Canada Payroll 101 – Paid

When it comes to Canadian payroll, it’s not all that different from the U.S. Some would say it’s even a little more simple! Check out our cheat sheets below to see how Canada payroll compares to the U.S.

Common terminology

United States		Canada
Internal Revenue Service (IRS)	=	Canada Revenue Agency (CRA)
Federal Employment Identification Number (FEIN)	=	Business Number (BN)
Social Security Number (SSN)	=	Social Insurance Number (SIN)
State Income Tax	=	Provincial Income Tax
W-4	=	TD1
W-2	=	T4
1099	=	T4A
W-9	=	n/a

General Payroll

*May or may not be applicable, depending on location
**May or may not be applicable, depending on location and is not yet supported by Salsa

	United States	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 28px;"Canada
Tax Agencies	- Internal Revenue Service (IRS) - State Unemployment - State Withholding* - Local tax agencies*	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 107px;"- Canada Revenue Agency (CRA) - Provincial workers’ compensation agencies* - Provincial employer health tax (EHT) agencies*
Tax Types	- Federal income tax (FIT) - Social security - Medicare - Federal unemployment (FUTA) - State income tax (SIT) - State unemployment (SUI) - State disability* - State paid family and medical leave* - State workers’ compensation* - Local taxes*	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 265px;"- Federal income tax (FIT) - Canada pension plan (CPP) - Second Additional CPP (CPP2) - Employment Insurance (EI) - Provincial income tax (PIT) - Provincial workers’ compensation - Provincial employer health tax (EHT)
Filing schedules	Filing schedules are dependent on the company, tax type, and tax agency. Common filing frequencies in the U.S include: - Monthly - Quarterly - Annually	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 159px;"All companies are on the same filing schedule, regardless of the company type or tax agency. - Annual - Quarterly (provincial workers’ comp only)
Forms filed	Forms filed are unique to the state and tax types. There are hundreds of different payroll tax forms used in the U.S., dependent on the business type and location. - IRS form 941/940 - IRS form 944 - W-2 - 1099 - State unemployment (SUI) - State income tax (SIT) - State workers’ comp - Local tax forms	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 291px;"All required payroll taxes are filed on one form, to one tax agency. The only exception are some provincial taxes that are only applicable to some companies - T4 - T4A - Provincial workers’ compensation - Provincial EHT
Deposit frequencies	Tax payment due dates will vary, depending on the tax type, company size, and tax agency. - Next day - Semi-weekly - Monthly - Quarterly - Annually	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 265px;"Tax payment due dates will vary, depending company size and age. - Quarterly - Regular (Monthly) - Accelerated 1 (Up to twice per month) - Accelerated 2 (Up to 4 times per month) Note: In Canada, this is referred to as ‘Remitter Type’
Common pay types	- Hourly - Salary - Commission - Overtime - Double overtime - Regular tips - Cash tips - Paid time off - Bonuses	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 238px;"- Hourly - Salary - Commission - Overtime - Double overtime - Controlled tips - Direct tips - Stat holiday pay - Bonuses
Benefits	Most employee benefits are not mandated in the U.S. and are generally granted as an incentives for hiring. Benefit taxability rules will vary, depending on the benefits type and work state. Benefits can be paid for by the employee, employer, or both. Federally mandated benefits include: - Social security - Medicare Other common employee benefit types: - Health insurance - Dental insurance - Vision insurance - Health savings account (HSA) - Retirement	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 422px;"Most employee benefits are federally mandated and are funded by federal tax withholdings. Employers can also offer supplemental benefits as incentives for hiring. Supplemental benefits will have varying taxability rules, depending on the benefit type. Federally mandated benefits include: - Provincial healthcare - Pension contributions - Employment insurance Other common supplemental benefit types: - Extended health, vision, dental - Short term and long term disability - Health savings account - Lifestyle spending account (LSA)
Vacation pay	Vacation pay is not mandated in the U.S. and is commonly offered as an incentive for hiring. In many cases, vacation pay is accrued based on hours worked and paid out when employee’s use their vacation time.	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 238px;"In Canada, employees are federally obligated to at least 2 weeks of vacation pay, which is calculated at at least 4% of their annual earnings. The total vacation pay and rate of their earnings will vary, depending on which province they are working in and their length of employment with the company. Vacation pay may be include in each paycheck as vacation earnings, or it may be accrued and paid out when the employee takes their vacation time.
Sick pay	Sick pay is not federally mandated in the U.S., but may be mandated in some states.	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 80px;"Sick pay is mandated at both the federal and provincial level, with varying rules depending on the location of the business.
Holidays	Employers are not obligated to give employees paid time off on holidays, nor are they obligated to pay special holiday pay for hours worked on federal holidays.	tTh" class="" style="box-sizing: border-box; width: 357.646px; height: 133px;" In Canada, they have what are called ‘statutory holidays’, which are designated paid holidays. Depending on the employee’s employment terms, they may be entitled to partial or full day’s worth of earnings on designated holidays.

Payroll Onboarding

<o" class="" style="box-sizing: border-box; width: 220.625px;"> </o">	United States	Canada
<o" class="" style="box-sizing: border-box; width: 220.625px;">Employer onboarding items</o">	- Federal employer identification number (FEIN) - Federal deposit schedule - State account IDs - State deposit schedules - State tax rates - Business and owner information - Company bank account information	- Business number (BN) - Reference number - Remitter Type - Business and owner information - Company bank account information
<o" class="" style="box-sizing: border-box; width: 220.625px;">Worker onboarding items</o">	- Legal name - Social security number (SSN) - Date of birth - Home address - Work location - Federal income tax withholding information (W-4) - State income tax withholding information	- Legal name - Social insurance number (SIN) - Date of birth - Home address - Work location - Federal income tax withholding information (TD4) - Provincial income tax withholding information
<o" class="" style="box-sizing: border-box; width: 220.625px;">Payroll migration items</o">	Payroll journal report including all wages paid, tax amounts withheld for both employee and employer, any benefit deductions or employer contributions, and any other payroll information, broken down by check date and employee. Preferably we receive quarter-to-date reports on any closed quarters, and payroll details for each pay date for the current quarter.	Same as U.S.

Additional Onboarding Highlights

When onboarding a new Canadian company, there are a few things you will want to be aware of to ensure you are able to successfully communicate specific information we need to collect.

	United States	Canada
Tax Identifiers	- Federal Employment Identification Number (FEIN) - State Employment Identification Numbers (EINs)	Program Account Number (comprised of the 3 pieces listed below) - Business Number (BN) - Program Identifier (This will always be RP for payroll) - Reference Number —— All 3 together will look something like this:
Address format	Line 1: Recipient's name Line 2: Street address or post office box number Line 3: City or town name, state or province, and postal code	Line 1: Recipient's name Line 2: Apartment, unit, or street address number and street name Line 3: City, province or territory, and postal code —— Postal code format = A1A 1A1 (A = Letter; 1 = Number)
Bank Information	- Account number - Routing number	- Transit number - Institution number - Account number