Question

In 2018, an employee earns an annual salary of $ 24,000 (paid semi-monthly – twice per...

In 2018, an employee earns an annual salary of $ 24,000 (paid semi-monthly – twice per month). What will be the total amount withheld from the employee as the employee’s Canada Pension Plan (CPP) and Employment Insurance (EI) contributions for the first pay period of the year?

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Answer #1

The CPP for the year (employee contribution) is 4.95% with maximum annual cap of $ 2593.80 and EI is 1.66% with maximum annual cap of $ 858.22. In this case the annual income is $ 24000 and the after deducting the basic exemption of 3500, we have net $ 20500. The CPP will be applied on the net amount : 20500*4.95% = 1014.75 and we will divide it by 24 to arrive at the semi monthly deduction rate which will be $ 42.28

The EI deduction will be on the entire salary of $ 24000 at 1.66% which for the full year will be 24000*1.66% = 398.4 or for the semi monthly period it will be $16.6.

Hence for the first pay period CPP = $ 42.28 and EI = $ 16.6

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