When I was living in Brazil looking for information on how to immigrate to Canada, I was not able to find anything on the web that shows me how we get paid in Canada. I mean, the first thing that you have to do is to find a job in Canada. However, what are my rights as an employee? What are the deductions that I will have? Is it worth quit my job in my country and come to Canada? You must have to consider all the facts when you are deciding your future and of course your career, your family, your job, your zone of comfort. Do you know why? Your life will start again, from the beginning.
What you need to understand is that when you’re negotiating your salary with your new company, they usually give you an annual salary, for example, your salary will be $50,000 dollars (sometimes we also say 50k). This is your salary without the deductions. What you will get after the deductions will depend on the province that you’re living in Canada. If you’d like to know how much you will receive after the deductions, check this personal tax calculator. Checking the website, if your annual salary in 2008 was $50,000 dollars, your salary will be $40,159 if you live in Ontario (not included CPP and EI yet).
But how do I get paid in Canada? What are the deductions? We usually get paid every 14 days. You can receive a check or you can have your company to deposit the money in your account. I can assure you that you will have at least the following 3 deductions from your salary:
- Income Tax
- CPP (Canada Pension Plan)
- EI (Employment Insurance)
This will be the largest deduction that will impact your salary. The amount of income tax depends on the province that you live in Canada. It will cover both provincial and federal taxes.
Canada Pension Plan (CPP)
The CPP is an insurance program designed to provide you with income for your retirement. Every year the contribution rate is different. Check how the CPP works, visiting the Canada Pension Plan page.
Employment Insurance (EI)
If you’re working in Canada, you have to contribute to Employment Insurance. The fund is used to provide income to workers that loose their jobs. Check my Employment Insurance page, that explains how to apply for Employment Insurance.
This picture shows my earnings statement in 2005. Actually, this was my last pay stub from 2005. At that time, my salary was $42,000 dollars. My hourly rate was $21.54 dollars and I’ve used my vacation days as well ($1,615.50). I paid almost $8,000 dollars in taxes. In addition to this, I’ve contributed to Canadian Pension Plan ($1,861.20) and Employment Insurance ($760.50). Please also note that as I was a full time employee, I had benefits – that’s why you can see the the Other deductions (Pension plan from company and Ltd – includes dental coverage, health coverage, long term disability, etc).