and due dates, not your employee pay frequency.

Reconcile the pay run

Match the approved payroll register to employee payments, bank withdrawals, payroll expenses and payroll liabilities.

Correct errors at the source

Fix the original payroll record first, then update any affected pay, remittance or accounting records. A payroll correction and a CRA remittance correction aren’t the same task, so the fix depends on where the error occurred.

Handle employee departures

When an employee has an interruption of earnings, such as a layoff, resignation or leave, the employer issues a Record of Employment (ROE). Filed electronically, it’s due within five calendar days after the end of the pay period in which the interruption happened. Service Canada sets ROE deadlines based on pay-period type and submission method.

Complete year-end reports

Reconcile annual payroll totals before you prepare T4 slips, the T4 Summary and other required returns. T4 returns are due by the last day of February after the calendar year they cover.

Use Wave’s Canadian payroll year-end checklist to review payroll records, taxable benefits, employee information and year-end tasks.

Keep payroll records

Store payroll reports, pay statements, remittance confirmations and related records together. The CRA requires most records to stay on file for six years from the end of the last tax year they relate to.

How often should a small business run payroll?

A small business should run payroll on a fixed schedule that meets the employment standards for each employee and fits its cash flow, time records and payroll cut-offs. Common Canadian payroll schedules are weekly, biweekly, semi-monthly and monthly.

Employment standards set when employees must receive wages. In Ontario, for example, employers must establish a recurring pay period and payday and pay wages no later than that payday.

Our example business pays Jordan biweekly, so his 80 regular hours fall within one two-week pay period.

Your pay schedule doesn’t change when you remit to the CRA. A business paying weekly and one paying monthly can have the same remittance due date.

Once you choose a schedule, keep it consistent. Before a change, check employment standards, employment agreements, deduction timing and direct-deposit cut-offs, then give employees the new dates in advance.

Should you use manual payroll, payroll software or a payroll professional?

Use manual payroll for a very small, straightforward payroll with enough internal time to handle calculations, deadlines and records. Use payroll software when you want to reduce repeat payroll work and keep employee data, calculations and records in one system. Use a payroll professional when your payroll includes multiple provinces, complex benefits, union rules or frequent corrections.

Manual payroll requires someone to track tax changes, deadlines and payroll records. Payroll software reuses employee data, calculates repeat payroll items, creates pay statements and keeps records together. A payroll professional adds another layer of review when payroll rules or compensation structures get more complex. Whichever method you choose, your business still owns the source information, approvals, records and payroll obligations.

Wave Payroll calculates deductions, pays employees by direct deposit and records each pay run in your Wave books. It’s available in every province and territory except Quebec.

How do you run payroll with Wave in Canada?

To run payroll with Wave in Canada, complete your payroll profile, add employees and contractors, enter prior payroll history and turn on direct deposit. From there, Wave calculates each pay run and you review it before approval.

Set up your payroll profile

Add your company signatory, business details, employees and contractors, pay schedule, payroll bank account and tax profile. If you move to Wave mid-year, enter year-to-date wage and tax history for every employee paid that calendar year. Wave’s Canadian payroll setup steps walk through each part of that process.

Review and approve each pay run

The Run Payroll page shows payroll dates, total payroll cost, notices, direct-deposit status, tax-payment status and open tasks.

Before approval, review employee changes, resolve notices and confirm the pay-run details.

Confirm direct deposit, tax and ROE authorizations

Wave’s Canadian tax service starts after direct deposit becomes active. Without direct-deposit authorization, Wave doesn’t remit payroll taxes to the CRA on your behalf.

Give Wave ROE authorization and it submits Records of Employment for you as well; without it, submit required ROEs outside Wave. Wave’s Canadian payroll tax services guidance explains the authorization and service requirements.

Wave Payroll isn’t available for businesses or employees in Quebec

What Canadian payroll mistakes should small businesses avoid?

Small businesses should avoid worker misclassification, the wrong province of employment, incomplete TD1 forms, missed pay items, outdated deduction figures, skipped payroll reviews, missing year-to-date history and unclear provider responsibilities. These errors affect employee pay, CRA obligations, year-end records or the books.

• Misclassifying an employee as a contractor: Worker status changes CPP, EI, income tax deductions and year-end reporting
• Using the wrong province of employment: An employee’s home address doesn’t automatically set payroll deductions
• Using incomplete TD1 information: Missing tax details change payroll deductions
• Leaving out pay items: Overtime, vacation pay, statutory holiday pay, bonuses and taxable benefits require the correct treatment
• Using outdated deduction figures: Use current CRA sources for each pay run
• Skipping the payroll-register review: Check pay, deductions, employer costs and funding before approval
• Dropping year-to-date history after a system switch: Prior totals need to carry into future pay runs and year-end forms
• Assuming software completed an obligation: Confirm direct deposit, CRA remittances and tax-form status

How do you keep Canadian payroll on track?

Keep Canadian payroll on track with one repeatable process: set up employee and tax information, calculate gross pay, apply deductions, review payroll, pay employees, remit amounts owed, reconcile the results and retain the records behind each pay run.

Use current CRA guidance and the employment standards that apply to each employee when rates, deadlines or payroll rules change. Each pay run then matches across the register, the bank and your books.

Wave Payroll* records each pay run in your Wave books, so payroll costs and your accounts start from the same numbers

Canadian Payroll FAQs

What happens if an employee hasn’t provided a SIN?

Ask for the employee’s Social Insurance Number (SIN) before payroll starts. If you still don’t have it when you prepare the T4, enter nine zeros in the SIN field and keep a record of your efforts to obtain the number. The CRA explains how to complete the T4 when a SIN is missing. 

How does an employee request more income tax off each paycheque?

An employee requests an additional income tax deduction through their TD1 form. Once you receive the updated form, add the requested amount to the income tax deduction from each payment.

What happens to payroll if the business changes legal structure?

A change in legal structure could require a new business number and payroll program account. For example, incorporation creates a separate legal entity from a sole proprietorship. Confirm the required payroll-account changes with the CRA before the new structure takes effect.

Can a business have more than one CRA payroll account?

Yes. A business can run separate payroll program accounts under one business number, for example one per division or location.

Each account receives its own four-digit reference number, such as RP0001 and RP0002. The CRA explains how payroll account numbers work.

When do CPP deductions start or stop because of an employee’s age?

Start CPP deductions with the first pay dated in the month after an employee turns 18. Stop after the last pay dated in the month the employee turns 70. Separate rules apply to employees age 65 to 69 who submit Form CPT30. The CRA sets out the start and stop rules for CPP deductions. 

What should you do if you find a T4 error after you file?

It depends on the error. To fix an amount on a filed slip, file an amended slip. To remove a slip filed in error, file a cancelled slip. To add a slip you missed, file it as an additional original. Only change the slips that were wrong. The CRA explains how to amend, cancel or add T4 slips.

When are payroll remittances due in Canada?

It depends on your remitter type. Regular remitters, which includes most new employers, remit by the 15th of the month after the month employees were paid. Larger employers remit more often. The CRA sets your type and tells you when it changes.

Do you need a CRA payroll account for one employee?

Yes. Any business that pays an employee needs a payroll program account, and it has to be open before the first remittance is due.