Canada Payroll Information – Deel Global Payroll

Updated on: 2025/08/04 14:04 (UTC)

Overview

Canada, a federation that is the largest country in North America by land area, consists of 10 provinces and three territories. The capital city of Canada is Ottawa. The provinces of Canada are Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec (Quebec), and Saskatchewan, and the territories of Canada are the Northwest Territories, Nunavut, and Yukon. Québec has a significant level of sovereignty regarding personal income taxation, social insurance, and benefits elements. All other provinces and territories operate with more limited levels of sovereignty under the federal government.

In addition to its mainland on North America, Canada includes thousands of islands, the most populous of which is Newfoundland to the east of the mainland and the largest of which is Baffin Island in the Canadian Arctic Archipelago to the north of the mainland. Additionally, Greenland is about 50 kilometers from Canada’s Territory of Nunavut at its closest point and France’s Overseas Collectivity of Saint Pierre and Miquelon is fewer than 10 kilometers away from Canada’s Province of Newfoundland and Labrador at its closest point.

The primary spoken and written language used in Canada as a whole is English. However, the primary spoken and written language used in Québec is the dialect of French known as Québec French and the main spoken and written languages used in Nunavut are Inuinnaqtun and Inuktitut, both of which are Inuit languages. Québec French also is used by more than 40% of the population of New Brunswick, and this dialect of French is somewhat commonly used in Canada outside of Québec and New Brunswick. English and French are the official languages of Canada, the only officially bilingual province is New Brunswick, and Canada’s territories are officially multilingual.

Canada’s currency is the Canadian dollar.

Employers in Canada are responsible for withholding income taxes and social taxes, as well as providing workplace protections for employees. Some taxes are collected by provincial and territorial governments. Québec administers its own social insurance programs apart from the rest of Canada.

Employers also are required to complete a Record of Employment for all workers who have quit, were laid off, had their employment terminated, or are anticipated to have seven consecutive calendar days without insurable earnings.

Foreign employees are entitled to the same workplace rights as domestic employees, including minimum wages and paid leave. Foreign employers are obligated to establish payroll-deduction accounts with the Canada Revenue Agency (CRA) and withhold social contributions for domestic workers, though foreign workers may not be entitled to the same social benefits.

Canadians working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the states and territories of the U.S. is covered by various labor laws.

For a more extensive treatment of Canada’s payroll requirements,

CURRENCY DETAILS

The currency of Canada is the Canadian dollar (C$). The internationally recognized three-letter currency code for the Canadian dollar is CAD, which also is one of the currency’s commonly used currency symbols. The plural form of Canadian dollar is Canadian dollars.

When an amount of Canadian dollars is written using the currency symbol C$ to distinguish Canadian dollars from other dollar currencies, and when Canadian documents use the general dollar currency symbol $ to refer to Canadian dollars, the symbol in general precedes the numerical value with no space between the numerical value and symbol, but for data written in French, the symbol follows the numerical value with a space between the numerical value and symbol.

The currency symbols $C, CA$, $CA, CA $, Can$, and $Can, sometimes are used instead of C$ for the Canadian dollar, and when an amount of Canadian dollars is written using one of these currency symbols, the symbol has the same placement treatment as the currency symbol C$.

When an amount of Canadian dollars is written using the currency symbol CAD, the symbol either precedes or follows the numerical value with a space between the numerical value and symbol, and when an amount of Canadian dollars is written using the variant CAD $ or the variant CAD$, the symbol precedes the numerical value with no space between the numerical value and symbol. Another variant of the symbol CAD is a rare split symbol for a currency, with part of the symbol used before a numerical value and part of the symbol used after the numerical value. This split currency symbol consists of the general dollar currency symbol $ preceding the numerical value with no space between the numerical value and general dollar currency symbol $, and the acronym CAD following the numerical value with a space between the numerical value and the acronym CAD.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a Canadian dollar is referred to as a cent, with the plural form of cents.

When amounts of Canadian dollars are written in French, the comma that in English separates the thousands place from the hundreds place instead is rendered as a space, and the dot (.) that in English separates the ones place from the tenths place instead is rendered as a comma.

Digital Currencies: Canada does not consider digital currencies to be legal tender. Only the Canadian dollar is considered official currency in Canada under the Currency Act, which defines legal tender as bank notes issued by the Bank of Canada under the Bank of Canada Act and coins issued under the Royal Canadian Mint Act. Digital currencies are neither supported nor prohibited by any government or central authority, such as the Bank of Canada.

Digital currency payments for services or to employees are treated in a similar manner to barter transactions, when one commodity is exchanged for another, within the purview of the Income Tax Act for income tax purposes.

When an employee receives digital currency as payment for salary or wages, the amount is required to be included in the employee’s income as calculated in Canadian dollars and reported on a T4 slip in Canadian dollars. The employer is required to also make the appropriate deductions, with amounts remitted to the Canada Revenue Agency required to be in Canadian dollars.

The values of services exchanged for digital currencies are required to be calculated in an employee’s income when the services are of the kind generally provided by the employee in the course of earning income from, or related to, a business or a profession performed by the employee.

TAXES

The Canada Revenue Agency (CRA) and Revenu Québec (RQ) are the country’s two primary taxation collection agencies. The federal government and the government of Québec have progressive income tax rates, and Canada’s other provinces and territories also levy taxes. Tax rates vary among the provinces and territories. While federal taxable income is consistent between provinces, Québec assesses taxable income differently.

All Canadian employers generally are responsible for withholding both income taxes and social insurance contributions from employee wages and remitting them to the federal government’s collection agency, although Québec collects through its own social insurance program. Employers also are responsible for making contributions to the government funds.

Employers are responsible for registering with either the Canada Revenue Agency or Revenu Québec before hiring employees. After registering, employers receive a Business Number (BN) and payroll deductions account.

Canadian citizens are socially insured through the Canada Pension Plan (CPP) system, unless they are citizens of Québec, who are insured through the Québec Pension Plan (QPP) system. Similar provincial distinctions also exist for taxable income and remittance schedules. Non-Québec citizens and employers contribute into the CPP and Employment Insurance (EI) plan for benefits, while Québec citizens and employers contribute into the QPP, EI plan, and Québec Parental Insurance Plan (QPIP) for benefits.

The tax year is Jan. 1 to Dec. 31.

Coronavirus (Covid-19) Guidance: A tax reduction, the 10% Temporary Wage Subsidy for Employers, allows employers to reduce income tax withholding deposits by 10% of wages paid from March 18 to June 19, 2020, up to a maximum of C$1,375 per employee and a maximum of C$25,000 per employer. The reduction does not apply to CPP or EI contributions or deposits made to Revenu Québec.

Nonresident employees who intend to leave Canada, but cannot because of travel restrictions, cannot become residents through time spent in Canada only because of travel restrictions. Days spent by these employees in Canada because of travel restrictions do not count towards the 183-day threshold to become a deemed resident. This provision is in effect until either travel restrictions end or Dec. 31, 2021, whichever is earlier.

U.S. residents who are temporarily working in Canada because of travel restrictions may continue to benefit from the protections provided in the countries’ income tax treaty. Days spent in Canada by U.S. residents from March 16 to Dec. 31, 2020, do not count towards the U.S.-Canada income tax treaty’s 183-day limit before employment income earned by a U.S. resident becomes taxable in Canada, but days spent after Dec. 31, 2020, do count. If a Canadian resident who normally works outside of Canada temporarily must work from Canada because of travel restrictions, the employer’s income tax withholding requirements are not to change as long as they do not change in the other country.

T4 reporting requirements: In addition to the standard reporting of employment income on the T4 slip, all employers must also report employment income earned during specific periods in 2020 in the Other Information section of the T4 slip using specified codes, in order to aid eligibility determinations for Canada’s wage-subsidy programs.

Provincial taxes: The annual exemption for Ontario’s employer health tax was increased to C$1 million, from C$490,000, effective for 2020 only, and employer health tax deadlines falling from April 1, 2020, to Aug. 31, 2020, could be met by Oct. 1, 2020.

The deadline for the 2019 annual return and last 2019 installment payment for British Columbia’s employer health tax was extended to Sept. 30, 2020, from March 31. Employers required to make installment payments for 2020 may make the payments by Dec. 31, 2020; and Jan. 31 and Feb. 28, 2021. The remaining tax is due with the 2020 annual return March 31, 2021.

Returns and deposits for Manitoba’s Health and Post Secondary Education Tax Levy due from March 16 to Sept. 15, 2020, may be made by Oct. 15, 2020, by employers that have tax liabilities of up to C$10,000 per month.

Employers that are eligible for the Canada Emergency Wage Subsidy may apply for a credit toward Québec’s Health Services Fund payroll tax.

The amount of the credit is the amount of the tax paid on an employee’s wages for one week in which an employee receives pay for the week, but does not perform any work, during the four-week periods into which the CEWS is divided. The credit is available for the same periods for which the CEWS is available. Employers must request the credit when they file the 2020 or 2021 RL-1 Summary with Revenu Québec.

Income Taxes

Coverage: Canadian employees of any age are subject to Canadian taxes on all worldwide income, regardless of the province or territory of residency. An individual is considered to be a Canadian resident based on a variety of factors, such as possession of a home or property in Canada, having a spouse or common-law partner residing in Canada, and other factors.

Another considered factor is taxpayer status in another country.

Individuals who spend at least 183 days in Canada in a year, but do not have other significant ties to Canada and are not considered a resident of another country through one of Canada’s income tax treaties, are known as deemed residents for a given year. These individuals are subject to federal income tax on their worldwide income, but are not subject to provincial or territorial personal income taxes and instead must pay a surtax of 48% of their federal tax liability.

Rates and Thresholds: Employers withhold income taxes at source from employees based on their total employment income minus applicable deductions.

Canada’s federal income tax rates are levied on a progressive scale, with rates ranging from 15% to 33%. In the country’s progressive income tax system, portions of an individual’s income are allocated to the country’s personal income tax brackets, and each portion of income allocated to a tax bracket is taxed at the tax rate applicable to that tax bracket.

Effective for 2022, Canada’s federal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$50,197	15%
More than C$50,197 and up to C$100,392	20.5%
More than C$100,392 and up to C$155,625	26%
More than C$155,625 and up to C$221,708	29%
More than C$221,708	33%

Effective for 2021, Canada’s federal income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$49,020	15%
More than C$49,020 and up to C$98,040	20.5%
More than C$98,040 and up to C$151,978	26%
More than C$151,978 and up to C$216,511	29%
More than C$216,511	33%

Employees also are responsible for paying provincial and territorial income taxes, which are covered in the State/Jurisdiction Taxes subsection.

Registration: If employers are new remitters, then they must register for a payroll account and Business Number (BN) using Form RC1, Request for a Business Number, before the first remittance due date, which is the 15th day of the month following the month when employers begin withholding deductions from employee pay.

Upon hiring, employees are required to complete both a federal and provincial/territorial Form TD1, which lists applicable income exemptions, from the Canada Revenue Agency and file it with their employers. Employers must ensure that their employees have valid social insurance numbers (SIN). Québec employees must file a federal Form TD1 and a provincial Form TP-1015.G-V with Revenu Québec.

Taxable Amounts: The Canada Revenue Agency (CRA) establishes the taxable base for all federal and provincial taxes, except for taxes levied in Québec. Revenu Québec has established a separate, although nearly identical, set of standards for taxable income for the province, including taxes paid to the federal government.

The CRA has a complete benefits and allowances list detailing the taxability of benefits ranging from automobile allowances, mobile phone usage, meals, moving expenses, child care and others. Further details are available in the CRA’s guide for employers.

National, including all provinces except Québec: All wages, salaries, fees, bonuses, benefits, pensions, and/or compensatory payments are liable to income taxation. Some types of income are not liable to taxation, such as: the Goods and Services Tax or Harmonized Sales tax credit; any Canada Child Tax Benefit payments; child assistance payments; victim payments from a criminal act; lottery winnings; most gifts and inheritances; amounts paid by Canada or an ally for war service; life insurance payments; union dues or strike pay; registered pension plan (RPP) and registered retirement savings plan (RRSP) contributions; and most amounts from a tax-free savings account.
Québec: Any amount that is earned, regardless of source, is considered income and liable to taxation. Some types of income are not liable to taxation, such as: allowance received from the Shelter Allowance program; property value received from inheritance; amounts received from a life insurance policy; child assistance payments; the solidarity tax credit; work premium tax credits; Goods and Services Tax (GST) tax credit; lottery winnings; strike pay from a union; Canada Child Tax Benefits payments; benefits paid under a wage loss replacement plan or income insurance plan; and income from investments held in a tax-free savings account.

Income earned on any of the exemptions mentioned above is liable to taxation. Income earned by Canadian residents outside of Canada is liable to taxation and should be converted into Canadian dollars based on the exchange rate at the time earned.

Employees also are subject to taxation on benefits in kind from employers, including automobile benefits; board and lodging; gifts and awards; life insurance policies; interest-free or low-interest loans; meals; tool reimbursements; transit passes; or tuition fees.

First Nations, or natives of Canada, are not taxed on income in any way earned on, or in relation to, an Indian reserve—including from employers that are not First Nations. All other income earned by a First Nations person is taxable and subject to social insurance contributions. Nontaxable income of First Nations is excluded from pensionable employment and employers do not have to withhold CPP or QPP contributions. However, though not taxed on reserve-related income, First Nations can opt to pay into CPP or QPP through their employer and receive social insurance benefits.

Withholding Methods: Income taxes are deducted at source by employers during each pay period whether weekly, biweekly, monthly, or quarterly. The CRA issues withholding methods, which are effective Jan. 1, 2021, and changes, which are effective July 1, 2021, to aid in the calculation of withheld amounts.

Returns and Remittance: An employer’s required tax remittance frequency for a year is based on its average monthly withholding amount (AMWA) for the second-most recent calendar year before that year. An employer’s AMWA is its total liability of income tax amounts, Canada Pension Plan (CPP) tax, and Employment Insurance (EI) tax required to be withheld from employment income paid to employees that year, divided by the number of months that payments were made in that year.

There are two accelerated remitter thresholds of AMWA that cause applicable employers to need to submit taxes withheld from employment income more frequently than employers that submit taxes on a regular basis, which is a monthly basis. The following remittance deadlines are the required dates by which the government must receive withheld taxes, and while employers generally are able to use electronic funds transfer to have the government receive remitted taxes the same day the payments were submitted, employers, especially those that do not pay tax electronically, should ensure that tax payments are submitted with enough time for the government to receive them by the following deadlines. Deadlines for employers to remit their share of CPP and EI taxes are the same as those for remitting taxes withheld from employees.

Employers that fulfill the conditions of accelerated remitter threshold 1 had a total AMWA of at least C$25,000 but less than C$100,000 during the second-most recent calendar year before the current year. Such employers must remit to the Canada Revenue Agency taxes withheld from amounts paid to employees during the first 15 days of a month by the 25th day of that month, and must remit to the agency taxes withheld from amounts paid to employees after the first 15 days of a month by the 10th day of the next month.

Employers that fulfill the conditions of accelerated remitter threshold 2 had a total AMWA of at least C$100,000 during the second-most recent calendar year before the current year. Such employers must remit withheld taxes to the Canada Revenue Agency within three working days of the end of each of four periods in each month, with the taxes remitted for a period based on payments to employees in the period. Working days do not include Saturdays, Sundays, or public holidays. The four periods in each month are the first through seventh days of the month, the eighth through 14th day of the month, the 15th through 21st day of the month, and the 22nd through last day of the month. Employers that fulfill the conditions of accelerated remitter threshold 2 must remit their withheld taxes either electronically or through a Canadian financial institution.

If employers had an AMWA of at least C$3,000 but less than C$25,000 during the second-most recent calendar year before the current year, they are regular remitters for the current year. Regular remitters must remit tax withheld from payments to employees during a month by the 15th day of the following month.

