# Calculation of Payroll for Ontario

by Tatiana

Proofing Payroll Taxes

I know that I can go to CRA website and calculate payroll deduction online. But I would like to understand how it works. Assume payroll \$2000.00 per month * 12 = \$24,000.00 per year and EI exempt.

Here are my calculations:

1)CPP = (\$24,000.00-\$3,500.00)*4.95%= \$1,014.75 / 12 = \$84.56 per month

2)Federal tax = \$24,000.00 *15%=\$3,600/12= \$300 per month
Federal tax credit \$11,327 *15%=\$1,699 / 12= \$141.59 per month
Federal tax payable \$300.00-\$141.59=\$158.41

3)Provincial tax = \$24,000.00 *5.05%=\$1,212 /12= \$101 per month
Provincial tax credit \$9,863 *5.05%=\$498 / 12= \$41.51 per month
Provincial tax payable \$101.00-\$41.51=\$59.49 per month

As per the CRA online calculator:

1) CPP = \$84.56 per month

2) Federal \$131.40 per month

3) Provincial \$75.22 per month

Would you please help me to understand why I have differences in Federal and Provincial taxes? What have I missed?

Tatiana, check out CRA's example "Tax to deduct for all income" in publication T4032ON : cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/t4032/2015/t4032on-gnrlnf-eng.html#_Toc337712829

Without spending a lot of time on this, it looks like your calculation of TOTAL federal and provincial tax credits is different from CRA's example.

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