Tax & Employment Contracts

Employment Contracts

All Canadian employees receive benefits from their employer. Payroll is usually managed by a third party or in-house human resources agency and salaries are paid over 12 months. It is usual for all employees in Canada to receive two weeks vacation. In Canada, employment insurance is issued for employees. For more information please visit http://www.hrsdc.gc.ca/en/ei/menu/eihome.shtml.

Taxation

Canada levies personal income tax on the worldwide income of individual’s resident in and on certain types of Canadian-source income earned by non-resident individuals. The amount of income tax that an individual must pay is based on the amount of their taxable income (income earned less allowed expenses) for the tax year. Personal income tax may be collected through various means:

• Deduction at source - where income tax is deducted directly from an individual's pay and sent to the CRA.
• Installment payments - where an individual must pay their estimated taxes during the year instead waiting to settle up at the end of the year.
• Payment on filing - payments made with the income tax return
• Arrears payments - payments made after the return is filed

Employers may also deduct Canada Pension Plan/Quebec Pension Plan (CPP/QPP) contributions, Employment Insurance (EI) and Provincial Parental Insurance (PPIP) premiums from their employees' gross pay. Employers then send these deductions to the taxing authority. Individuals who have overpaid taxes or had excess tax deducted at source will receive a refund from the CRA upon filing their annual tax return. Generally, personal income tax returns for a particular year must be filed with CRA on or before April 30 of the following year. Depending on individual income, the tax ranges from zero to 47% of one's taxable income.

For more information contact Michael Page.