Quarterly remittance of withheld taxes is available to employers that either in the second-most recent calendar year or most recent calendar year before the current year had an AMWA of less than C$3,000, have been in business for at least 12 months, and that have timely fulfilled all tax compliance obligations. Quarterly remitters must remit withheld taxes by the 15th day after each calendar quarter.

New employers, which are those that have been in business during fewer than three calendar years, generally are regular remitters. However, a new employer may remit taxes on a quarterly basis if it has been in business for at least 12 months, has timely fulfilled all tax compliance obligations, and each month has a total amount to be remitted of less than C$1,000 in withheld tax and employer share of taxes.

Whenever a deadline to submit withheld taxes would be on a Saturday, Sunday, or public holiday, the applicable deadline is the next business day.

Remittances may be electronically transmitted to the Canada Revenue Agency using the agency’s My Payment online service, the pre-authorized debit option through the agency’s My Business Account online service, the internet-based banking service of a Canadian financial institution, or the internet-based payment method available through a third-party service provider. Additionally, nonresidents may use wire transfer to remit tax payments.

Employers generally must submit a remittance voucher accompanying each of their remittances that summarizes the remitted taxes. The remittance voucher of Form PD7A may be used by monthly and quarterly remitters. The remittance voucher of Form PD7A™ may be used by employers that are accelerated remitters. The remittance voucher of Form PD7A-RB may be used by employers that are accelerated remitters, except those that pay employees only once per month.

If employers have paid wages, salary, taxable benefits, or allowances, then they also must file with the Canada Revenue Agency and provide to employees a wage statement, known as a T4 slip, on or before the last day of February following the taxable year detailing all employee withholding amounts. Employers must give employees two copies of the T4 slip, or alternately one slip distributed electronically. This must be done whether or not employers have received their employees’ SINs. The T4 slip should be used, and amended if the SIN is not initially included.

If certain conditions are fulfilled, employers may be able to distribute T4 information slips electronically.

For employees who reside or were employed in more than one province during the taxable year, employers must complete separate T4 slips for each province or territory. Amounts on T4 slips should be listed in Canadian dollars only.

Québec employers must remit to Revenu Québec annually if their total income tax withheld, employee social taxes withheld, and employer social taxes did not exceed C$2,400, or quarterly if their monthly remittance did not exceed C$3,000 in the previous two years. Employers not meeting the previous requirements must remit monthly if the average monthly remittance is less than C$25,000; biweekly if the remittance is at least C$25,000 but not more than C$100,000; and weekly if the mostly remittance is more than C$100,000.

Québec employers must file with Revenu Québec and provide employees on paper or electronically with a provincial statement of wages and other payments, income tax withheld, and social tax contributions, known as Relevé 1 or RL-1, Employment and Miscellaneous Income, and must also file an annual reconciliation of income tax withheld and social tax contributions known as the RL-1 Summary, Summary of Source Deductions and Employer Contributions, by the last day of February each year, either online or on paper.

Employee Share Plans: Stock purchase plans in Canada can be offered by employers at a discount, generally of 10 to 15%, with the amount of the discount being a taxable benefit. Additionally, many employers also provide stock option plans. Stock plans are regulated by Canadian federal income tax legislation, provincial securities regulation, and the rules of the stock exchanges.

U.S. employers providing stock or stock options to employees in Canada are required to comply with provincial securities rules, however, there is currently a movement towards the establishment of a single national securities regulator. In most cases, simplified procedures exist in addition to exemptions from prospectus and disclosure requirements, particularly where the shares are traded on a recognized stock exchange such as the New York Stock Exchange and requirements of the SEC have been met.

Taxation: Employees are not subject to tax on the grant of a stock option. Upon exercising the option, the difference between the grant price and exercise price is taxable with an offsetting partial deduction with the end result treated as a capital gain. For sold shares, the difference between the price of the shares at exercise and upon sale is a capital gain, one half of which is subject to tax at marginal rates.

A deduction equal to one-half of the benefit required to be included in the employee’s income is permitted if three requirements are met, treating the benefit as a capital gain. To qualify for the deduction, the employee must have dealt with the employer in an arm’s-length transaction when the option was granted; the price paid for the shares must be at least their fair-market value when the stock option agreement was made; and the shares acquired must be prescribed shares, which generally includes common shares. Effective starting July 1, 2021, only up to C$200,000 of stock options granted to an employee per year, based on the options’ fair-market value, are to qualify for the deduction, unless the options are granted by a Canadian-controlled private corporation (CCPC) of any size or a non-CCPC with annual gross revenue of up to C$500 million.

If the stock option is granted by a Canadian-controlled private corporation, the inclusion of the benefit in the employee’s income is deferred until the taxation year in which the employee disposes of or exchanges the shares.

Withholding: Withholding and remittance of income tax must be made in respect of stock option benefits to the same extent as a cash bonus. However, the employer’s withholding and remittance obligations do not generally extend to any portion of the benefit that is deductible by the employee. Stock option benefits are also subject to source deduction requirements.

For withholding purposes, employers should apply the same tax rates to stock options as they do for regular employment income.

Recordkeeping: Employees must retain income tax returns and any related rebate documentation for six years from the date of the return. Records must be verifiable upon request by the Canada Revenue Agency. Employees are entitled to hire third parties to conduct their recordkeeping activities, but are required to fulfill all normal obligations.

Penalties: Employers who fail to deduct withholding taxes may be liable to a 10% penalty on the total amount of CPP, EI, and income taxes not withheld. If income taxes, or other withheld contributions, are withheld but not remitted, then fines between 3% and 10% may be levied based on the lateness of payment. For repeated failures in a single year, this penalty can reach 20%.

Employees who do not complete the requisite federal and provincial income tax forms upon new employment and submit them to their employer are liable for a C$25 penalty for each day the form is late, up to C$2,500.

Taxpayers who repeatedly miss the filing deadline may be liable for a 10% interest rate, plus 2% for each additional month of incomplete filings up to 20 months. Additional penalties apply for grossly negligent misstatements, including a C$100 fine or a 50% penalty of the understatement of tax and/or the overstatement of tax credits.

Employees who do not file their income tax returns on time are charged a late-filing penalty of 5% on their balance owing, plus 1% of the balance owing for each month uncompleted up to 12 months.

Employees with overdue income taxes, Canada Pension Plan (CPP) contributions, and social insurance premiums are susceptible to the accrual of interest based on proscribed rates, which can change every quarter.

Social Taxes

Employers must withhold two types of social insurance contributions from wages, as well as adding their own contributions to the insurance fund.

Coverage: With very few exceptions, employers must deduct Canada Pension Plan (CPP) contributions from employee earnings if the employee is over the age of 18 but younger than 70. Employees aged 65 to 70 can file an election to stop CPP contributions using the prescribed CPT30 form.

Employers must deduct Employment Insurance (EI) premiums from all employees, regardless of age or pension status.

Québec employees and employers are not covered by the Canada Pension Plan (CPP), but are alternatively covered under the Québec Pension Plan (QPP). Employers must withhold QPP contributions from employee wages for all Québec employees aged 18 or older, even if recipients receive QPP or CPP benefits or are older than 70 years of age.

Employers in Canada must pay workers’ compensation assessments that help fund programs for individuals who become injured or ill in the course of employment. As the amounts of earnings subject to workers’ compensation premium assessments vary among provinces and territories, more information regarding workers’ compensation assessments is available in the State/Jurisdiction Taxes section of this primer.

Rates and Thresholds: Employees are liable for two types of social insurance taxation: pension plan contributions and employment insurance premiums. However, which fund employers remit into depends on whether the business is located in Québec or one of the other provinces/territories. Both social insurance types are held at source by employers and employers must contribute an amount equal to their employees. Non-Québec employees are liable for Canada Pension Plan (CPP) and Employment Insurance (EI) contributions. Québec employees are alternately liable to Québec Pension Plan (QPP) and Québec Parental Insurance Plan (QPIP) contributions.

Canada Pension Plan (CPP): Employers must withhold CPP contributions for employees aged 18 years to 70 years, who are in pensionable employment and not disabled, and remit them to the Canada Revenue Agency. Employers also must contribute an amount equal to the total amount their employees contribute.

The maximum annual amount of employment income per employee upon which the employee and employer contribution rates for the CPP may be assessed is known as CPP maximum pensionable earnings, and also is known as the CPP earnings limit. An employee’s age does not affect maximum pensionable earnings for the CPP. Effective starting in 2019 and until 2023, under the initiative known as Canada Pension Plan Enhancement, the CPP tax rates for employees and employers are to be increased each year until they each reach 5.95%.

Effective for 2022, the CPP contribution rate for employees is 5.7%, the CPP contribution rate for employers is 5.7%, and the CPP maximum pensionable earnings amount is C$64,900, minus an annual exemption of C$3,500 that makes the total amount of income per employee subject to CPP assessment C$61,400. Effective for 2021, the CPP contribution rate for employees was 5.45%, the CPP contribution rate for employers was 5.45%, and the CPP maximum pensionable earnings amount was C$61,600, minus an annual exemption of C$3,500 that makes the total amount of income per employee subject to CPP assessment C$58,100.

Effective for 2023, the CPP contribution rate for employees is 5.95% and the CPP contribution rate for employers is 5.95%.

Effective starting in 2024, employees are to be assessed an additional CPP tax rate of 4% and employers are to be assessed an additional CPP tax rate of 4% on the amount of annual employment income in excess of the original earnings limit and up to an additional earnings limit. In the context of assessments of the additional CPP tax rate, the original earnings limit also is known as the first earnings limit or first earnings ceiling, and the additional earnings limit also is known as the second earnings limit or second earnings ceiling.

Effective for 2024, the CPP maximum pensionable earnings applicable for the additional CPP tax rate is equivalent to 107% of the CPP maximum pensionable earnings for base contributions (i.e., the additional earnings limit is 107% of the original earnings limit). Effective starting with 2025, the CPP maximum pensionable earnings applicable for the additional CPP tax rate is equivalent to 114% of the CPP maximum pensionable earnings for base contributions (i.e., the additional earnings limit is 114% of the original earnings limit).

Québec Pension Plan (QPP): Employers must withhold QPP contributions for employees of at least 18 years of age and remit them to Revenu Québec. Employers and employees equally share the QPP taxes.

Effective starting with 2019, first additional contributions for the QPP are assessed on Québec employees and employers as a supplement to base contributions. Effective until Dec. 31, 2018, there was one type of QPP contribution assessed on Québec employees and employers, and that type of contribution is known as a base contribution to differentiate it from other types of QPP contributions in effect after 2018. Effective starting with 2024, second additional contributions for the QPP are assessed on Québec employees and employers as a supplement to base contributions and first additional contributions. Base contributions fund the QPP base plan, and first additional contributions and second additional contributions fund the QPP additional plan.

The maximum annual amount of employment income per employee upon which the employee and employer base contribution rates for the QPP may be assessed is known generally as QPP maximum pensionable earnings and as the QPP earnings limit, and is known more specifically as QPP maximum pensionable earnings for base contributions. An employee’s age does not affect maximum pensionable earnings for the QPP. The amount established by the Canada Revenue Agency as a year’s maximum pensionable earnings for the Canada Pension Plan generally is used by Revenu Québec as the year’s QPP maximum pensionable earnings for base contributions.

Effective for 2022, the QPP base contribution rate for employees is 5.4%, the QPP base contribution rate for employers is 5.4%, and the QPP maximum pensionable earnings for base contributions is C$64,900, minus an annual exemption of C$3,500 that makes the total amount of income per employee subject to assessment for QPP base contributions C$61,400. Effective for 2021, the QPP base contribution rate for employees was 5.4%, the QPP base contribution rate for employers was 5.4%, and the QPP maximum pensionable earnings for base contributions was C$61,600, minus an annual exemption of C$3,500 that made the total amount of income per employee subject to assessment for QPP base contributions C$58,100.

First additional contributions for the QPP will be phased in for Québec employees and employers from 2019 to 2023. The QPP maximum pensionable earnings applicable for first additional contributions is the same as the QPP maximum pensionable earnings for base contributions.

Effective for 2022, the QPP first additional contribution rate for employees is 0.75% and the QPP first additional contribution rate for employers is 0.75%. Effective starting with 2023, the QPP first additional contribution rate for employees is 1% and the QPP first additional contribution rate for employers is 1%. Effective for 2021, the QPP first additional contribution rate for employees was 0.5% and the QPP first additional contribution rate for employers was 0.5%.

Effective starting in 2024, employees and employers each are to be assessed a second additional QPP contribution of 4% on the amount of annual employment income exceeding the original earnings limit and up to an additional earnings limit, also known generally as the QPP additional maximum pensionable earnings.

Effective for 2024, the QPP additional maximum pensionable earnings applicable for second additional contributions is equivalent to 107% of the QPP maximum pensionable earnings for base contributions and first additional contributions, rounded down to the nearest multiple of C$100. Effective starting with 2025, the QPP additional maximum pensionable earnings applicable for second additional contributions is equivalent to 114% of the QPP maximum pensionable earnings for base contributions and first additional contributions, rounded down to the nearest multiple of C$100.

Employment Insurance (EI): Employers, including those in Québec, must deduct Employment Insurance tax from employees’ insurable earnings and remit them to the Canada Revenue Agency to help fund Canada’s EI program.

The maximum annual amount of employment income per employee upon which the employee and employer contribution rates for the EI program may be assessed is known as EI maximum insurable earnings. An employee’s age does not affect maximum insurable earnings for the EI program.

Effective for 2022, the amount of maximum insurable earnings applicable for EI assessment is C$60,300. Effective for 2021, the amount of maximum insurable earnings applicable for EI assessment is C$56,300. Effective for 2020, the amount of maximum insurable earnings applicable for EI assessment was C$54,200.

The Employment Insurance tax rate for employers is 1.4 times the applicable EI tax rate assessed on employees.

Effective for 2020 through 2022, the standard EI tax rate for employees is 1.58% and the standard EI tax rate for employers is 2.212%.

Employees who are residents of Québec receive an EI tax rate reduction in comparison to the standard rate for employees because the province provides maternity, parental, and adoption benefits under the Québec Parental Insurance Plan. Employers in Québec also receive an EI tax rate reduction with respect to employment income paid for Québec employment.

Effective for 2022, the EI tax rate for employees who are residents of Québec is 1.2% and the EI tax rate for employers in Québec is 1.68%. Effective for 2021, the EI tax rate for employees who are residents of Québec is 1.18% and the EI tax rate for employers in Québec is 1.652%. Effective for 2020, the EI tax rate for employees who are residents of Québec was 1.2% and the EI tax rate for employers in Québec was 1.68%.

Employers that cover their employees under a qualified short-term disability plan that provides benefits that may offset EI benefits may be eligible for a reduced EI rate. The percentage by which EI rates may be reduced for an employer with a qualified short-term disability plan vary based on type of qualified short-term disability plan, whether the employer is in Québec, and whether an annual or pro-rated reduced rate would be assessed. The reduced rates are expressed as lower multipliers than the standard multiplier of 1.4 that, when the employee EI rate is multiplied by it, results in the standard EI rate for employers. Employers must submit Form NAS-5022, Application for Employment Insurance Premium Reduction, to Employment and Social Development Canada (ESDC), and their application must be approved, for them to acquire a reduced EI rate.

ESDC has tables that detail the reduced multipliers available to employers.

Reduced EI rate multiplier tables were published effective for 2022, for Canada in general and for Québec. Reduced EI rate multiplier tables were published effective for 2021, for Canada in general and for Québec.

Québec Parental Insurance Plan (QPIP): Maternity, parental, and adoption benefits for Québec residents are administered by the province of Québec through its own insurance premium system. Also called the Provincial Parental Insurance Plan (PPIP), QPIP applies to all employees working in Québec, regardless of their provincial residence.

The maximum annual amount of employment income per employee upon which the employee and employer contribution rates for the QPIP may be assessed is known as QPIP maximum insurable earnings. An employee’s age does not affect maximum insurable earnings for the QPIP.

