Income Sources & Deductions
The following table gives important information about which payroll taxes to deduct and how to fill out the T4.
EI & CPP Deductions
Maximum Deduction Limits
Each year the CRA publishes the maximum deduction limits for CPP and EI premiums. These can be found on the CRA website www.cra-arc.gc.ca under Businesses – Payroll. For manual systems, the maximum threshold usually is met some time after July. Accounting software programs with payroll capabilities will stop deducting these taxes when the threshold has been met.
Allowances paid for vehicle, books, education etc., are considered taxable benefits and should be added to salary amounts and included in the calculation for payroll deductions (CPP and EI).
It is recommended that the churches make reimbursements for ministry expenses rather than giving allowances. Allowances require the employee to keep details records. Reimbursing expenses also allows the church to claim a rebate on the GST paid on those expenses.