Gross pay is an employee's total earnings before any deductions, the starting figure from which income tax, CPP and EI are withheld to arrive at net pay.
Gross pay is the full amount an employee earns in a pay period, wages, salary, overtime, bonuses and taxable benefits, before anything is withheld. It is the base for calculating source deductions and the employer's matching CPP and EI, and it is the figure that appears as remuneration on the T4.
The gap between gross and net pay (what lands in the employee's account) is the total of income tax, CPP and EI withheld. Employers budget for more than gross pay, because they also owe the employer share of CPP and EI and any provincial payroll tax on top.
An employee's gross pay is $5,000 a month. After roughly $1,000 in income tax, CPP and EI is withheld, their net pay is about $4,000, while the employer's total cost exceeds $5,000 once its CPP and EI share is added.
Our certified accounting firm handles this for businesses and individuals across Canada, at fixed fees with no surprises.
Book a Free 15-Minute CallCommon questions regarding our compliance workflows and service guarantees.