Employers in Québec must deduct QPIP tax amounts from employees’ insurable earnings and remit them to Revenu Québec to help fund the QPIP.

Effective for 2022, the maximum insurable earnings for the QPIP is C$88,000. Effective for 2021, the maximum insurable earnings for the QPIP was C$83,500.

Effective for 2022, unchanged from 2021, Québec employees are assessed a QPIP rate of 0.494% and Québec employers are assessed a QPIP rate of 0.692% of employment income.

Registration: Employers must request employees’ social insurance numbers (SIN) within three days of the start of their employment. Employees must all possess an SIN in order to receive government benefits under the Income Tax Act, the Canada Pension Plan Act, and the Employment Insurance Act.

All employees in Canada, whether permanent or temporary residents, must apply for social insurance numbers.

Taxable Amounts: Canada Pension Plan (CPP) and Employment Insurance (EI) contributions are deducted from wages, salaries, bonuses, commissions, and any advances from payroll, among other sources. Benefits in kind also are valued, such as lodging or travel expenses, as well as remuneration received while on vacation, furlough, or sick leave.

Withholding Methods: Social insurance contributions are withheld at source by employers from each paycheck up to a minimum insurable earnings and remitted, along with employers’ contributions, to the Canada Revenue Agency or Revenu Québec.

Taxes are remitted by employers electronically, in person, or through mail, but the method may be dependent on the total average monthly withholding amount (AMWA).

Returns and Remittances: Employers have the option of remitting in a variety of ways to their federal and provincial governments. However, employers may be required to remit electronically depending on their total average monthly withholding amount, for which there are two thresholds.

Threshold 1 is for employers with a total average monthly withholding amount (AMWA) of C$25,000 to C$99,999.99 two calendar years ago. The AMWA is calculated based on the total CPP, EI, and income tax amounts for payroll employees for a given tax year, then divided into the number of months (12 or fewer) that payments were made in that year. Remittances must be made to the Canada Revenue Agency by the 25th of the month if the deduction was made prior to the 16th of the same month and by the 10th of the month if the deduction was made prior to the 15th of the same month.

Threshold 2 is for employers with a total average monthly withholding amount (AMWA) of C$100,000 or greater two calendar years ago. Employers in this threshold must remit weekly to the CRA no later than the third weekday following each seven-day period in the month until the fourth period, which may be eight or nine days in length.

Threshold 2 employers must remit electronically or in person to their Canadian financial institution. The electronic option is conducted through My Payment, an online banking account between employers, the CRA, and four major banks in Canada.

If an employer has an AMWA of less than C$3,000, then they are entitled to a quarterly remittance schedule. If an employer has an AMWA between C$3,000 and C$25,000, then they qualify for monthly remittance similar to new remitters.

If employers are new remitters, then they must apply for a business number (BN) and register for a payroll account with the Canada Revenue Agency. New remitters, since they lack a deduction history, are initially required to remit on a monthly basis upon the 15th day of each month. This classification may change depending on the total monthly deductions after two tax years.

Québec employers must remit to Revenu Québec annually if their total income tax withheld, employee social taxes withheld, and employer social taxes for the previous year did not exceed C$2,400, or quarterly if their average monthly remittance for the previous year or the second-most recently completed year did not exceed C$3,000 and they have fulfilled all their fiscal obligations in the past 12 months. Employers that do not fulfill the conditions to remit annually or quarterly must remit monthly if the average monthly remittance for the second-most recently completed year was less than C$25,000; twice-monthly if the remittance in the second-most recently completed year was at least C$25,000 but less than C$100,000; and weekly if the average monthly remittance in the second-most recently completed year was more than C$100,000.

Québec employers must file with Revenu Québec and provide employees with a provincial statement of wages and other payments, income tax withheld, and social tax contributions, known as Relevé 1 or RL-1, Employment and Miscellaneous Income, and must also file an annual reconciliation of income tax withheld and social tax contributions known as the RL-1 Summary, Summary of Source Deductions and Employer Contributions, by the last day of February each year, either online or on paper.

Recordkeeping: Employers must retain records on the total hours worked by employees, as well as any Canada Pension Plan (CPP) taxes, insurance premiums, or income taxes withheld at source. Records must be verifiable upon request by the Canada Revenue Agency. Employers are entitled to hire third parties to conduct their recordkeeping activities, but are required to fulfill all normal obligations.

At the federal level, records must be kept for a minimum of six years from the last tax year to which they relate. Certain records related to long-term acquisitions must be retained indefinitely.

However, all provinces establish their own standards on record retention. Saskatchewan requires records be maintained for five years, while Newfoundland and Labrador requires four years of retention. In Alberta, Manitoba, New Brunswick, Ontario, Prince Edward Island, and Québec, the requirement is three years. The requirement is two years in British Columbia, Northwest Territories, and Nunavut, while Nova Scotia and Yukon merely require one year.

Employees failing to present their social insurance numbers to employers within three days may be subject to a C$100 penalty. Employers who fail to deduct may be susceptible to a 10% penalty on the total amount of CPP, EI, and income tax the employer failed to deduct. If this occurs more than once in a calendar year, then the penalty may be increased to 20%. Additionally, if employers withhold but fail to remit, then they may be charged penalties between 3% and 10%, depending on the lateness of payment.

Employees with unpaid payments are susceptible to the accrual of interest based on proscribed rates, which can change every three months. Interest rates for overdue income taxes, Canada Pension Plan (CPP) contributions, and social insurance premiums may change quarterly.

Other Taxes

Canada’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

Canada’s provinces and territories all assess personal income taxes and all have a maximum amount of assessable income per employee upon which workers’ compensation premiums may be assessed. Some, but not all, of the provinces and territories assesses taxes for other social programs.

Provincial and Territorial Personal Income Taxes

Income taxes in all provinces are assessed by the Canada Revenue Agency (CRA) based in Ottawa, except for the Québec provincial taxes, which are collected by Revenu Québec. Provincial income taxes are withheld at source by employers.

Québec assesses taxable income differently than the national government. Some provinces, such as Ontario and Québec, also levy their own additional payroll tax on employers.

The CRA details on a webpage each of the income tax rates and applicable income ranges for each income tax bracket for each of the provinces and territories of Canada, except Québec, although this CRA webpage is a summary that does not necessary account for tax rate changes detailed below. Each province and territory’s name below is linked to the jurisdiction’s applicable webpage regarding its income tax rates. Québec’s income tax rates and applicable income ranges for each of its income tax brackets are available on a webpage of Revenu Québec.

Alberta: Resident employees of Alberta are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 10% to 15%.

Effective for 2022, unchanged from 2021, Alberta’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$131,220	10%
More than C$131,220 and up to C$157,464	12%
More than C$157,464 and up to C$209,952	13%
More than C$209,952 and up to C$314,928	14%
More than C$314,928	15%

British Columbia: Resident employees of British Columbia are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 5.06% to 20.5%.

Effective for 2022, British Columbia’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$43,070	5.06%
More than C$43,070 and up to C$86,141	7.7%
More than C$86,141 and up to C$98,901	10.5%
More than C$98,901 and up to C$120,094	12.29%
More than C$120,094 and up to C$162,832	14.7%
More than C$162,832 and up to C$227,091	16.8%
More than C$227,091	20.5%

Effective for 2021, British Columbia’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$42,184	5.06%
More than C$42,184 and up to C$84,369	7.7%
More than C$84,369 and up to C$96,866	10.5%
More than C$96,866 and up to C$117,623	12.29%
More than C$117,623 and up to C$159,483	14.7%
More than C$159,483 and up to C$222,420	16.8%
More than C$222,420	20.5%

Manitoba: Resident employees of Manitoba are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 10.8% to 17.4%.

Effective for 2022, Manitoba’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$34,431	10.8%
More than C$34,431 and up to C$74,416	12.75%
More than C$74,416	17.4%

Effective for 2021, Manitoba’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$33,723	10.8%
More than C$33,723 and up to C$72,885	12.75%
More than C$72,885	17.4%

New Brunswick: Resident employees of New Brunswick are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 9.4% to 20.3%.

Effective for 2022, New Brunswick’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows.

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$44,887	9.4%
More than C$44,887 and up to C$89,775	14.82%
More than C$89,775 and up to C$145,955	16.52%
More than C$145,955 and up to C$166,280	17.84%
More than C$166,280	20.3%

Effective for 2021, New Brunswick’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows. The 9.4% income tax rate was reduced from 9.68%, effective retroactive to Jan. 1, 2021, in a bill that received royal assent June 11, 2021.

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$43,835	9.4%
More than C$43,835 and up to C$87,671	14.82%
More than C$87,671 and up to C$142,534	16.52%
More than C$142,534 and up to C$162,383	17.84%
More than C$162,383	20.3%

Newfoundland and Labrador: Resident employees of Newfoundland and Labrador are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 8.7% to 21.8%.

Effective for 2022, Newfoundland and Labrador’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$39,147	8.7%
More than C$39,147 and up to C$78,294	14.5%
More than C$78,294 and up to C$139,780	15.8%
More than C$139,780 and up to C$195,693	17.8%
More than C$195,693 and up to C$250,000	19.8%
More than C$250,000 and up to C$500,000	20.8%
More than C$500,000 and up to C$1 million	21.3%
More than C$1 million	21.8%

Effective for 2021, Newfoundland and Labrador’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$38,081	8.7%
More than C$38,081 and up to C$76,161	14.5%
More than C$76,161 and up to C$135,973	15.8%
More than C$135,973 and up to C$190,363	17.3%
More than C$190,363	18.3%

Northwest Territories: Resident employees of the Northwest Territories are liable for progressive taxation on income at the territorial level, with income tax rates ranging from 5.9% to 14.05%.

Effective for 2022, territorial income tax rates for the Northwest Territories and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$45,462	5.9%
More than C$45,462 and up to C$90,927	8.6%
More than C$90,927 and up to C$147,826	12.2%
More than C$147,826	14.05%

Effective for 2021, territorial income tax rates for the Northwest Territories and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$44,396	5.9%
More than C$44,396 and up to C$88,796	8.6%
More than C$88,796 and up to C$144,362	12.2%
More than C$144,362	14.05%

Nova Scotia: Resident employees of Nova Scotia are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 8.79% to 21%.

Effective for 2022, unchanged from 2021, Nova Scotia’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$29,590	8.79%
More than C$29,590 and up to C$59,180	14.95%
More than C$59,180 and up to C$93,000	16.67%
More than C$93,000 and up to C$150,000	17.5%
More than C$150,000	21%

Nunavut: Resident employees of Nunavut are liable for progressive taxation on income at the territorial level, with income tax rates ranging from 4% to 11.5%.

Effective for 2022, Nunavut’s territorial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$47,862	4%
More than C$47,862 and up to C$95,724	7%
More than C$95,724 and up to C$155,625	9%
More than C$155,625	11.5%

Effective for 2021, Nunavut’s territorial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$46,740	4%
More than C$46,740 and up to C$93,480	7%
More than C$93,480 and up to C$151,978	9%
More than C$151,978	11.5%

Ontario: Resident employees of Ontario are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 5.05% to 13.16%.

Effective for 2022, Ontario’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$46,226	5.05%
More than C$46,226 and up to C$92,454	9.15%
More than C$92,454 and up to C$150,000	11.16%
More than C$150,000 and up to C$220,000	12.16%
More than C$220,000	13.16%

Effective for 2021, Ontario’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$45,142	5.05%
More than C$45,142 and up to C$90,287	9.15%
More than C$90,287 and up to C$150,000	11.16%
More than C$150,000 and up to C$220,000	12.16%
More than C$220,000	13.16%

Prince Edward Island: Resident employees of Prince Edward Island are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 9.8% to 16.7%.

Effective for 2022, unchanged from 2021, Prince Edward Island’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$31,984	9.8%
More than C$31,984 and up to C$63,969	13.8%
More than C$63,969	16.7%

Québec: The province of Québec collects provincial income taxes using its own revenue collection agency, Revenu Québec (RQ).

Resident employees of Québec are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 15% to 25.75%.

Effective for 2022, Québec’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$46,295	15%
More than C$46,295 and up to C$92,580	20%
More than C$92,580 and up to C$112,655	24%
More than C$112,655	25.75%

Effective for 2021, Québec’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$45,105	15%
More than C$45,105 and up to C$90,200	20%
More than C$90,200 and up to C$109,755	24%
More than C$109,755	25.75%

Saskatchewan: Resident employees of Saskatchewan are liable for progressive taxation on income at the provincial level, with income tax rates ranging from 10.5% to 14.5%.

Effective for 2022, Saskatchewan’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$46,773	10.5%
More than C$46,773 and up to C$133,638	12.5%
More than C$133,638	14.5%

Effective for 2021, Saskatchewan’s provincial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$45,677	10.5%
More than C$45,677 and up to C$130,506	12.5%
More than C$130,506	14.5%

Yukon: Resident employees of Yukon are liable for progressive taxation on income at the territorial level, with income tax rates ranging from 6.4% to 15%.

Effective for 2022, Yukon’s territorial income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$50,197	6.4%
More than C$50,197 and up to C$100,392	9%
More than C$100,392 and up to C$155,625	10.9%
More than C$155,625 and up to C$500,000	12.8%
More than C$500,000	15%

Effective for 2021, Yukon’s territorial income tax rates and minimum and maximum amounts of annual income for each tax bracket were as follows:

Range of Annual Income (Canadian Dollars)	Income Tax Rate
Up to C$49,020	6.4%
More than C$49,020 and up to C$98,040	9%
More than C$98,040 and up to C$151,978	10.9%
More than C$151,978 and up to C$500,000	12.8%
More than C$500,000	15%

Workers’ Compensation Premiums

Workers’ compensation is administered at the provincial and territorial level by a province’s or territory’s workers’ compensation board, although the Northwest Territories and Nunavut share a workers’ compensation board. The provinces and territories generally establish coverage premium rates that are assessed on employers, and these rates vary among industries based on varying degrees of workplace risk among the industries, with some additional variation within each industry based on each individual employer’s experience rating. An individual employer’s experience rating is based on its workplace safety performance compared with other employers in its industry.

Each province and territory has an amount of maximum insurable earnings, also known as maximum assessable earnings, maximum annual earnings, or maximum wage rates, for assessment of workers’ compensation coverage premium rates on employers. In the context of workers’ compensation, a province’s or territory’s maximum insurable earnings is the maximum annual amount of wages paid to an employee upon which a workers’ compensation coverage premium rate may be assessed on an employer.

The definition of what types of payments constitute insurable earnings varies among provinces and territories.

The maximum insurable earnings amounts for workers’ compensation premiums, effective for 2022, among Canada’s provinces and territories are as follows:

Jurisdiction	Maximum Insurable Earnings (Canadian Dollars)
Alberta	C$98,700
British Columbia	C$108,400
Manitoba	C$150,000
New Brunswick	C$69,200
Newfoundland and Labrador	C$69,005
Northwest Territories	C$102,200
Nova Scotia	C$69,000
Nunavut	C$102,200
Ontario	C$100,422
Prince Edward Island	C$53,800
Québec	C$88,000
Saskatchewan	C$94,440
Yukon	C$94,320

The maximum insurable earnings amounts for workers’ compensation premiums, effective for 2021, among Canada’s provinces and territories were as follows:

Jurisdiction	Maximum Insurable Earnings (Canadian Dollars)
Alberta	C$98,700
British Columbia	C$100,000
Manitoba	C$127,000
New Brunswick	C$67,100
Newfoundland and Labrador	C$67,985
Northwest Territories	C$97,300
Nova Scotia	C$64,500
Nunavut	C$97,300
Ontario	C$97,308 (The maximum was changed on April 14, 2021, from C$102,800, retroactive to Jan. 1, 2021.)
Prince Edward Island	C$55,300
Québec	C$83,500
Saskatchewan	C$91,100
Yukon	C$91,930

Deadlines for registering with the provincial and territorial workers’ compensation boards after initiating work in the provinces or territories vary among them.

