2021 Payroll Tax Update Canada

Revision History

Original: Nov. 24, 2020

2021 Payroll Tax Update Canada

The following information has been summarized based on the Canada Revenue Agency publication t4127-01021e.pdf and the Revenue Quebec publication tp-1015.f-v(2021-01).pdf
This information can be obtained, in detail, at the following links:

• https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas/t4127-jan.html
• https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4127-jan/t4127-01-21e.pdf
• https://www.canada.ca/en/services/taxes.html
• https://www.revenuquebec.ca/documents/en/formulaires/tp/TP-1015.F-V%282021-01%29.pdf
• https://www.revenuquebec.ca/en/online-services/forms-and-publications/current-details/tp-1015.f-v/

Disclaimer

This guide reflects some income tax changes recently announced which, if enacted as proposed, would be effective January 1, 2021. At the time of publishing, these proposed changes were not law. We recommend that you use the Payroll Deductions Online Calculator (PDOC), the publication T4032 Payroll Deductions Tables, or the publication T4008 Payroll Deductions Supplementary Tables, and the formulas in this guide for withholding, starting with your first payroll in 2021.

Federal Brackets

Please see here for information to update brackets for the new tax year.
Please note that that there is no change for Quebec, Nova Scotia or Outside Canada.

 

Bracket	Type	Description	2019 Values
CPP LIMITS	Withholding	Exemption, rate and maximum deduction	Amount Over	Tax %		Limit
			3,500.00	5.45		3,166.45
CPP W/H	Withholding	Exemption, rate and maximum deduction	Amount Over	Tax %		Limit
			3,500.00	5.45		3,166.45
CPP W/H BONUS	Withholding	Exemption, rate and maximum deduction	Amount Over	Tax %		Limit
			0.00	5.45		3,166.45
CPP/QPP MAX	Limit + Tax%	Pensionable earnings maximum		Tax %		Limit
				0.00		61,600.00
EI LIMITS	Withholding	Rate and maximum deduction		Tax %		Limit
				1.58		889.54
EI MAX	Limit + Tax%	Insurable earnings maximum		Tax %		Limit
				0.00		56,300.00
EI MAX Q	Limit + Tax%	Insurable earnings maximum		Tax %		Limit
				0.00		56,300.00
EI W/H	Withholding	Rate and maximum deduction		Tax %		Limit
				1.58		889.54
EI W/H Q	Withholding	Rate and maximum deduction		Tax %		Limit
				1.18		664.34
FED TAX	Withholding	Withholding brackets and rates	Amount Over	Tax %		Tax Amount
			0.00	15		0.00
			49,020.00	20.5		7,353.10
			98,040.00	26		17,402.40
			151,978.00	29		31,425.62
			216,511.00	33		50,140.63
MAX EMPLOYMENT CRED	Limit + Tax	Credit limit		Tax %		Limit
				0.00		1,245.00

Provincial Brackets

Please see here for information on how to update brackets for the new tax year.

 

 

