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The Canada CPP guide. How the math works.

Canada CPP-EI, explained for employers by the Workzoom payroll team: how the contributions are calculated, the filing deadlines, and the steps to set it up. Then run the numbers in the CPP-EI calculator.

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How the math works

Calculating Canada payroll, step by step.

How to calculate gross pay

For a salaried employee, divide the annual salary by the number of pay periods in the year: 52 for weekly, 26 for bi-weekly, 24 for semi-monthly, 12 for monthly. The table below lists each schedule. For an hourly employee, multiply the hourly rate by the hours worked in the period, then add any overtime, shift premiums, or commissions. The result is gross pay, the figure every statutory deduction is calculated from.

How CPP and CPP2 are calculated

CPP is deducted at 5.95% in 2026 on pensionable earnings between the $3,500 basic exemption and the $74,600 Year's Maximum Pensionable Earnings (YMPE). The employer matches the same rate. CPP2 is a second tier that applies at 4% on earnings between the YMPE and the $85,000 Year's Additional Maximum Pensionable Earnings (YAMPE), again matched by the employer. The $3,500 exemption is annual and is prorated across pay periods.

How EI is calculated

Employment Insurance is deducted at 1.63% in 2026 on insurable earnings up to the $68,900 Maximum Insurable Earnings (MIE). The employer pays 1.4 times the employee rate, which works out to 2.282% on the same base. Quebec employees pay a reduced rate of 1.30% because the Quebec Parental Insurance Plan (QPIP) funds parental benefits separately. Once earnings pass the MIE for the year, EI stops.

How income tax is withheld

On top of CPP and EI, employers withhold federal and provincial income tax from each cheque. The amount depends on the employee's TD1 claim codes, which set the basic personal amount and other credits, and on the federal and provincial tax brackets for the year. The Canada Revenue Agency publishes the brackets and a Payroll Deductions Online Calculator (PDOC) for the exact figure. This tool shows the CPP, CPP2, and EI portions of the deduction.

Pay periods per year by schedule

Pay schedulePay periods
Weekly52
Bi-weekly26
Semi-monthly24
Monthly12

Filing calendar · Marked against the actual deadlines

When CPP-EI is due.

T4
Statement of Remuneration Paid
Due by the last day of February

The T4 is the CRA annual employer return reporting employment income, CPP, CPP2, EI, federal and provincial income tax withheld, and other amounts per employee. Workzoom generates the T4 directly from payroll, with every line reconciling back to the pay register and the year's PD7A remittances.

ROE
Record of Employment
Due within 5 calendar days of the last pay period worked

The ROE is filed with Service Canada on termination, leave, or any interruption of earnings. It carries insurable earnings, insurable hours, and reason codes that drive EI eligibility. Workzoom generates the ROE electronically from the same payroll engine that calculated EI all year, ready to submit through ROE Web, so the numbers match Service Canada's records.

Workzoom Payroll · Canada

Stop calculating CPP and EI by hand.

Workzoom runs every Canadian statutory deduction automatically. CPP at 5.95% on pensionable earnings between the $3,500 basic exemption and the $74,600 YMPE, CPP2 at 4% between YMPE and the $85,000 YAMPE, EI at 1.63% on insurable earnings to the $68,900 MIE with the employer 1.4× multiplier. The T4 and ROE come out of the same engine, ready to submit, so year-end slips and termination filings match the payroll register by construction. Hosted in Canada, Canadian-owned, with over 25 years of Canadian payroll experience.

  • Current 2026 CRA rates applied automatically every pay run
  • $3,500 CPP basic exemption prorated across pay periods per employee
  • CPP2 starts above YMPE and stops above YAMPE, all automatic
  • T4 slips generated directly from payroll at year-end
  • ROE generated electronically for Service Canada within 5 days of termination, ready to submit
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New to payroll

Steps for new Canada employers.

  1. Register a payroll program account with the CRA

    Before the first pay run, open a payroll program account (an RP account) under your business number with the Canada Revenue Agency. This is what you remit CPP, EI, and income tax against.

  2. Collect a completed TD1 from every employee

    Each employee files a federal TD1 and a provincial TD1 so you can apply the right basic personal amount and credits when calculating income tax withholding.

    Canadian payroll deductions guide →

  3. Confirm your provincial employment standards

    Minimum wage, overtime, vacation pay, and statutory holiday rules are set provincially. Confirm the standards for the province each employee works in before you set pay rates.

  4. Choose a pay schedule

    Decide whether you pay weekly, bi-weekly, semi-monthly, or monthly. The schedule sets how many pay periods fall in the year and how the $3,500 CPP exemption is prorated.

  5. Calculate and remit source deductions on time

    Each pay run, deduct CPP, EI, and income tax, add the employer share, and remit to the CRA on your assigned schedule (regular, threshold 1, or threshold 2) using a PD7A.

    2026 payroll tax rates →

  6. File T4 slips and ROEs

    File T4 slips with the CRA by the last day of February, and a Record of Employment (ROE) with Service Canada within 5 calendar days of any interruption of earnings.

Ready to run the numbers for Canada?

Enter a gross pay figure and get employer and employee CPP-EI math instantly, against the current published statutory rates.

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