Employers typically must file an annual return with a provincial or territorial workers’ compensation board detailing insurable earnings paid to workers during the reported year, with insurable earnings defined as those upon which employers can be required to be assessed workers’ compensation coverage premium rates. These reports also often must include an estimate of the insurable earnings employers expect to pay during the upcoming year. Provinces and territories generally require this annual return to be submitted by the last day of February after the reported year.

Additional Social Taxes

The provinces of British Columbia, Manitoba, Newfoundland and Labrador, Ontario, and Québec; and the Northwest Territories and Nunavut, assess taxes to fund additional social programs.

British Columbia: Effective since Jan. 1, 2019, British Columbia assesses a health tax on employers that pay employees who either work in British Columbia or are paid by a permanent establishment in the province. The tax is based on the amount of annual wages, benefits, and allowances that employers pay to these employees. Employers that pay more than C$500,000 in a year to their British Columbia employees must register starting Jan. 7, 2019, for assessment of the employer health tax.

Employers that pay C$500,000 or less to their British Columbia employees during a year are not assessed the employer health tax. Employers that pay more than C$500,000 and up to C$1.5 million to their British Columbia employees during a year are assessed an employer health tax rate of 2.925% on the result of subtracting C$500,000 from the amount they paid to their British Columbia employees. The rate of 2.925% on this range of income is known as the notch rate, and the upper limit of this range of income is known as the notch-rate amount. Employers that pay more than C$1.5 million to their British Columbia employees during a year are required to pay an employer health tax of C$29,250 plus 1.95% of the total amount of pay to British Columbia employees in excess of C$1.5 million.

Part-year employers, which are employers that during the applicable year start or cease to have a permanent establishment in the province, are required to prorate the exemption amount and notch-rate amount using the following calculations:

to prorate the exemption amount: C$500,000 multiplied by the number of days with a permanent establishment in the province, divided by 365 days; and
to prorate the notch-rate amount: C$1.5 million multiplied by the number of days with a permanent establishment in the province, divided by 365 days.

Employers whose health tax liability exceeded C$2,925 in the prior year must make quarterly installment payments based on the lesser of 25% of the previous year’s tax or 25% of the current year’s estimated tax. Returns must be filed electronically using the eTaxBC portal. Payments may be made through eTaxBC or through a financial institution using electronic funds transfer, bill-payment services, or wire transfer.

Effective starting with premiums that would have been due for January 2020, employers administering a British Columbia Medical Services Plan (MSP) are no longer required to pay premium amounts that employees residing in British Columbia otherwise would be required to pay.

Manitoba: Manitoba also levies its own payroll tax, the Health and Post Secondary Education Tax Levy, on employers based on total remuneration paid to Manitoba employees. Effective Jan. 1, 2021, employers that pay total annual remuneration to Manitoba employees of C$1.5 million or less are exempt from the levy. While there are multiple payroll tax rates, an employer is assessed only the payroll tax rate that corresponds to its total annual remuneration paid to Manitoba employees. Effective Jan. 1, 2021, employers that pay total annual remuneration to Manitoba employees greater than C$1.5 million and up to C$3 million are subject to a levy rate of 4.3% on the amount greater than C$1.5 million. Employers that pay total annual remuneration to employees of more than C$3 million are subject to a levy rate of 2.15% on their entire payroll. Effective until Dec. 31, 2020, the C$1.5 million threshold was instead C$1.25 million, and the C$3 million threshold was C$2.5 million.

Employers that are not exempt from the levy must file a monthly payroll tax return by the 15th day of the following month and an annual return by March 31 of the following year. Effective Jan. 1, 2021, returns must be filed and payments made online using Manitoba’s TAXcess portal. The division mails the annual return to employers, but payments of amounts owed with the annual report must be remitted through TAXcess.

Newfoundland and Labrador: Newfoundland and Labrador has a Health and Post Secondary Education Tax assessed on employers, with a rate of 2% on an employer’s total annual remuneration to employees, effective since Jan. 1, 2019, of more than C$1.3 million, and effective until Dec. 31, 2018, of more than C$1.2 million. Employers must file a monthly return by the 20th day of the following month. Returns may be filed and payments made using Newfoundland and Labrador’s eFiling portal, or mailed to the province’s Department of Finance.

The province also had a Temporary Deficit Reduction Levy, which was in effect from July 1, 2016, until Dec. 31, 2019. Tax amounts under the levy ranged from C$100 for individuals earning more than C$50,000 but not more than C$55,000, to C$1,800 for individuals earning more than C$600,000. The levy was paid by individuals and was included as part of Newfoundland and Labrador’s income tax withholding.

Northwest Territories: The Northwest Territories levies a payroll tax of 2% on all employees who perform work in the territory, regardless of home residence. This tax is collected at source by employers.

The payroll tax reporting frequency varies based on the employer’s estimated total annual remuneration paid to employees. If the total annual remuneration paid to employees is more than C$1 million, a monthly return must be filed. If the total annual remuneration paid to employees is more than C$600,000 and up to C$1 million, a quarterly return for each quarter ending March 31, June 30, Sept. 30, and Dec. 31, must be filed. If the total annual remuneration paid to employees is more than C$200,000 and up to C$600,000, a half-year return for six-month periods ending June 30 and Dec. 31 must be filed. If the total annual remuneration paid to employees is up to C$200,000, a calendar-year return must be filed. For all reporting frequencies, a return is due by the 20th of the month following the end of the reporting period.

Employers must also file an annual return by Feb. 28 of the following year. Returns must be mailed, faxed, or delivered to the Northwest Territories Finance Department.

Nunavut: Nunavut assesses a payroll tax of 2% on all employees who perform work in the territory for a majority of days worked in a year, regardless of home residence. Employees who do not spend a majority of days in a year working in Nunavut are not subject to the tax if they earn up to C$5,000 a year in Nunavut. The tax is collected at source by employers.

The payroll tax reporting frequency varies based on the employer’s estimated total annual remuneration paid to employees. The reporting frequencies are identical to the Northwest Territories payroll tax. If the total annual remuneration paid to employees is more than C$1 million, a monthly return must be filed. If the total annual remuneration paid to employees is more than C$600,000 and up to C$1 million, a quarterly return for each quarter ending March 31, June 30, Sept. 30, and Dec. 31, must be filed. If the total annual remuneration paid to employees is more than C$200,000 and up to C$600,000, a half-year return for six-month periods ending June 30 and Dec. 31 must be filed. If the total annual remuneration paid to employees is up to C$200,000, a calendar-year return must be filed. Employers may request a more frequent reporting schedule than they are assigned.

Returns and payments are due by the 20th of the month following the end of the reporting period. An annual return is due by Feb. 28 of the following year. Nunavut’s Department of Finance sends all returns to employers.

Ontario: Ontario levies an Employer Health Tax (EHT) on employers. The rates of Ontario’s EHT range from 0.98% on total annual remuneration paid to Ontario employees of up to C$200,000 to 1.95% on total annual remuneration paid to Ontario employees of more than C$400,000.

Eligible employers, such as private sector employers, government-subsidized employers, or crown corporations categorized under Part 1 of the Income Tax Act, are exempt from the EHT on an applicable amount of total annual remuneration paid to their Ontario employees. This annual exemption amount is subject to adjustment every five years, including years ending with “4” or “9”. Employers with total annual remuneration paid to their Ontario employees of more than C$5 million are ineligible for this exemption.

Effective from Jan. 1, 2019, to Dec. 31, 2023, the EHT annual exemption amount is C$490,000, except that effective for 2020, this annual exemption amount is C$1 million. Effective from Jan. 1, 2014, to Dec. 31, 2018, this annual exemption amount was C$450,000.

While there are multiple EHT rates, an employer is assessed only the EHT rate that corresponds to its total annual remuneration paid to Ontario employees. An employer’s EHT rate is based on its total annual remuneration paid to Ontario employees before the aforementioned annual exemption amount is applied. That EHT rate is applied to the employer’s annual remuneration paid to Ontario employees after the exemption amount is applied.

Ontario’s EHT rates and the corresponding ranges of total annual remuneration paid to Ontario employees for which the rates apply are as follows:

Range of Total Annual Remuneration Paid to Ontario Employees Before Exemption is Applied (Canadian Dollars)	Employer Health Tax Rate
Up to C$200,000	0.98%
More than C$200,000 and up to C$230,000	1.101%
More than C$230,000 and up to C$260,000	1.223%
More than C$260,000 and up to C$290,000	1.344%
More than C$290,000 and up to C$320,000	1.465%
More than C$320,000 and up to C$350,000	1.586%
More than C$350,000 and up to C$380,000	1.708%
More than C$380,000 and up to C$400,000	1.829%
More than C$400,000	1.95%

Public-sector employers are not exempt from the EHT. Employers, whether exempt or not, must register with the Ontario Ministry of Finance and must file an annual EHT return with the Ontario Ministry of Finance, which may be filed using the ministry’s ONT-TAXS online portal.

The annual EHT return for a year is due by March 15 of the following year. Remittances of the EHT due based on payments made to employees during a month are due by the 15th day of the following month.

Québec: Québec levies three types of payroll taxes on employers: the tax for the Health Services Fund (Fonds des services de santé, abbreviated as HSF in English and as FSS in French), the Labour Standards Contribution (Cotisation relative aux normes du travail), and the tax for the Workforce Skills Development and Recognition Fund (Fonds de développement et de reconnaissance des compétences de la main-d’œuvre, abbreviated as WSDRF in English and as FDRCMO in French).

Additionally, Québec employees and employers are assessed contributions for the Québec Pension Plan (Régime de rentes du Québec, abbreviated as QPP in English and as RRQ in French) and the Québec Parental Insurance Plan (Régime québécois d’assurance parentale, abbreviated as QPIP in English and as RQAP in French).

Health Services Fund (HSF) Tax: Effective since Aug. 16, 2018, payroll tax rates assessed on employers for the Health Services Fund range from 1.25% to 4.26%.

An employer’s Health Services Fund tax rate is based on its total annual remuneration to employees, also known as total payroll, and its industry sector. The four industry sector categories are the primary sector (referring to employers in general), the manufacturing sector, the service sector, and the construction sector.

Effective for 2022, employers that pay total annual remuneration to employees of at least C$7 million are assessed the maximum Health Services Fund rate of 4.26%, and rates lower than 4.26% are applicable to small- or medium-sized businesses (SMBs), which are those that pay total annual remuneration to employees of less than C$7 million. Effective for 2020, the C$7 million threshold was instead C$6.5 million.

The threshold at which employers are assessed the maximum Health Services Fund tax rate is to gradually increase through 2022, and is to be annually indexed starting with 2023.

Effective for 2022, the Health Services Fund tax rates applicable to employers based on their total annual remuneration to employees (total payroll) and industry sector are as follows:

Total Payroll (Canadian Dollars)	HSF Rate for Primary and Manufacturing Sector Employers	HSF Rate for Service and Construction Sector Employers
Up to C$1 million	1.25%	1.65%
More than C$1 million but less than C$7 million	0.7483% plus (0.5017% multiplied by total payroll divided by 1 million), rounded to the nearest hundredth of 1%, with rounding up if the number in the thousandths place is at least 5	1.215% plus (0.435% multiplied by total payroll divided by 1 million), rounded to the nearest hundredth of 1%, with rounding up if the number in the thousandths place is at least 5
At least C$7 million	4.26%	4.26%

Effective for 2021, the Health Services Fund tax rates applicable to employers based on their total annual remuneration to employees (total payroll) and industry sector are as follows:

Total Payroll (Canadian Dollars)	HSF Rate for Primary and Manufacturing Sector Employers	HSF Rate for Service and Construction Sector Employers
Up to C$1 million	1.25%	1.65%
More than C$1 million but less than C$6.5 million	0.7027% plus (0.5473% multiplied by total payroll divided by 1 million), rounded to the nearest hundredth of 1%, with rounding up if the number in the thousandths place is at least 5	1.1755% plus (0.4745% multiplied by total payroll divided by 1 million), rounded to the nearest hundredth of 1%, with rounding up if the number in the thousandths place is at least 5
At least C$6.5 million	4.26%	4.26%

Labour Standards Contribution: Effective starting in 2022, employers are assessed a labour standards contribution levy of 0.06% of wages paid to employees. Effective until 2021, employers were assessed a labour standards contribution levy of 0.07% of wages paid to employees.

Specified employers that were not subject to the contribution before 2022 are subject to the contribution starting in 2022, but some categories, including educational institutions, day care centers, and some public-sector employers such as municipalities, are assessed a reduced contribution rate through 2024. The contribution rate for these employers is 0.02% in 2022, 0.03% in 2023, and 0.05% in 2024.

Effective for 2022, the maximum annual amount of wages paid to an employee upon which the employer could be assessed this tax is C$88,000. Effective for 2021, the maximum annual amount of wages paid to an employee upon which the employer could be assessed this tax was C$83,500.

Workforce Skills Development and Recognition Fund (WSDRF) Tax: Employers with total annual remuneration paid to employees of more than C$2 million are liable for this tax. The total amount of payroll tax that employers are assessed for this fund for a year is the difference between 1% of their total remuneration paid to Québec employees for the year and the amount of their eligible training expenditures.

The Health Service Funds tax, Labour Standards Contribution, and Workforce Skills Development and Recognition Fund tax are remitted together with other employer social tax contributions and are reported on Québec’s RL-1 Summary each year according to the procedures detailed in the Social Taxes section of this primer.

Québec Pension Plan and Québec Parental Insurance Plan: Québec employees and employers also are required to pay contributions to fund the Québec Pension Plan (QPP) and Québec Parental Insurance Plan (QPIP), and contribution rates for Québec employees and employers to fund the Employment Insurance (EI) program differ from those generally in effect for employees and employers in Canada. More information regarding these social tax requirements for Québec employees and employers is available in the Social Taxes section of this primer.

COMPENSATION AND BENEFITS

Canada’s compensation and benefits requirements are established and enforced by the federal government of Canada and by the country’s provincial and territorial governments. The federal labor code is known as the Canada Labour Code (Code canadien du travail).

The Canada Labour Code applies only to employment in federally regulated industries, and not to all employment in Canada. The federally regulated industries include air transportation, banks, cable systems, canal and pipeline transportation that crosses provincial borders, feed and seed mills, grain elevators, marine shipping, port and ferry services, private businesses necessary to the operation of a federal act, protection of fisheries as a natural resource, radio and television broadcasting, railway and road transportation that crosses provincial or international borders, telephone and telegraph systems, uranium mining and processing, and many but not all federal Crown corporations and First Nations organizations.

The majority of employers in Canada do not perform principal activities in federally regulated industries and therefore are covered by provincial or territorial compensation and benefits provisions but not the Canada Labour Code. However, with regard to employees in federally regulated industries, applicable provincial and territorial compensation and benefits provisions that are more favorable to them than analogous parts of the Canada Labour Code apply to them and any provincial and territorial compensation and benefits provisions that do not conflict with the Canada Labour Code are in effect.

This section provides an overview of Canada Labour Code provisions and some provincial and territorial compensation and benefits provisions. Further details regarding federal, provincial, and territorial compensation and benefits provisions are available in the National Payroll Institute’s publication Canada Payroll: A Comprehensive Overview.

Minimum levels of compensation and benefits are set by law, although individualized contracts and collective bargaining agreements may provide for more generous compensation and benefits packages.

Minimum wage and overtime requirements vary among provinces and territories, although most provinces and territories require employers to pay an overtime premium of 50% of the regular rate of pay for overtime hours worked.

Other protections regarding compensation and benefits include mandatory holidays, leave, and termination pay.

Workers’ compensation is organized by associations at the provincial and territorial level with varying degrees of maximum coverage.

When employers have employees whose work is interrupted for any reason, including termination, employers are responsible for completing a Record of Employment (ROE), which determines whether terminated or laid-off employees qualify for employment insurance benefits.

