How to Verify An Employee's Pay Cheque Is Calculated Correctly
As an employer, have you ever wanted to verify if an employee's pay was calculated correctly? Here is a quick lesson on how to do just that.
Go to the CRA website (www.cra-arc.gc.ca) and click on the Payroll link. Then click on the Payroll Deduction Onlice Calculator link. Accepting the conditions of use will bring you to the starting page.
Let's assume you want to verify that the CPP and EI premiums have been deducted properly. Select "Verify CPP contributions and EI premiums", then click on begin.
- Fill in the employee and employer names if you want, but it's not necessary as you are just verfiying calculations.
- Select your province from the drop down box.
- Let's assume the employee earns $30,000 per year. Type this into both the boxes you see.
- Let the calculator calculate.
It will come back and tell you the following:
CPP is $1311.75 ($30,000 -$3,500 x 4.95%)
EI is $519.00 ($30,000 x 1.73%) ... this is actually wrong (surprised me) as the 2011 EI rate is 1.78% not 1.73% ... so the correct amount would be $30,000 x 1.78% = $534
I thought I'd retry the calculation selecting the salary option this time. It calculated everything correctly this time including income tax witholding of $3,347.88.
I chat about how to manually calculate CPP and EI
in the Payroll Section of this site.