Economical Vacation Pay Calculation for Canadian Businesses

Several NETFILE certified programs are free to use for straightforward returns, and the CRA publishes the certified list each filing season. If your income is modest and your return is simple, a free volunteer tax clinic can prepare and file it for you. Some people also receive a CRA invitation to file through a simplified phone or digital service. Free tools cover most employment and pension returns; self-employment, rental or foreign income usually needs more.

For 2026 employees outside Quebec pay Employment Insurance premiums at 1.63% of insurable earnings, up to maximum insurable earnings of $68,900, giving a maximum employee premium of $1,123.07. Quebec employees pay a reduced 1.30%, capped at $895.70, because the province runs its own parental insurance plan. Employers pay 1.4 times the employee amount unless they qualify for a reduced rate. Premiums stop once the annual cap is reached.

Start with the basic personal amount, which is already printed on the form, then add only the credits you genuinely expect to claim, such as tuition you will pay this year, an eligible dependant, the age amount or an amount transferred from a spouse. Total them, sign and date, and give the form to your employer rather than the CRA. With two jobs, claim the amounts at one only. You can also ask for extra tax to be withheld.

A T4E is the statement of Employment Insurance and other benefits. Service Canada issues one for each year in which EI was paid, covering regular, sickness, maternity, parental, caregiving or fishing benefits, and it shows the total received, the income tax already withheld and any amount to be repaid. Those figures go on the personal return for that year. Benefits paid under a different program come on their own slip.

Yes. Employment Insurance benefits are taxable income and must be reported on your return. Service Canada issues a T4E slip showing the benefits paid and the tax already withheld, and that withholding is often less than the rate that ends up applying, because it takes no account of employment income earned earlier in the same year. Many claimants therefore owe a balance at filing. If your income for the year is high enough, part of any regular benefits may also be repayable — the repayment never touches maternity, parental or sickness benefits, and it does not apply where you have not received regular benefits in the previous ten years.

No single percentage applies. Income tax is charged in brackets, so your average rate sits well below your top rate; federal rates for 2026 run from 14% up to 33%, and your province adds its own brackets on top. Employees also pay CPP of 5.95% on earnings above the $3,500 exemption to $74,600 and EI of $1.63 per $100 to $68,900 for 2026. The CRA payroll deductions online calculator gives your own figure.

Yes, and it is usually worth doing. Filing with little or no income is how you claim the GST/HST credit, provincial and territorial credits and, if you have children, the Canada child benefit - these are based on an assessed return each year. Filing also carries forward tuition and other unused amounts, creates RRSP room from any earned income, and keeps your CRA record current for later years.

The claim code is the number payroll uses to turn the credits you claimed on your federal and provincial personal tax credits returns into the tax withheld from each pay. A higher code means larger credits claimed and less tax deducted; the lowest code means no credits, so tax comes off every dollar. Most people sit at the code matching the basic personal amount, which is $16,452 federally for 2026. File a fresh return when your situation changes.

A bonus is ordinary employment income, so once your return is filed it is taxed at the same combined federal and Quebec rates as your salary. Employers withhold using the bonus method, which annualises the payment to estimate a rate, so the deduction on a large bonus can look steep and is often corrected on filing. Quebec employees also see separate provincial withholding, QPP and Quebec parental insurance. Revenu Quebec and the CRA publish the current withholding tables.

Ornamental plants are taxable. Cut flowers, houseplants, shrubs, trees and potted arrangements all carry GST or HST at your province's rate. Plants and seeds that produce food for people are treated as basic groceries and are zero-rated, which covers vegetable seedlings and garden seed for edible crops, and some bulk agricultural seed and nursery stock sold to farmers is zero-rated as well. A garden centre applies both rules, so one bill can be part taxed.

There is no single figure, because the amount depends on your income, your province and which taxes are counted. Studies that quote an average usually bundle income tax, payroll contributions, sales tax and property tax together, which is why published numbers differ so widely. For your own position, divide the total tax shown on your notice of assessment by your total income to get your effective rate, then compare that with later years rather than with a national average.

Drugs prescribed by a medical practitioner and recorded by a pharmacist are eligible medical expenses. Over-the-counter products are not eligible even when a doctor recommends them, and most vitamins and supplements fall outside the rules too. Ask the pharmacy for an annual printout instead of saving till receipts, because it shows the prescribing detail the CRA expects. Only the total above an income-based floor produces a credit, and reimbursed amounts must be excluded.