Coronavirus (Covid-19) Guidance: Canada’s initial wage-replacement program, the Canada Emergency Wage Subsidy, provided to employers a partial subsidy of employees’ wages until Oct. 23, 2021. Employers must apply by 180 days after the end of the four-week period for which they wish to apply. The amount of the subsidy is calculated according to the percentage by which the employer’s revenue declined for a given month or the previous month compared to the same month of 2019 or the average of January and February 2020. For periods starting July 4, 2021, a revenue decrease of more than 10% is required. For periods from July 5, 2020, to July 3, 2021, all employers could receive a subsidy.

The subsidy is calculated on the first C$1,129 of an employee’s weekly wages, and the maximum subsidy ranges from 40% to 10% of employees’ weekly wages, depending on the period applied for. Employers that suffered a decrease in revenue of at least 50% on average over three-month periods when compared to the same period of 2019 may receive an additional subsidy, calculated according to the percentage by which their revenue decline exceeded 50%. From Dec. 20, 2020, to Oct. 23, 2021, the additional subsidy ranges from 35% to 10% of the first C$1,129 of an employee’s weekly wages, depending on the period applied for.

Employers may also claim refunds of Employment Insurance, Canada Pension Plan, Québec Pension Plan, and Québec Parental Insurance Plan employer contributions paid on the wages of employees who are on paid leave and for whom the employer can claim the CEWS. The refund can be claimed for each week that an employee receives pay for the week but does not perform any work.

Canada Recovery Hiring Program: The first of three CEWS successor programs, the Canada Recovery Hiring Program (CRHP), uses the same schedule of four-week periods as the CEWS with a 10% revenue-loss requirement for periods from June 6, 2021, to May 7, 2022. The amount of the subsidy uses the wages paid to employees during the period for which a claim is made and subtracts the wages paid during the period from March 14 to April 10, 2021, using a maximum of C$1,129 of weekly wages per employee. The result is then multiplied by a percentage from 50% to 30%, depending on the period of a claim. Unlike the CEWS, wages paid to employees on paid leave are not included in the CRHP calculation.

Two other programs, the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program, are similar to the CRHP and provide different subsidy rates from Oct. 24, 2021, to May 7, 2022. The Tourism and Hospitality Recovery Program covers businesses in tourism, hospitality, arts, entertainment, or recreation, and any other business affected by public health restrictions, that has a revenue loss of generally at least 40%. The Hardest-Hit Business Recovery Program covers businesses with at least a 50% revenue loss, both on average from March 2020 to February 2021 and during a given four-week period.

Canada Labour Code Covid-19 leave: Effective starting March 15, 2021, amendments to the Canada Labour Code and regulations entitle covered employees to up to four weeks of leave if they are unable to work because they have or may have Covid-19; because they have an underlying illness or condition that puts them at greater risk if they have Covid-19; or because they are self-isolating on the advice of their employer, a medical professional, or a government or public health department. Effective from Oct. 2, 2020, to March 14, 2021, this entitlement was to two weeks of leave.

Effective starting June 19, 2021, amendments to the Canada Labour Code and regulations entitle covered employees to up to 42 weeks of leave if they are unable to work because they must care for a child under age 12 or a family member requiring supervised care. The child or family member’s school or other care facility must be closed or partially open because of Covid-19; or they must be unable to attend the school or facility because they have or may have Covid-19, are at greater risk if they have Covid-19, or must self-isolate; or normal caregivers must not be available. Effective from March 15 to June 18, 2021, this entitlement was to 38 weeks of leave. Effective from Oct. 2, 2020, to March 14, 2021, this entitlement was to 26 weeks of leave.

British Columbia Covid-19 leave: Amendments to British Columbia’s Employment Standards Act, effective from May 20 to Dec. 31, 2021, entitled employees to three days of paid leave when they could not work for one of several Covid-19-related reasons and did not already have access to paid sick leave. The reasons for leave include that the employee was diagnosed with Covid-19; the employee was to quarantine on the advice of orders or guidelines from provincial or federal agencies; or they were complying with instructions from their employer in order to not expose other employees to Covid-19.

Employees must be paid at least their average daily wages, including vacation pay and excluding overtime pay, from the 30 days before the period of leave starts. Starting June 17, 2021, employers that do not have sick leave programs could apply to WorkSafeBC for reimbursements of up to C$200 per day for up to three days of leave per employee taken during the period from May 20 to Dec. 31, 2021, after paying employees for days of leave taken.

Ontario Covid-19 leave: Amendments to Ontario’s Employment Standards Act, effective from April 19, 2021, to July 31, 2022, entitle employees to three days of paid leave when they cannot work for one of several Covid-19-related reasons and do not already have access to paid sick leave. The reasons for leave include that the employee is undergoing treatment for Covid-19; they are complying with a government order related to Covid-19; they must quarantine on the advice of any level of government or a medical professional; or they are complying with instructions from their employer in order to not expose other employees to Covid-19. The entitlement also applies when the employee must care for a relative who is undergoing treatment for Covid-19 or who must quarantine on the advice of any level of government or a medical professional.

Employers must pay employees for each day of leave the least of either C$200, the amount of wages they would have earned by working, or the applicable minimum wage for employees who earn performance-based payments like commissions.

Vaccine leave: Alberta, British Columbia, Manitoba, and Saskatchewan allow employees to request paid leave for periods of up to three hours to receive Covid-19 vaccinations. Alberta and Saskatchewan allow employers to extend the period if the employer believes it necessary. These provisions took effect April 21, 2021, in Alberta; April 19, 2021, in British Columbia; May 12, 2021, in Manitoba; and March 18, 2021, in Saskatchewan.

Leave reimbursements: Manitoba, for leave from May 7 to Oct. 23, 2021; Nova Scotia, for leave from May 10 to July 31, 2021; Prince Edward Island, for leave starting March 1, 2021; and Yukon, for leave from March 26, 2020, to Sept. 30, 2022, are reimbursing employers for days of sick leave taken by employees for varying Covid-19-related reasons, including illness, self-isolation, care for relatives, tests, or vaccinations. Manitoba provides payments of up to five days of wages per employee, with a daily maximum of C$600, when the employer does not already offer at least five days of paid sick leave. Nova Scotia and Prince Edward Island offer up to four and six days of payments, respectively, with maximums of C$20 per hour and C$160 per day, when employees do not receive paid sick leave. Yukon reimburses up to 10 days of wages per employee for leave taken in each of two periods from April 1 to Sept. 30, 2021, or from Oct. 1, 2021, to Sept. 30, 2022, with a daily maximum of C$378.13, after an employee’s paid sick leave has been exhausted.

Minimum Wage

Canada does not have a national minimum wage. Each of Canada’s 10 provinces and three territories has a standard hourly minimum wage. In some jurisdictions, the applicable minimum wage for employees varies based on their level of experience. Some jurisdictions have industry-specific minimum wages or minimum wages for certain categories of employees, such as those younger than 18 years of age or those who regularly and customarily receive tips.

Starting Dec. 29, 2021, a separate minimum wage applies to employees covered by the Canada Labour Code unless the minimum wage in the jurisdiction where the employee works is higher. The Canada Labour Code minimum wage is to be adjusted each April 1.

The provinces’ and territories’ standard hourly minimum wages, and the provinces’ and territories’ industry-specific minimum wages based on time worked, are as follows:

Jurisdiction	Standard Hourly Minimum Wage (Canadian Dollars)	Minimum Wage for Specific Industry Sectors (Canadian Dollars)
Canada Labour Code	C$15 (starting Dec. 29, 2021)	No industry-specific minimum wage
Alberta	C$15	Domestic employees living in employer’s home: C$2,848 per monthSalespersons:C$598 per weekStudents under 18 years of age working up to 28 hours per week during the school year: C$13
British Columbia	C$15.20 (effective June 1, 2021)	Liquor servers:C$15.20 per hour (effective June 1, 2021)Live-in camp leaders:C$121.65 per day (effective June 1, 2021)Live-in home support workers:C$113.50 per dayResident caretakers:for an apartment building with nine to 60 suites, C$912.28 per month plus C$$35.56 per suite; C$3,107.42 per month (effective June 1, 2021)
Manitoba	C$11.95 (effective Oct. 1, 2021)	Construction workers (heavy construction):C$12.75 per hour to C$25.25 per hourConstruction workers (journeypersons):C$26.80 per hour to C$40.10 per hourConstruction workers (Skilled tradespersons):C$24.45 per hour to C$38.75 per hourConstruction workers (other workers):C$15.80 per hourSecurity guards:C$12.50 per hour
New Brunswick	C$11.75 (effective April 1, 2021)C$12.75 (effective April 1, 2022)C$13.75 (effective Oct. 1, 2022)	Counselors and program staff at a residential summer camp operated by a charity or nonprofit: C$501.60 per weekEmployees with unverifiable work hours and not paid by commission: C$517 per weekGovernment contractors in construction:C$10.37 per hour to C$30.17 per hour
Newfoundland and Labrador	C$12.75 (effective Oct. 1, 2021)C$13.20 (effective April 1, 2022)	No industry-specific minimum wage
Northwest Territories	C$15.20 (effective Sept. 1, 2021)	No industry-specific minimum wage
Nova Scotia	C$13.10 (effective April 1, 2021)C$13.35 (effective April 1, 2022)C$13.60 (effective Oct. 1, 2022)C$14.30 (effective April 1, 2023)C$14.65 (effective Oct. 1, 2023)C$15 (effective April 1, 2024)	Effective April 1, 2020:the rate specifically for inexperienced employees was eliminated
Nunavut	C$16	No industry-specific minimum wage
Ontario	C$15 (effective Jan. 1, 2022)	Homeworkers:C$16.50 per hour (effective Jan. 1, 2022)Hunting, fishing, and wilderness guides:C$75 per day for working less than five consecutive hours (effective Jan. 1, 2022); C$150.05 per day for working at least five hours (effective Jan. 1, 2022)Liquor servers:Eliminated, effective Jan. 1, 2022Students under 18 years of age working up to 28 hours per week or during a school day: C$14.10 per hour (effective Jan. 1, 2022)
Prince Edward Island	C$13.00 (C$13.70 effective April 1, 2022)	No industry-specific minimum wage
Québec	C$13.50 (effective May 1, 2021)	Tipped Employees:C$10.80 (effective May 1, 2021)
Saskatchewan	C$11.81 (effective Oct. 1, 2021)	No industry-specific minimum wage
Yukon	C$15.20 (effective Aug. 1, 2021)	Government contractors in construction:C$25.44 per hour to C$35.26 per hour (effective April 1, 2021)

Overtime

Hours worked beyond the standard hours of work in a day or week generally are considered overtime hours for which overtime premiums must be paid. However, overtime premiums generally are not required to be paid to some types of employees, even if they work beyond daily or weekly overtime thresholds. Managers, superintendents, employees with management functions, architects, dentists, engineers, lawyers, and medical doctors generally are exempt from overtime requirements.

Canada Labour Code: Work performed during a day in excess of eight hours and work performed during a week in excess of 40 hours generally must be compensated with an overtime premium of 50% of the regular rate.

Effective since Sept. 1, 2019, as an alternative to being entitled to pay of 1.5 times their regular hourly rate of pay for each overtime hour worked, employees instead may receive, for each overtime hour worked, 1.5 hours of paid time off if they have entered into a written agreement with their employer to provide on a specified date or dates paid time off in exchange for overtime work. Paid time off granted in exchange for overtime work must be taken within three months of the end of the pay period that included the overtime work to which the paid time off relates. An employer and employee not covered by a collective bargaining agreement instead may use a longer period of up to 12 months within which to take the paid time off if they agree in writing, and an employer and employee covered by a collective bargaining agreement instead may use a longer period of up to 12 months if that period is specified in the collective bargaining agreement.

Effective since Sept. 1, 2019, employees who within the applicable maximum period do not take paid time off that they were owed for overtime hours they worked must within 30 days of the end of the period be paid the amount they would have been paid for the paid time off they did not take. If an employee separates from employment before the date or dates when the employee was to take paid time off owed to the employee in connection with overtime work, the amount the employee would have been paid for the time off must be paid to the employee within 30 days of the date that the employee separated from employment.

Effective since Sept. 1, 2019, employees can refuse to work overtime hours if they need to use that time to attend to any responsibilities for which they would be eligible to take family responsibility leave and if there was no reasonable way that they could have attended to those responsibilities at another time. However, employees cannot refuse to work overtime hours if an employer needs them to work those hours due to situations that the employer could not reasonably have foreseen and that imminently or seriously threaten the life, health, or safety of anyone; the security of property; or the ordinary operations of the employer’s business.

Provincial and Territorial Requirements: Each province and each territory has an overtime rate governed by employment and labour standards acts, with general provisions listed below. The overtime threshold column of the chart refers to the maximum number of hours worked in an applicable period after which further hours worked during the period must be compensated with overtime premiums in addition to the regular rate of pay. More information regarding provincial and territorial overtime requirements is available in the Overtime section of Canada Payroll: A Comprehensive Overview.

Among Canada’s 10 provinces and three territories, the number of hours worked in a day and in a week in excess of which the hours are considered overtime hours, the overtime premium that must be paid in addition to regular pay for work performed during overtime hours, and whether there are limits on overtime are as follows:

Jurisdiction	Overtime Threshold	Overtime Premium	Limits on Overtime
Alberta	8/day; 44/week	50% of regular rate	Yes
British Columbia	8/day; 40/week	50% of regular rate for hours beyond 8 per day or 40 per week; 100% of regular rate for hours beyond 12 per day	No
Manitoba	8/day; 40/week	50% of regular rate	No
New Brunswick	44/week	50% of minimum wage or 50% of regular rate, whichever is greater	No
Newfoundland and Labrador	40/week	50% of minimum wage or 50% of regular rate, whichever is greater	No
Northwest Territories	8/day; 40/week	50% of regular rate	Yes
Nova Scotia	48/week	50% of regular rate	No
Nunavut	8/day; 40/week	50% of regular rate	Yes
Ontario	44/week	50% of regular rate	No
Prince Edward Island	48/week	50% of regular rate	No
Québec	40/week	50% of regular rate	Yes
Saskatchewan	8/day; 40/week	50% of regular rate	Yes
Yukon	8/day; 40/week	50% of regular rate	No

Hours of Work

Canada Labour Code: The standard hours of work in Canada are eight hours per day, or 40 hours in a week. The maximum time permitted for work per week is 48 hours.

Certain occupational groups are exempt from the rule to work no more than 48 hours in a week, although the Canada Labour Code makes no distinction between full-time, part-time, or any other category of worker. Canada’s restrictions on hours worked do not apply to management-level employees and some exceptions may be made regarding emergency jobs or careers without regular schedules.

Employees also may be subject to a modified work schedule, which may compress total hours per week into fewer days.

Effective since Sept. 1, 2019, employers in federally regulated industries must notify each employee in writing of his or her work schedule at least 96 hours before the start of the employee’s first work period or shift in accordance with the schedule. Employees also generally may decline to work during any work period or shift that starts within 96 hours of when they were provided notice of their work periods or shifts under the schedule. The code permits collective bargaining agreements to specify that the 96-hour period specified by the Canada Labour Code is inapplicable to employees covered by an agreement and that the covered employees therefore cannot decline the work. If a collective bargaining agreement established a different schedule for providing covered employees with notice of their work periods and shifts under a work schedule, the 96-hour period would not apply to the covered employees. Employees cannot decline work within their applicable period of time to decline work if they are needed to handle situations that the employer could not reasonably have foreseen and that imminently or seriously threaten the life, health, or safety of anyone; the security of property; or the ordinary operations of the employer’s business.

Effective since Sept. 1, 2019, employers that want to adjust an employee’s work schedule either by reassigning the employee to work during a different work shift than one for which the employee originally was assigned or by adding a work shift to the schedule must provide the employee with written notice of this adjustment. Notice that an employee is required to work a shift different from one for which the employee originally was scheduled must be provided to the employee at least 24 hours before the start of the original shift or the new shift, whichever starts first. Notice that an employee is required to work an additional shift must be provided to the employee at least 24 hours before the start of the additional shift. The requirement to provide at least 24 hours of advance notice regarding a work schedule change does not apply if the employer needs an employee to handle a situation that the employer could not reasonably have foreseen and that imminently or seriously threatens the life, health, or safety of anyone; the security of property; or the ordinary operations of the employer’s business.