Bracket	Type	Description		2019 Values
AB TAX	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	10	0.00
			131,220.00	12	13,122.40
			157,464.00	13	16,271.32
			209,952.00	14	23,094.28
			314,928.00	15	37,791.20
BC TAX	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	5.06	0.00
			42,184.00	7.7	2,134.17
			84,369.00	10.5	5,382.75
			96,866.00	12.29	6,694.83
			117,623.00	14.7	9,245.58
			159,483.00	16.8	15,399.14
			222,420.00	20.5	25,973.10
BC TAX RED	W/H Deduction	Reduction brackets, rates and limit	Amount Over	Tax %	Tax Amount	Limit
			0.00	0	0.00	476.00
			21,185.00	3.56	0.00	476.00
			34,556.00	0	476.00	476.00
MB TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	10.8	0.00
			33,723.00	12.75	3,641.68
			72,885.00	17.40	8,634.99
NB TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	9.68	0.00
			43,835.00	14.82	4,243.35
			87,671.00	16.52	10,739.25
			142,534.00	17.84	19,803.07
			162,383.00	20.30	23,343.75
NL TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	8.7	0.00
			38,081.00	14.5	3,312.75
			76,161.00	15.8	8,834.44
			135,973.00	17.3	18,285.33
			190,363.00	18.3	27,694.43
NS TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	8.79	0.00
			29,590.00	14.95	2,600.71
			59,180.00	16.67	7,024.31
			93,000.00	17.5	12,662.00
			150,000.00	21	22,637.00
NT TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	5.9	0.00
			44,396.00	8.6	2,619.06
			88,796.00	12.2	6,438.11
			144,362.00	14.05	13,216.86
NT PTAX	Limit + Tax%	NT - Payroll Tax	Tax %		Limit
			2
NU TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	4	0.00
			46,740.00	7	1,869.80
			93,480.00	9	5,141.20
			151,978.00	11.5	10,406.47
ON BASIC RED	Tax Credit	Reduction Amounts	Amount	Per Allowance
			251.00	Blank
			464.00	Selected
ON SURTAX	W/H Deduction	Surtax Rates	Amount Over	Tax %	Tax Amount
			4,874.00	20	0.00
			6,237.00	56	270.40
ON TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	5.05	0.00
			45,142.00	9.15	2,279.49
			90,287.00	11.16	6,410.03
			150,000.00	12.16	13,074.00
			220,000.00	13.16	21,586.00
PEI TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	9.8	0.00
			31,984.00	13.8	3,134.79
			63,969.00	16.7	7,548.82
QC CNT ER CONT	Limit + Tax%	Rate and maximum earnings	Tax %	Limit
			0.0692	83,500.000
QC LOW RATE	Tax Credit	Total Credits Claimed x Bracket %	Tax %		Per Allowance
			15		Blank
QC RED	Deduction	Maximum income reduction	%		Max. Amount
			6		1,205.00
QC TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	15	0.00
			45,105.00	20	6,766.00
			90,200.00	24	15,785.20
			109,755.00	25.75	20,478.91
QPIP EE	Withholding	Rate and limit	Tax %		Limit
			0.494		412.49
QPIP ER	Withholding	Rate and limit	Tax %		Limit
			0.692		577.82
QPIP MAX	Limit + Tax %	Maximum earnings	Tax %		Limit
			0		83,500.00
QPP W/H	Withholding	Exemption, rate and maximum deduction	Amount Over	Tax %	Limit
			3,500.00	5.90	3,247.90
QPP W/H BONUS	Withholding	Exemption, rate and maximum deduction	Amount Over	Tax %	Limit
			0.00	5.90	3,247.90
SK LOW RATE	Tax Credit	Total Credits Claimed x Bracket %	Tax %		Per Allowance
			10.5		Blank
SK TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	10.5	0.00
			45,677.00	12.5	4,795.63
			130,506.00	14.5	15,399.37
YT TAX W/H	Withholding	Withholding brackets and rates	Amount Over	Tax %	Tax Amount
			0.00	6.4	0.00
			49,020.00	9	3,136.80
			98,040.00	10.9	7,549.36
			151,978.00	12.8	13,428.18
			500,000.00	15	57,975.00
YT LOW RATE	Tax Credit	Reduction amounts	Tax %		Per Allowance
			6.4		blank

Base Amount Changes

None applicable to this tax year.

Tax Form Class Code Changes

For the tax year 2020, in addition to reporting employment income in Box 14 or Code 71, use new other information codes when reporting employment income and retroactive payments in the following periods:

• Code 57: Employment income – March 15 to May 9
• Code 58: Employment income – May 10 to July 4
• Code 59: Employment income – July 5 to August 29
• Code 60: Employment income – August 30 to September 26

The Tax Form Class Codes are (please refer to the eLearning Webinar from November 12, 2020

13-57

13-58

13-59

13-60

Changes to Payroll Objects

Support cases have been created for each client who are currently live on 2016 and prior versions for the New 2020 T4 Changes

These will be delivered to our clients as soon as available prior to December 10, 2020

Method Step Table Changes

None applicable to this tax year.

Calculation Method Changes Required

None applicable to this tax year.

TD1 Amounts

Due to the proposed changes to the Federal basic personal amount (BPAF), the existing Nova Scotia legislation to the Basic Personal Amount (BPANS) and the legislation to the Yukon Basic Personal Amount (BPAYT), the Claim Code charts cannot be produced with ranges, as was previously done. Accordingly, the Federal, the Nova Scotia and Yukon Claim Code Charts will not be produced as the BPAF, BPANS and BPAYT will be unique to each employee’s annual income.Please see here for information on how to update TD1 amounts for the new tax year.

Federal

Notice to the reader

Federal Basic Personal Amount

The federal Basic Personal Amount (BPAF) has been changed from $12,421.00 to the following formula. The new factors BPAF and NI have been created and added to the Chapter 4 — Glossary.