Effective since Sept. 1, 2019, employees who have completed six consecutive months of continuous employment with their employer have the right to submit to their employer a written request to establish a flexible work arrangement that would change the number of hours they are required to work, their work schedule, their work location, or any other employment terms and conditions that are regulated. Employers may respond to an employee’s flexible work arrangement request by granting it, granting it in part and declining it in part, offering to make an alternative change to the employee’s terms and conditions of employment, or refusing the request. An employer may refuse such a request if granting it would:

increase the employer’s costs to such an extent that the additional costs would be a burden;
detrimentally affect the quality or quantity of work, or performance, within the employer’s industrial establishment;
detrimentally affect the employer’s ability to fulfill demands of customers;
cause the employer to be in a situation in which the employer is unable to reapportion work among its employees or hire an additional employee to accommodate the request; or
cause there to be insufficient work available for the employee to whom the request was granted.

Effective since Sept. 1, 2019, employers must provide employees with an unpaid break of at least 30 minutes during each period of five consecutive work hours. Employers that require employees to be at their disposal during a break must pay them for the duration of the break. Employees generally must be granted a rest period of at least eight consecutive hours between work periods or shifts. Employers do not need to provide an employee with a break or a rest period if it is necessary for the employee to work without a break or rest period to handle a situation that the employer could not reasonably have foreseen and that imminently or seriously threatens the life, health, or safety of anyone; the security of property; or the ordinary operations of the employer’s business.

Effective since Sept. 1, 2019, employers must provide employees with any unpaid breaks they request for attending to medical needs, although employers may issue a written request to an employee mandating that the employee provide certification from a health care practitioner identifying the appropriate lengths and frequencies of the employee’s unpaid breaks for fulfilling medical needs.

Effective since Sept. 1, 2019, employees who are nursing must be granted any unpaid breaks they need to nurse or express breast milk.

Provincial and Territorial Requirements: There is considerable variation among Canada’s provinces and territories regarding whether there is a maximum number of hours that may be worked during a period; whether a jurisdiction enforcing maximum hours that may be worked imposes a maximum on work in a day, work in a week, or both; and whether employers can average hours worked over multiple periods to fulfill requirements regarding maximum hours worked.

More information regarding provincial and territorial hours of work requirements is available in the Hours of Work section of Canada Payroll: A Comprehensive Overview.

Most of the provinces and territories require a break of at least half an hour to be provided to employees for every five hours of work, but jurisdictions with such a requirement vary regarding whether the break must be provided within the period of five hours of work or whether five consecutive hours of work must be completed before the break must be provided.

Alberta, British Columbia, Newfoundland and Labrador, and Ontario require least eight hours of rest to be provided between work periods or shifts, although there are some nuanced differences among these requirements. No other province or territory requires at least eight hours of rest between work periods or shifts.

All of the provinces and territories require employers to provide employees with a period of at least 24 hours each week when they are not required to work, but there is variation among the provinces and territories regarding whether this period must be a calendar day or can be a period of 24 hours that is not coterminous with a calendar day and whether a period of more than 24 hours of rest is required.

More information regarding provincial and territorial requirements regarding meal breaks, rest periods, time off between shifts, and days off is available in the Meal Breaks, Test Periods, Time Off Between Shifts, and Days Off section of Canada Payroll: A Comprehensive Overview.

Holidays

The holidays for which paid leave is required vary among the provinces and territories, and employees in federally regulated industries are covered by the paid holiday provisions of the Canada Labour Code. Employees in a federally regulated industry who are employed in a province or territory with a paid holiday that is not among the nine paid holidays specified in the Canada Labour Code must be provided with paid leave for that holiday.

There are five statutory holidays (jours fériés) that the Canada Labour Code and every province and territory recognize as holidays for which paid leave generally must be granted. The five holidays are:

Jan. 1: New Year’s Day (jour de l’An).
Good Friday (Vendredi saint), the Friday immediately before Easter Sunday. In Québec, employers may designate the following Monday, Easter Monday (lundi de Pâques), as a paid day off instead of Good Friday.
July 1: Canada Day (Fête du Canada). This holiday is celebrated as Memorial Day in Newfoundland and Labrador.
Labour Day (fête du Travail), the first Monday in September.
Dec. 25: Christmas Day (jour de Noël).

There is variation among the Canada Labour Code and the provinces and territories regarding: whether when a holiday occurs on a day for which an employee normally would not be working the employer is required to provide the employee with a separate day of paid leave, methods of calculating statutory holiday pay for employees who do not work on a statutory holiday for which paid leave is required, and methods of calculating statutory holiday pay for employees who work on a statutory holiday even though they normally would have been entitled to paid leave. More information regarding the variations is available in the Statutory/Public/General Holidays section of Canada Payroll: A Comprehensive Overview and the Overtime Calculations for Statutory Holidays section of Canada Payroll: A Comprehensive Overview.

Canada Labour Code: The additional holidays for which the Canada Labour Code requires paid leave to be provided to employees in federally regulated industries are:

Victoria Day (fête de la reine Victoria), the Monday immediately before May 25.
Sept. 30: National Day of Truth and Reconciliation (Journée nationale de la vérité et de la réconciliation), which is a holiday starting in 2021.
Thanksgiving Day (jour de l’Action de grâces), the second Monday in October.
Nov. 11: Remembrance Day (jour du Souvenir).
Dec. 26: Boxing Day (lendemain de Noël).

Effective starting Sept. 1, 2019, employees, starting with their first day of employment, are entitled to holiday pay for statutory holidays identified in the Canada Labour Code. Effective until Aug. 31, 2019, employees were not entitled to holiday pay for statutory holidays identified in the Canada Labour Code that occurred within their first 30 days of employment with an employer.

For each holiday for which paid leave is required and an employee in a federally regulated industry does not work, the employee generally must be paid at least one-twentieth ( ¹ ⁄ ₂₀ ) of his or her wages, excluding overtime pay, that he or she earned during the four-week period immediately before the week that includes the holiday. In these circumstances, the applicable wages that must be paid to employees in federally regulated industries who have worked at least 12 weeks in continuous employment and who are paid wholly or partially part by commission must be paid at least one-sixtieth ( ¹ ⁄ ₆₀ ) of his or her wages, excluding overtime pay, that he or she earned during the 12-week period of that employment immediately before the week that includes the holiday.

When employees work on a holiday for which paid leave normally is required, they generally must be paid holiday pay equivalent to their regular daily rate of wages, and also need to be paid 1.5 times their regular hourly rate of wages for each hour worked on the holiday. However, when employees work on a holiday for which paid leave normally is required and they choose through a written substitute agreement to have a different day off with pay, they would be paid their regular rate of wages for normal hours worked during that day and would receive a different day off with pay at their regular daily rate of wages.

When a public holiday falls on a day that is a non-working day for employees in federally regulated industries, they are entitled to a paid day of leave at some other time, which may be in addition to their annual vacation or granted as a holiday with pay at a time convenient to both the employee and the employer.

For weeks with one holiday, overtime applies after 32 hours of work during the week. Shifts that start on the holiday are paid at 1.5 times the regular rate to midnight and at the regular rate after midnight. Shifts that start the day before a holiday are paid at the regular rate of pay until midnight and at 1.5 times the regular rate for hours after midnight.

Effective starting Sept. 1, 2019, employers may replace a public holiday with another day with the consent of employees. For employees who are represented by a trade union, the written consent of the union must be obtained, and for employees that are not represented by a trade union, the replacement holiday must be approved by 70% of affected employees. Employers must then post a notice of the substitution at least 30 days before the substitution takes effect.

Provincial and Territorial Requirements: Each province and each territory has at least one holiday for which paid leave is required that is in addition to the five statutory holidays for which paid leave is required across Canada. Some of the provinces and territories require paid leave for at least one of the additional four paid holidays identified in the Canada Labour Code.

Alberta

Alberta’s additional public holidays for which paid leave is required are:

Alberta Family Day, the third Monday in February.
Victoria Day, the Monday immediately before May 25.
Thanksgiving Day, the second Monday in October.
Nov. 11: Remembrance Day.

Three additional days are recognized by Alberta as optional general holidays for which if an employer agrees to provide paid leave, Alberta’s holiday pay provisions are applicable. The three optional general holidays are:

Easter Monday, the Monday immediately after Easter Sunday.
Alberta Heritage Day, the first Monday in August.
Dec. 26: Boxing Day.

British Columbia

British Columbia’s additional public holidays for which paid leave is required are:

British Columbia Family Day, the third Monday in February.
Victoria Day, the Monday immediately before May 25.
British Columbia Day, the first Monday in August.
Thanksgiving Day, the second Monday in October.
Nov. 11: Remembrance Day.

Manitoba

Manitoba’s additional public holidays for which paid leave is required are:

Louis Riel Day, the third Monday in February.
Victoria Day, the Monday immediately before May 25.
Thanksgiving Day, the second Monday in October.

Additionally, while Remembrance Day, which annually occurs Nov. 11, is not a holiday for which Manitoba requires paid leave, Manitoba requires employers to provide employees with extra compensation for working on the day. Employees who on Remembrance Day work no more than half of their normal daily work hours must be paid as if they had worked for half of their normal daily working hours at 1.5 times their regular hourly rate of pay per hour; and they also must be paid either one full day’s worth of pay at their regular daily rate of pay, or if their work hours normally vary, then 5% of their gross earnings during the 28-day period that preceded Remembrance Day. Employees who on Remembrance Day work more than half of their normal work hours must be paid 1.5 times their regular hourly rate of pay per hour and also must be paid one full day’s worth of pay at their regular daily rate of pay.

New Brunswick

New Brunswick’s additional public holidays for which paid leave is required are:

New Brunswick Family Day, the third Monday in February.
New Brunswick Day, the first Monday in August.
Nov. 11: Remembrance Day.

Three additional days are recognized by New Brunswick as optional general holidays for which if an employer agrees to provide paid leave, New Brunswick’s holiday pay provisions are applicable. The three optional general holidays are:

Victoria Day, the Monday immediately before May 25.
Thanksgiving Day, the second Monday in October.
Dec. 26: Boxing Day.

Newfoundland and Labrador

The only additional public holiday for which paid leave is required by Newfoundland and Labrador is Remembrance Day, which is annually celebrated Nov. 11.

In Newfoundland and Labrador, Canada Day is known as Memorial Day.

Northwest Territories

The Northwest Territories’s additional public holidays for which paid leave is required are:

Victoria Day, the Monday immediately before May 25.
June 21: National Indigenous Peoples Day, also known as National Aboriginal Day.
Northwest Territories Civic Holiday, the first Monday in August.
Thanksgiving Day, the second Monday in October.
Nov. 11: Remembrance Day.

Nova Scotia

The only additional public holiday for which paid leave is required by Nova Scotia is Nova Scotia Heritage Day, which is the third Monday in February.

Additionally, while Remembrance Day, which annually occurs Nov. 11, is not a holiday for which Nova Scotia requires paid leave, Nova Scotia requires employers, except employers exempt from the province’s Remembrance Day Act, to provide employees with extra compensation for working on the day. Exempt employers include employers whose business primarily involves aquaculture, Christmas tree operations, farming, fishing, logging or tree harvesting or other forest work, or industrial undertakings such as construction, mining, factory production, power generation, and shipbuilding. Employees of employers covered by Nova Scotia’s Remembrance Day Act who work on Remembrance Day during a year and who were entitled to receive wages for at least 15 of the 30 calendar days immediately preceding Remembrance Day of that year must be provided with a different day off with pay in addition to the wages they normally would be paid for work on the holiday.

Nunavut

Nunavut’s additional public holidays for which paid leave is required are:

Victoria Day, the Monday immediately before May 25.
June 21: National Indigenous Peoples Day, also known as National Aboriginal Day.
Nunavut Civic Holiday, the first Monday in August.
Thanksgiving Day, the second Monday in October.
Nov. 11: Remembrance Day.

Additionally, government employees are entitled to paid leave on Nunavut Day, which annually occurs July 9.

Ontario

Ontario’s additional public holidays for which paid leave is required are:

Ontario Family Day, the third Monday in February.
Victoria Day, the Monday immediately before May 25.
Thanksgiving Day, the second Monday in October.
Dec. 26: Boxing Day.

Prince Edward Island

Prince Edward Island’s additional public holidays for which paid leave is required are:

Islander Day, the third Monday in February.
Nov. 11: Remembrance Day.

Québec

Québec’s additional public holidays for which paid leave is required are:

National Patriots’ Day (Journée nationale des patriotes), the Monday immediately before May 25.
June 24: Québec National Day (Fête nationale du Québec), also known as Saint-Jean-Baptiste Day (Fête de la Saint-Jean-Baptiste). However, if June 24 is a Sunday, employees who do not normally work Sunday have paid leave June 25 and employees who normally work Sunday have paid leave June 24. Unlike other paid holidays recognized in Québec, for which if an employee works on the holiday the employee may choose to be paid at his or her regular daily rate for work on the holiday plus receive a different day of leave with pay within three weeks of the holiday, a replacement day of paid leave granted to an employee for work on Québec National Day must be the employee’s normal working day that either is the day before or the day after the holiday.
Thanksgiving Day (jour de l’Action de grâces), the second Monday in October.

In Québec, employers may designate Easter Monday (lundi de Pâques) as a paid day off instead of Good Friday, with Easter Monday occurring on the Monday immediately after Easter Sunday.

Additionally, employees in the clothing industry are annually entitled to paid leave Jan. 2 and to paid leave on both Good Friday and Easter Monday.

Saskatchewan

Saskatchewan’s additional public holidays for which paid leave is required are:

Saskatchewan Family Day, the third Monday in February.
Victoria Day, the Monday immediately before May 25.
Saskatchewan Day, the first Monday in August.
Thanksgiving Day, the second Monday in October.
Nov. 11: Remembrance Day.

Yukon

Yukon’s additional public holidays for which paid leave is required are:

Victoria Day, the Monday immediately before May 25.
June 21: National Indigenous Peoples Day, also known as National Aboriginal Day.
Discovery Day, the third Monday in August.
Thanksgiving Day, the second Monday in October.
Nov. 11: Remembrance Day.

Leave

The Canada Labour Code guarantees paid vacation leave, as well as additional types of paid leave and types of unpaid leave. Each province and territory in Canada has laws and regulations in effect regarding paid leave and unpaid leave.

Vacationable earnings is the term used throughout Canada to denote the amount of an employee’s compensation over a 12-month period used for calculating the vacation pay due to that employee when the employee is on vacation. Each province and territory has specified the percentage or fraction of vacationable earnings due to an employee as vacation pay and changes to the applicable percentage or fraction based on length of service, and these elements also are specified by the Canada Labour Code.

The remainder of the Leave section of this primer discusses general leave provisions of the Canada Labour Code and Québec, while other provinces and territories have additional provisions regarding paid leave and unpaid leave to which employees are eligible. More information regarding provincial and territorial leave provisions, including additional details on Québec’s leave provisions, is available in the Vacation Time and Pay, Maternity (Pregnancy), Parental, Paternal, Adoption and Child Care Leave, Bereavement Leave, Jury Duty, Family Responsibility/Crisis Leave, Citizenship Leave, Compassionate Care Leave, Reservist Leave, Organ Donor Leave, and leave for Parents of Critically Ill or Injured Children sections of Canada Payroll: A Comprehensive Overview.

Canada Labour Code: Effective since Sept. 1, 2019, employees in federally regulated industries are entitled to two weeks of annual leave after one year of employment; three weeks of annual leave after five consecutive years of employment with an employer; and four weeks of annual leave after 10 consecutive years of employment with an employer. Effective until Aug. 31, 2019, employees in federally regulated industries are entitled to two weeks of annual leave after one year of employment and three weeks of annual leave after six consecutive years of employment with an employer.

Employees are entitled to 4% of their wages as vacation pay if they qualify for two weeks of leave, 6% of their wages if they qualify for three weeks of leave, or 8% of their wages if they qualify for four weeks of leave. Employees may also request in writing to take annual leave in more than one period, in which case they receive prorated amounts of vacation pay according to the length of each period.

Vacation pay is typically paid by employers 14 days prior to employees beginning their vacation leave. However, employers determine when employees can take their vacations.

Employees that intend to take compassionate care leave, bereavement leave, critical illness leave, leave related to death or disappearance of a child, leave for victims of domestic violence, or leave for traditional aboriginal practices must notify their employer in writing with the reasons for the leave and the intended length of the leave, and must also notify the employer of any change in the intended length of leave.

Family Responsibility Leave/Personal leave: Effective starting Sept. 1, 2019, employees are entitled to five days of family responsibility leave, the first three days of which must be paid leave if the employee has completed three consecutive months of employment with an employer. Family responsibility leave is available for specified reasons related to either caring for family members or caring for oneself so that one can improve one’s ability to take care of one’s family. The federal family responsibility leave also is known simply as personal leave because some of the reasons for which the leave may be used involve personal needs instead of solely helping members of one’s family.

The circumstances for which employees are entitled to use their accumulated days of family responsibility leave are for:

providing health care or other care for family members;
educating family members younger than 18 years of age;
addressing urgent matters concerning their family members or themselves;
treating their own illness or injury; and
attending their citizenship ceremony under the Citizenship Act, if they were not already a citizen of Canada.

Paid family responsibility leave provided to an employee must be paid at the employee’s regular rate of pay for his or her normal hours of work.

Maternity Leave: Female employees who have completed six consecutive months of employment with an employer are entitled to up to 17 weeks of maternity leave, which may begin up to 13 weeks before the expected date of birth and must end within 17 weeks of the date of birth.

Paid Parental Leave: Employees who have completed six consecutive months of employment with an employer are also entitled to up to 63 weeks of leave to care for a newborn or newly adopted child. The leave may be taken during a 78-week period starting, by the employee’s choice, either on the day the child is born or the day the employee begins to care for the child.

Employment Insurance (EI) funds maternity and paternity benefits for individuals who have accumulated at least 600 hours of insurable employment and who are expecting a child, have recently given birth, have adopted a child, or are caring for a newborn.

EI benefits guarantee 55% of employees’ average insurable weekly earnings, with the maximum amount of wages upon which this calculation is based equivalent to the maximum insurable earnings for the EI program. Low-income families who earn less than C$25,921 annually and qualify for the Canada Child Tax Benefit are entitled to additional support through the EI Family Supplement. The supplement can increase EI benefits up to 80% of average insurable earnings. EI benefits are taxable at both the federal and provincial/territorial level.

Parental benefits may be paid over an extended period of 61 weeks at a lower rate of 33% of employees’ average insurable weekly earnings.

Additional paid leave from EI may be granted if the child is hospitalized. Parents are entitled to as many as 50 weeks of paid leave when combined with sickness and compassionate care leave. Biological mothers, however, are ultimately entitled to as many as 71 weeks of paid leave if they combine total parental benefits with their maximum sickness and compassionate care leave.

Medical Leave/Sick Leave: Effective since Sept. 1, 2019, medical leave is the primary term for this type of leave and employees may, starting with the start date of their employment, be absent from work for periods of up to 17 weeks because of an illness or injury. Effective until Aug. 31, 2019, sick leave is the primary term for this type of leave and employees who have completed three consecutive months of employment with an employer may be absent from work for periods of up to 17 weeks because of an illness or injury.

Effective since Sept. 1, 2019, this leave may be used because of a personal illness or injury, to donate an organ or tissue, and to attend medical appointments that occur during work hours. Effective until Aug. 31, 2019, this leave may be used because of a personal illness or injury.

Sickness benefits are calculated on the same basis as maternity/paternity benefits, including a reduction of at least 40% of income and at least 600 hours of accumulated insurable employment. Employees are entitled to a total of 15 weeks of sickness benefits under EI.

An employee’s leave period may be extended if the employee has a workers’ compensation claim and is undergoing treatment and rehabilitation under that claim.

Compassionate Care Leave: Employees are entitled to up to 28 weeks of leave to provide care to a family member if the family member has a serious condition that a doctor or nurse certifies has a significant risk of death within 26 weeks.

Compassionate care leave generally may be shared among siblings.

Compassionate care benefits are also calculated based on accrued insurable employment and total income, and disbursed if income falls below 40% of previous weekly earnings. Employees are entitled to a total of 26 weeks of compassionate care leave benefits under EI.

Leave for Victims of Domestic Violence: Effective starting Sept. 1, 2019, employees must receive 10 days of leave if they are a victim of domestic violence or are a parent of a child who is a victim of domestic violence, and they must be paid for at least five of these days. The leave may be used to seek medical attention, counseling, or other services; to temporarily or permanently change their residence; or to seek legal assistance.

Leave for Traditional Aboriginal Practices: Effective starting Sept. 1, 2019, employees who are First Nations, Inuit, or Métis and have completed three consecutive months of employment with an employer may take up to five days of leave to engage in traditional practices, such as hunting, fishing, and harvesting.

Jury Duty Leave: Employees must be granted leave to attend court for the purpose of participating in the selection process for a jury or acting as a witness or juror in a proceeding, and this leave does not need to be paid.

Bereavement Leave: Effective since Sept. 29, 2021, employees are entitled to 10 days of bereavement leave following the death of a member of their immediate family or another family member for which the employee was taking compassionate care leave or critical illness leave at the time of the individual’s death. The 10 days must be used during the period that begins on the day the death occurred and ends six weeks after the latest of the days on which any funeral, burial, or memorial service for that family member occurred; and employees who have completed at least three consecutive months of continuous employment with their employer are entitled to pay on the first three of these days of leave, with this pay provided at their regular rate of pay for normal hours of work. Effective until Sept. 28, 2021, employees were entitled to five days of bereavement leave only for immediate family members, three days of which were paid.

Critical Illness Leave: Employees who have completed six consecutive months of employment with an employer are entitled to 37 weeks of leave to care for a child that a doctor or nurse certifies is critically ill, or 17 weeks of leave for a corresponding adult.

As part of critical illness leave, the Family Caregiver Benefit for Children allows eligible caregivers to receive up to 35 weeks of caregiver benefits to provide care or support to a critically ill or injured child. Caregivers must be family members or someone who is considered to be like family to the child needing care or support. The Family Caregiver Benefit for Adults allows eligible caregivers to receive up to 15 weeks of caregiver benefits to provide care or support to a critically ill or injured adult. Caregivers must be family members or someone who is considered to be like family by the person needing care or support.

The Family Caregiver Benefit may be used entirely for a caregiver or split between eligible caregivers during a 52-week period.

Leave Related to Death or Disappearance of a Child: Employees are entitled to up to 104 weeks of leave to cope with the death or disappearance of their child.

Voting Leave: Employees must be granted three consecutive hours while the employee’s polling location is open to vote.

Reservist Leave: Effective since Sept. 1, 2019, employees who are members of Canada’s Reserve Force are eligible for leave to take part in qualifying Reserve Force activities after they have completed three consecutive months of continuous employment with their employer. Effective until Aug. 31, 2019, employees who are members of Canada’s Reserve Force are eligible for leave to take part in qualifying Reserve Force activities after they have completed six consecutive months of continuous employment with their employer.

Québec: For Québécois (Quebecers), paid vacation is accrued during each 12-month period of employment. During the first year of employment, one day of vacation accrues per month, up to a limit of two weeks of accrued vacation. Employees with at least one year and up to three years of employment are entitled to two weeks of uninterrupted vacation. Employees with more than three years of continuous employment with an employer must be granted three uninterrupted weeks of vacation per year by that employer.

Employees eligible for two weeks of vacation are compensated for their vacation time with 4% of their annual wage, and employees eligible for three weeks of vacation are compensated for their vacation time with 6% of their annual wage. Clothing-industry employees earn vacation time at a slightly different rate, although this does not include retail employees of clothing stores.

Québec employees are entitled to benefits from the Québec Parental Insurance Plan (QPIP). To qualify, employees must have stopped working or experienced a reduction of at least 40% of their income and have at least C$2,000 in insurable income during the 52-week period prior to requiring benefits. When applying for benefits under the QPIP, employees can opt for the Basic Plan or the Special Plan. Under the Basic Plan, maternity leave maximizes at 18 weeks with 70% of average weekly income. Under the Special Plan, maternity leave maximizes at 15 weeks, though payment increases to 75% of average weekly income. Paternity leave in both plans is much lower, at five weeks and three weeks, respectively, with the same percentages of average weekly income.

If Québec parents opt for shared leave, the Basic Plan allows the option for higher benefits for a shorter period or lower benefits for a longer period. The parental leave is uniform for the Special Plan, at 25 weeks for 75% of average weekly income. Adoptive leave is similarly structured with a tiered system for the Basic Plan and a uniform system for the Special Plan.

Employers must approve of the timing of an employee’s leave.

Wage Payment

Employers are required to pay employee wages on a regular basis, as well as disburse any overtime, holiday, severance, and bereavement pay.

Employees can be paid in several ways and pay frequencies, including weekly, biweekly, semi-monthly, monthly, or in 13 annual payments.

Employees qualifying for vacation leave must be compensated by their employers before the start of their vacation.

Bonuses and Special Benefits

The Canada Labour Code, the provinces, and the territories do not require employers to provide bonus payments to employees.

Termination Pay

Canada Labour Code: The Canada Labour Code governing the termination of employees in federally regulated industries by providing minimum standards for their dismissal and potential compensation.

Under the Code, employers must give individual employees written notice of an intent to terminate their employment at least two weeks before the intended termination date. Instead of providing written notice, employers can pay employees two weeks of wages. The requirement for notice or pay applies to employees who have completed three consecutive months of employment with the employer, those who terminate their own employment, or those who are dismissed for just cause.

Employers with employees who have earnings interrupted for any reason, including termination, are required to complete a Record of Employment (ROE). More details on completing the ROE are in the Recordkeeping section of this primer.

Group terminations or mass layoffs are defined to include the termination of at least 50 employees from a single establishment in a federally regulated industry either all at once or within four consecutive weeks. Written notice to any trade union representing the employees or to any individual who is not a union member is required at least 16 weeks before the terminations begin, unless the employer is granted a waiver by the labor minister.

An employee in a federally regulated industry qualifies for severance pay after completing at least 12 consecutive months of continuous employment with an employer. Layoffs that are not a termination of employment and absences permitted by the employer do not interrupt the continuity of employment. Under the Code, severance pay is calculated as two regular working days of pay, excluding overtime, for each completed year of employment, with a minimum payment of the equivalent of five regular days of pay. Employees dismissed for just cause are ineligible for severance pay.

Provincial and Territorial Requirements: Requirements regarding terminations, notices of group termination, and severance pay vary among Canada’s provinces and territories. Among the provinces and territories, only Ontario requires severance pay to be paid to employees separating from employment.

More information regarding the provinces’ and territories’ termination pay requirements is available in the Terminations, Notice of Group Termination, and Severance Pay sections of Canada Payroll: A Comprehensive Overview.

Employment Insurance Act: The Employment Insurance Act applies to all employees throughout the provinces and territories, even if they are not within federally regulated industries. Employment Insurance provides wage replacement income to employees who were separated from employment through no fault of their own. Employees and employers are assessed premiums to fund the Employment Insurance (EI) program. More information regarding EI assessment rates is available in the Social Taxes section of this primer.

To qualify for EI benefits, employees generally must have worked a minimum of 420 hours to 700 hours during the previous year, with the applicable number of hours varying depending on the unemployment rate in the worker’s region. The level of benefits is 55% of a worker’s average insurable weekly earnings, up to a maximum weekly benefit. A worker receives payments for 14 to 45 weeks, depending on the unemployment rate in his or her region and the number of hours of insurable employment he or she has worked in the past year.

Weekly EI benefits are calculated using employees’ highest weeks of earnings during a qualifying period, which usually is a period of 52 weeks. The number of weeks of earnings used to calculate benefits ranges from 14 to 22, depending on the applicable region’s unemployment rate.

Workers’ Compensation

Workers who become injured or ill because of their employment activities and who partially or fully cannot perform work because of that injury or illness are entitled to workers’ compensation, which serves as replacement income. Employers operating in Canada are required to secure workers’ compensation coverage so that their workers can have access to replacement income in the event of injury or illness in the course of employment.

Each province and territory has a maximum insurable earnings amount for assessment of workers’ compensation premiums, and a province’s or territory’s maximum insurable earnings amount generally also is the maximum amount of applicable wages an employer paid to an individual that a workers’ compensation board would use to calculate workers’ compensation replacement income payable to the individual. However, Alberta’s maximum insurable earnings amount only applies to premium calculations, and no maximum applies to benefit payments. The provincial and territorial maximum insurable earnings amounts for workers’ compensation are identified in the State/Jurisdiction Taxes section of this primer.

Employers have an obligation to inform their respective provincial or territorial workers’ compensation office when employees become injured or unable to work and must submit an injury report when necessary. These filings may be made online in some cases.

In Québec, when a worker is injured, employers are required to continue to pay 90% of wages for the first 14 days of missed work. Afterward, the province’s Commission on Standards, Equity, Health and Safety at Work, which in French is the commission des normes, de l’équité, de la santé et de la Sécurité du Travail (CNESST), pays workers’ compensation to the individual.

Recordkeeping

Employers must retain all records and supporting documents pertaining to employee hiring, tax obligations, tax withholding, and entitlements, including benefits in kind and compensatory payments, for a period of six years from the end of the most recently filed tax year. When records are electronically stored, employers must uphold some requirements specifically applicable to electronic storage, such as needing to create proper electronic backups.

Payroll records must show the time worked by each employee and all social insurance contributions, as well as any additional deductions, pension information, and pay slips related to filed returns.

Record of Employment: The Record of Employment (ROE) form must be issued for each interruption of earnings. An interruption occurs when an employee quit, was laid off, had his or her employment terminated, or was anticipated to have at least seven consecutive calendar days without being paid insurable earnings from his or her employer.

An interruption also occurs when an employee’s insurable earnings fall below 60% of normal weekly earnings because of illness, injury, quarantine, pregnancy, parental, adoption, or compassionate care leave.

Service Canada, which is a part of Employment and Social Development Canada that processes data regarding government services and benefit claims, uses employment history information on the ROE to decide if a person qualifies for Employment Insurance benefits, what benefit rate should be used, and how long a person is eligible to collect EI benefits.

Insurable employment includes most employment in Canada under a contract of service, which is a contract in which an employer pays an employee. There is no age restriction on deducting EI premiums. It is the employer’s responsibility to ensure accuracy when preparing an ROE, as the information on ROEs is used to determine employee eligibility for EI benefits.

ROEs must be issued within five calendar days after the later of the interruption of earnings itself, or the date the employer becomes aware of the interruption. All fields on the ROE must be completed. The paper ROE is a three-part form. The first copy is given to the employee. The second copy, which is blue, is mailed to Service Canada. The last copy is retained for the employer’s records.

Employers may electronically submit ROEs to Service Canada using The Record of Employment on the Web (ROE Web) portal. Employees may view their copy of an electronically submitted ROE through their My Service Canada Account.

Each ROE has a serial number. Service Canada maintains a record of ROE serial numbers provided to employers. As ROE forms are valuable documents used for EI benefit claims, employers immediately should report to Service Canada the serial numbers of any lost or stolen forms. It is recommended that employers track the use of ROE serial numbers the same way as they track payroll checks.

Employers must ensure the correct employer Business Number (BN), correct SIN, reason for separation, and first day worked are properly recorded. If employers process payroll through a service provider or payroll software vendor, then they must ensure that they understand the dynamics of how the service provider or software vendor’s systems influence ROE completion.