Where NI* ≤  $151,978, BPAF = $13,808

Where $151,978 < NI* < $216,511, BPAF**= $13,808 - (NI* - $151,978) × ($1,387 / $64,533)***

Where NI* ≥ $216,511, BPAF = $12,421

* Variable NI represents Net Income = A + HD

** If the BPAF has three or more digits after the decimal point, increase the second digit after the decimal point by one if the third digit is five or more, and drop the third digit. If the third digit after the decimal point is less than five, drop the third digit

*** Note that there is no rounding on this division

For 2021, employers can use a BPAF of $13,808 for all employees, while payroll systems and procedures are updated to fully implement the proposed legislation.

If the employer uses a BPAF of $13,808 for its employees, employees with net income above $151,978 can ask for additional tax to be deducted, by completing the form TD1.

Type	Amount

see Notice Above

Provinces and Territories:

AB | BC | MB | NB | NL | NT | NS | NU | ON | PE | QC | SK | YT

 

Alberta

Type	Amount
Basic personal amount	19,369.00
Spouse or common-law partner amount	Up to 19,369.00

British Columbia

Type	Amount
Basic personal amount	11,070.00
Spouse or common-law partner amount	Up to 11,070.00

Manitoba

Type	Amount
Basic personal amount	9,936.00
Spouse or common-law partner amount	Up to 9,936.00

New Brunswick

Type	Amount
Basic personal amount	10,564.00
Spouse or common-law partner amount	Up to 10,564.00

Newfoundland and Labrador

Type	Amount
Basic personal amount	9,536.00
Spouse or common-law partner amount	Up to 9,536.00

Northwest Territories

Type	Amount
Basic personal amount	15,243.00
Spouse or common-law partner amount	Up to 15,243.00

Nova Scotia

Type	Amount
Basic personal amount	BPANS
Spouse or common-law partner amount	NA

The Nova Scotia Claim Code chart income range is $1,600 between all claim codes once the BPANS has been calculated. For example, if Nova Scotia’s BPANS is $11,481 for a particular employee, then the claim code 2 range would be $11,481 – $13,081 and so forth up to claim code 10

Nunavut

Type	Amount
Basic personal amount	16,467.00
Spouse or common-law partner amount	Up to 16,467.00

Ontario

Type	Amount
Basic personal amount	10,880.00
Spouse or common-law partner amount	Up to 10,880.00

Prince Edward Island

Type	Amount
Basic personal amount	10,500.00
Spouse or common-law partner amount	(Information not yet available)

Quebec

Type	Amount
Basic personal amount	15,278.00
Spouse or common-law partner amount	Up to 15,278.00
Amount for other dependents who are 18 or older	4,403.00
Amount for a child under 18 enrolled in post-secondary studies	3,021.00
Additional amount for person living alone (single-parent family)	2,225.00
Amount for a severe and prolonged impairment in mental or physical functions	3,492.00
Amount for a person living alone	1,802.00
Age amount	3,308.00
Amount for retirement income	2,939.00

Saskatchewan

Type	Amount
Basic personal amount	16,225.00
Spouse or common-law partner amount	(Information not yet available)

Yukon

The Yukon Basic Personal Amount (BPAYT) has been changed from $12,421.00 to the following formula. The new factor BPAYT has been created and added to the Chapter 4 — Glossary. Effective January 1, 2021 the calculation is:

Where NI* ≤  $151,978, BPAYT = $13,808

Where $151,978< NI* < $216,511, BPAYT**= $13,808 - (NI* - $151,978) × ($1,387 / $64,533)***

Where NI* ≥ $216,511, BPAYT = $12,421

* Variable NI represents Net Income = A + HD

** If the BPAYT has three or more digits after the decimal point, increase the second digit after the decimal point by one if the third digit is five or more, and drop the third digit. If the third digit after the decimal point is less than five, drop the third digit.

*** Note that there is no rounding on this division.

For 2021, employers can use a BPAYT of $13,808 for all employees, while payroll systems and procedures are updated to fully implement the legislation.

If the employer uses a BPAYT of $13,808 for its employees, employees with net income above $151,978 can ask for additional tax to be deducted, by completing the form TD1YT.

 

Type	Amount
Basic personal amount	Formula
Spouse or common-law partner amount	Please refer to TD1 form for YT

Other Configurations

Please see here for information on other configuration to be updated in preparation for the new tax year.

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Return to Payroll Tax Update in the Configuring Workforce section