FOREIGN WORKERS

Generally, business visitors to Canada from developed countries do not require a visa to visit Canada for less than six months. After six months, foreign workers can apply for a work permit. Work permits that were granted approval on or before Dec. 12, 2016, were valid for up to four years. There is no cumulative duration limit for work permits that were granted approval on or after Dec. 13, 2016.

Canadian employers are responsible for requesting a labor market impact assessment (LMIA) from the Canadian government before hiring foreign workers. This report details the market needs for particular occupations and whether hiring a foreign worker would negatively affect the Canadian workforce. Foreign workers are, however, responsible for applying for permanent or extended residency. Foreign workers can stay in Canada only for four years at a time, unless they request permanent residency through a variety of federal or provincial programs.

Foreign employers must register a payroll deductions account with the Canada Revenue Agency (CRA) and withhold income and social taxes for resident employees. Foreign employees are assessed tax on their Canadian-based income, although tax treaties and other tax credits may lessen their tax burden.

Employers must provide the same insurance benefits and protections to foreign workers as domestic workers during termination.

Visas: Whether workers entering Canada on business require a visa is dependent on their country of origin. Citizens and permanent residents of the U.S. and many European countries do not need a visa to visit, transit, or do business in Canada. Citizens of countries that do not require a visa must still possess a valid travel document, such as a passport, and have a valid reason for being in Canada. If employees are from a country that does require a visa, there is no separate application beyond the basic temporary resident visa from Immigration, Refugees and Citizenship Canada (IRCC). The North American Free Trade Agreement (NAFTA) allows U.S. and Mexican nationals freedom in activities such as research, marketing, and general service, which other nationals cannot participate in without a permit.

Business visitors in Canada are different from temporary workers and are expected to stay for less than six months and not earn money in Canada. Foreign workers generally must have a job with a Canadian employer before moving to Canada and must be in Canada to meet a specific labor need.

The Temporary Foreign Worker Program (TFWP) allows Canadian employers to hire foreign workers to fill temporary positions during skill shortages. A skill shortage occurs when employers cannot identify qualified Canadians to fill necessary jobs and when bringing such workers into Canada will not have a negative effect on the broader workforce. Employers may need a labor market impact assessment (LMIA) from Employment and Social Development Canada (ESDC) before hiring foreign workers, although some occupations do not need one. Employers are responsible for filing a request with the ESDC for an LMIA.

All nationals from countries in Europe, Africa and the Middle East must provide fingerprints and a photo if they are applying for a work visa.

Employees must complete applications for temporary employment with Immigration, Refugees and Citizenship Canada. Processing times vary by employment type, but generally range from two months to three months. The TFWP application requires a fee for processing, which is paid by the employee. Spouses or family members of approved workers also may be approved to work in Canada by extension.

Employers that fail to comply with Temporary Foreign Workers requirements are subject to warnings and fines up to C$100,000 per violation.

Highly skilled foreign workers can be hired to temporarily work in Canada in managerial, professional, scientific, technical, or otherwise skilled occupations that require university training, a college education, or another form of technical knowledge. The Federal Skilled Trades Program (FSTP) helps employers seeking to hire skilled workers. Employers must verify that employees in this category have all of the necessary qualifications before hiring. Employers also must verify that employment is for a continuous, full-time period for a minimum of one year. Alternately, two foreign workers can jointly share the year-long appointment for six months a piece.

Some other requirements exist at the provincial level. Before applying for an LMIA, temporary workers in Québec, whether highly skilled or not, must receive a Certificate of Selection in Québec (CSQ) from the government. In Manitoba, employers must apply for a Certificate of Registration from Manitoba’s Employment Standards branch, Business Registration Unit, and apply for an LMIA from ESDC. Alberta employers must provide the Employment Agency Business License. British Columbia employers must provide the Employment Agency License when applicable.

Foreign employees seeking permanent immigration can apply through a variety of programs. The Federal Skilled Worker Program allots foreign worker applicants up to 100 points as a measure of their capacity to adapt to the Canadian labor market. The measurement takes into account skill level, education, experience, and knowledge of English or French. Workers must complete at least one year of work in Canada before applying. The program has an annual cap of 10,000 new applications and sub-caps of 500 for each of the 29 federally recognized occupations.

The Canadian Experience Class (CEC) program allows temporary foreign workers and foreign students to stay permanently in Canada, as well. Foreign workers must have completed two years working in Canada before applying. Employees are responsible for applying through Immigration, Refugees and Citizenship Canada. Processing is generally guaranteed within 15 months.

Provincial Nominee Program (PNP) is a program that gives provinces and territories the ability to nominate permanent residence individuals who meet certain labor needs. Approved applicants will receive priority processing from CIC provided they demonstrate the ability to establish themselves economically in the province. Applications typically finalize within 16 months.

Employers may lose the ability to hire foreign workers if, during the two years before an LMIA, they did not provide sufficient wages or working conditions to foreign workers consistent with their employment offer. At any given time, employers with foreign workers are expected to demonstrate compliance with the ESDC. Compliance includes retaining payroll records, time sheets, current job descriptions for foreign employees, temporary foreign workers’ work permits, proof that the employer has paid the foreign employee’s transportation costs from their home to the place of work, proof that the employer helped the foreign employee find adequate and affordable accommodation, and proof of private health insurance coverage, if applicable. Additional requirements may be imposed by provincial governments.

Taxes: Foreign employers doing business with employees in Canada, whether resident or nonresident, may require a payroll deductions account and a Business Number (BN) from the Canada Revenue Agency (CRA). Foreign employers with resident employees must deduct income and withholding taxes and remit them to the government through this payroll account.

New residents in Canada must file income taxes and report total worldwide income. Foreign workers may be entitled to some tax benefits, however, such as credits for foreign-source income.

Nonresident employers may use Form RC473, Application for Non-Resident Employer Certification, to apply for certification to not withhold income taxes on nonresident employees temporarily in Canada. Nonresident employer certification may be valid for up to two calendar years.

Qualifying nonresident employers are defined as employers that are residents of countries with which Canada has a tax treaty, or partnerships in which at least 90% of the partnership income is allocated to partners who are residents in a country with which Canada has a tax treaty.

Qualifying nonresident employees are defined as individuals who are residents in a country with which Canada has a tax treaty, not liable to income tax obligations under a tax treaty, and work in Canada for less than 45 days in the calendar year that includes the times of payment or present in Canada for less than 90 days in any 12 month period that includes the times of payment.

The CRA must receive employer applications for withholding relief at least 30 days before a qualifying nonresident employee starts providing services in Canada.

A nonresident employer that receives certification has multiple obligations, including but not limited to obtaining a Business Number, filing the applicable Canadian income tax returns for the calendar years under certification, and making any necessary social tax contributions.

Wages/Payments: Employers must ensure that foreign employees are paid the same wages as Canadian and permanent resident employees doing the same job in the same geographical area. Canada allows payments to be made in foreign currencies.

Termination: Employers must give foreign employees written notice and termination pay before removing them from their jobs. If the termination is based on just cause and occurs because of misconduct or missed work, then no such notice must be given. Termination pay may vary based on province or territory. When switching employers, foreign employees are not subject to penalization or deportation, although all employers must have permission to hire employees as foreign workers.

A Record of Employment (ROE) document must be administered for foreign workers. Employers’ ROE responsibilities are detailed in the “ Recordkeeping ” subsection of the “Compensation and Benefits” section of this primer.

For a group termination, which is defined as the termination of at least 50 employees over a period of four weeks, written notice to any trade union representing the employees or to any individual who is not a union member is required at least 16 weeks before the terminations begin, unless the employer is granted a waiver by Employment and Social Development Canada.

Foreign employees under federal jurisdiction qualify for severance pay after completing at least 12 consecutive months of continuous employment with an employer. Layoffs that are not a termination of employment and absences permitted by the employer do not interrupt the continuity of employment. Under the Labour Code, severance pay is calculated as two regular working days of pay for each completed year of employment, with a minimum payment of five days of pay. Employees dismissed for just cause are ineligible for severance pay.

The Employment Insurance Act applies to all employees throughout the provinces and territories, even if they are not under federal jurisdiction. Both employees and employers are assessed premiums to fund Canada’s Employment Insurance program.

Applicable tax rates on employers and employees to fund Canada’s Employment Insurance (EI) program are detailed in the “ Social Taxes ” section of this primer.

Provisions generally applicable to individuals regarding qualification for EI benefits are applicable to foreign individuals residing in Canada whose employment was interrupted because of qualifying conditions. More information regarding EI benefits eligibility is available in the Termination Pay section of this primer.

WORKING IN THE UNITED STATES

Foreign workers from Canada must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

Canadian workers are eligible to work in the U.S. under special TN visas, which were created under the North American Free Trade Agreements between Canada, U.S. and Mexico. TN visas are valid for three years and are easier to apply for than other visas and the fees are typically less. To be eligible for a TN visa, Canadian workers must qualify within a profession listed within Appendix 1603.D.1 of Title 8, Section 214.6 of the U.S. Code of Federal Regulations.

Canadian workers also are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

For tax purposes, Canadians are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes.

Canada has both an income tax treaty and a social tax totalization agreement with the U.S.

State and local taxation of Canadian workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from Canada and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Canada and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use 4a or 4b. Nonresidents in the U.S. who are from [country] may be able to use Step 3 to claim the child tax credit or the credit for other dependents. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form. A special provision allowed nonresidents from [country] to use Form W-4 to claim withholding allowances for themselves and a spouse and any dependent children who live with them in the U.S. for some portion of the year.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Compensation paid to certain residents of Canada who enter and leave the U.S. at frequent intervals because of their work, such as transportation services, construction, or projects involving boundaries, is not subject to U.S. withholding. To qualify for this exemption, Canadian residents must give their employer a statement with their name, address and identification number certifying that they:

are not a U.S. citizen or resident;
are a resident of Canada; and
expect to perform the described duties during the tax year in question.

Nonwage income and self-employed foreign workers can be subject to U.S. income tax withholding at a flat rate of 30%.

Income that residents of Canada receive for dependent personal services in the U.S. is exempt from U.S. tax if it is not more than U.S. $10,000 for the year.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: Canada and the U.S. have a tax treaty with provisions addressing host country taxation of nonresident workers. A summary of those benefits is listed in the Tax Treaty Exemption Comparison Chart. The Internal Revenue Services also offers a publication on the U.S.-Canada income tax treaty. To claim the treaty benefit, the nonresident must file Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with the employer.

Students, trainees, and apprentices in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student, trainee, or apprentice is temporarily in the U.S. for purposes of studying or has accepted an invitation by the U.S. government, or by a political subdivision or local authority, to teach or engage in research. There is no limit placed on student, trainee, or apprentice compensation for Canadians.

Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a Social Security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: Social Security totalization agreements can allow foreign workers and U.S. nationals working abroad to avoid paying into two social security systems while being subjected to losing benefits for their home country system. Under totalization agreements, generally, foreign workers will pay into only one of the social security systems, either the home or the foreign system, but not both. Foreign nationals, utilizing a totalization agreement, also can count years of contributions paid to different social security systems to all of the systems they have contributed to in order to be eligible for benefits in one country.

Canada and the U.S. have entered into a totalization agreement and a summary of those provisions is included in

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

In addition to its special relationship with the United States and Mexico under the North American Free Trade Agreement (NAFTA), Canada has entered into more than 90 income tax treaties with countries around the world, including an income tax treaty with the United States. Canada also has 60 totalization agreements for social tax coverage purposes, including an agreement with the United States.

The Canadian province of Québec has an income tax treaty in effect with France that supplements Canada’s general income tax treaty with France. Québec also has more than 30 of its own totalization agreements for social tax coverage purposes, including an agreement with the United States.

The U.S.-Canadian Totalization Agreement was signed in 1984 and guarantees benefits to workers in both countries who work in the other. The U.S.-Québec agreement is similarly styled, but separate because the province conducts its own social insurance system. If Country A employers send employees into Country B for work for less than five years, then employers and employees are subject to taxation benefits in Country A only. However, if Country A employers send their employees to work in Country B for more than five years, then employers and employees are subject to taxation in Country B only.

Canada’s and Québec’s tax treaties are available in

RESOURCES

In English unless otherwise noted.

General

The National Payroll Institute:

Canada Payroll: A Comprehensive Overview
Pay Statement Guidelines

U.S. State Department:

U.S. Relations With Canada
International Travel Information: Canada

U.S. Central Intelligence Agency:

The World Factbook: Canada
The World Factbook: Languages

U.S. Department of Commerce:

Export.gov: Canada - Market Overview
Export.gov: Canada - Business Travel

U.S. Library of Congress:

Guide to Law Online: Canada
Global Legal Monitor: Canada

Language Highlight Tables, 2016 Canada Census

Nunavut Department of Executive and Intergovernmental Affairs: Nunavut FAQs

Currency Details

International Organization for Standardization: Currency Codes - ISO 4217

Unicode Consortium: Currency Symbols

United Nations: United Nations Terminology Database: Canada

Taxes

Canada Revenue Agency:

Covid-19 International Income Tax Issues
Canada Pension Plan (CPP)
Canadian Income Tax Rates for Individuals: Current and Previous Years
Determining Residency Status
Employer’s Guide: Taxable Benefits and Allowances
Stock Option Deductions
Opening a Payroll Program Account
Prescribed Interest Rates
Recordkeeping Policies
Tax and Contribution Rates in Canada
Tax Services Offices and Tax Centres
T4: Information for Employers

T4001 - Employer’s Guide, Payroll Deductions and Remittances
Tax Benefits in General Under Canadian Indian Act

Revenu Québec:

Source Deduction Tables for QPP Contributions
Source Deductions and Contributions
Tax Benefits Under Canadian Indian Act for Residents of Québec
TP-1015.G-V: Guide for Employers: Source Deductions and Contributions
Reduction of the Health Services Fund Contribution Rate for SMBs

Compensation and Benefits

Canada Labour Code

Canada Budget Implementation Act, 2017, No. 2 (Bill C-63)

Canada Budget Implementation Act, 2018, No. 2 (Bill C-86)

Canada Order SI/2019-31

An Act Relating to Certain Measures in Response to COVID-19, Statutes of Canada 2020, c. 12

An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy), Statutes of Canada 2020, c. 13

An Act to amend the Bills of Exchange Act, the Interpretation Act and the Canada Labour Code (National Day for Truth and Reconciliation), Statutes of Canada 2021, c. 11

Canada Emergency Wage Subsidy

Canada Recovery Hiring Program

Provincial Covid-19 Leave:

COVID-19 Putting Workers First Act, Statutes of Ontario 2021, c. 9
Infectious Disease Emergency Leave, O. Reg. 228/20
Employment Standards Act, R.S.B.C. 1996, c. 113
Employment Standards (COVID-19 Vaccination Leave) Amendment Act, 2021, Statutes of Alberta 2021, c. 4
The Employment Standards Code Amendment Act (COVID-19 Vaccination Leave), Statutes of Manitoba 2021, c. 10
Manitoba Pandemic Sick Leave
Nova Scotia Paid Sick Leave Program
The Occupational Health and Safety Amendment Regulations, 2021, O.C. 140/2021 (Sask.)
Prince Edward Island Covid-19 Special Leave Fund
Yukon Paid Sick Leave Rebate

Association of Workers’ Compensation Boards of Canada (AWCBC): Maximum Assessable/Insurable Earnings

Canada Labour Standards Regulations

Canadian Centre for Occupational Health and Safety (CCOHS): Provincial Workers’ Compensation Boards in Canada

Employment and Social Development Canada (ESDC):

Acts and Regulations
Employment Insurance Maternity and Paternal Benefits
General Holiday Calculator
Hours of Work
How to Complete the Record of Employment
Reports and Publications: Federal Labour Standards and Equity

Québec Parental Insurance Plan (QPIP):

Benefits Table
Publications

Wages Regulations Amendment, Nu. R-005-2020 (Can.).

Foreign Workers