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Canadian Paystub

So you just got your first job, and that very first paycheck has finally arrived. Congratulations! But the likelihood is you are more bewildered by all the deductions and acronyms set out on your Canada paycheck stub. What do they stand for? Where’s the money going? Read more to find out.

Paystub vs. T4 Slip: Understanding the Difference

What is a Paycheck Stub?

OK, so first, if your pay stub says “statement of earnings” on it, do not worry; it is the same thing. Your employer must legally provide you with this, either in hard copy or electronically, each time you get paid.

Whether you get paid weekly or biweekly—like most employees—or if your payday is Tuesday or Thursday; whether you are a seasonal, temporary, or permanent worker, you’re supposed to get a pay stub from your employer.

You may want to refer to your pay stubs for various reasons, such as to obtain a loan. You should also have copies of the last statement for each year and use them to verify the figures on your income tax forms, T4 slips, etc., to ensure there are no errors.

Note: You can also check for mistakes in your pay stub by your employer, like if they have missed counting the number of hours you have worked or your overtime hours, which are often paid at a higher rate. So, do check them out.

The Importance of Accurate Paystubs for Canadian Employees

How To Read Your Pay Stub?

A pay stub is divided into four stages which are described below:


This section includes your identifying information and that of your employer. It should be up to date. Your job title and employee number might be included here as well. Also included in this section are the pay period (i.e., the week[s] for which you are being paid), the date the payment will be made, and sometimes the number of the pay period (e.g., 12/26 for biweekly pay periods).


This column will show you how many hours you have worked and what is your hourly rate—what you are paid for every hour of work. Be sure this information is accurate. It may also include overtime, which may be paid at a higher rate depending on the employer’s policy. This section will also contain tips or commissions if applicable to your job. It also includes incentives, bonuses, and allowances. All of these amounts combine to form your gross pay before deductions, such as income tax.

The following lines contain the below-mentioned items:

  • Vacation Pay: Either the number of hours or the amount accrued toward your next vacation, generally 4% to 6% of your salary.
  • Statutory Holidays: Holidays for which you get paid.
  • Sickness or Incidental Absence: When you were ill or absent from work on a scheduled workplace day.

The Evolution of Paystubs in Canada


This is where the abbreviations come in. This section lists all deductions at source—the amounts your employer takes from your pay and remits to the government. As a wage earner, you must contribute toward public services such as health insurance, employment insurance, road construction, schools, and more.

The main deductions are:

  • Federal and Provincial Taxes: These deductions are based on your gross income and progressive tax rate. The more you earn, the more you pay in taxes. Don’t be too surprised that you may have to pay additional taxes at the end of the year with two jobs or other income.
  • Employment Insurance (EI): This contribution helps fund benefits for people who have lost their jobs, are on disability or maternity leave, etc. If you lose your job, you will also be entitled to EI benefits and be very thankful for them.
  • CPP and QPP: CPP stands for Canada Pension Plan. In Quebec, workers contribute to the QPP—the Quebec Pension Plan—a government pension fund for all workers, employed and self-employed. You will contribute to it for as long as you are employed. When you retire, you will start getting a monthly pension from the plan you contributed to.
  • QPIP and EI Maternity and Parental Benefits: The Quebec Parental Insurance Plan applies only in the province of Quebec. You contribute so new parents can take time off work when a baby is born or adopted. The benefits replace some of their lost earnings. In the rest of the country, workers contribute to Employment Insurance, Maternity, and Parental Benefits. There is no abbreviation for this program.

Other Deductions include:

  • Group Insurance: Many employers provide group insurance to help pay specific costs. Benefits can include dental coverage, vision coverage, prescription drugs, disability insurance, and more. If you are a part of a group insurance plan, a specific amount will be taken out of each one of your paychecks.
  • Group SIPP, DPSP, DBP, DCP, VRSP, or RRSP: Group SIPP, DPSP, DBP, DCP, VRSP, or RRSP: These are all acronyms for different kinds of retirement plans that your employer can provide. The advantages of such plans are that they encourage workers to save for retirement. Your employer may decide to contribute to the employee pension plan so you can save more money for your golden years. If you can access an employer-sponsored retirement plan, take advantage of it.
  • ESPP: An Employee Stock Purchase Plan is an arrangement in which employees can buy the company stock if the company is publicly traded. Becoming a shareholder in your company is enriching, particularly if your employer matches your contributions.

Net Pay:

This is the shortest section but probably the most important to you. The money is left with you after all kinds of deductions are deducted from the gross pay. This is the amount that is deposited into your bank account.

Tips for Managing Your Finances Using Your Paystub

Spotting Common Errors on a Canadian Pay stub

Missing Federal and Provincial Deposit Deadlines:

You need to make federal and provincial remittances on certain dates. These dates will be based on the combination of your estimated gross payroll annually and the total taxes you remitted the previous year with the CRA or applicable provincial tax agencies. And file late and face serious penalties, which increase with each incidence of late remittances.

Processing Garnishment Incorrectly:

Different rules apply to various types of employee garnishments, such as family support orders, back taxes, garnishment orders, etc. Any failure to conform leads to fines and/or employer liability for untaken amounts; employees might not be able to retrieve payments processed in error.

Incomplete Records:

The CRA requires employers to keep seven years’ worth of pay records, including hours worked, payment rates, and the date of every payroll. In addition, the provinces impose their own record-keeping requirements on employers, which usually last seven years. Missing records could mean big headaches down the road.


Carefully reviewing your Canadian paystub each pay period will ensure your compensation is correct and, if errors are made, rectified as soon as possible to protect your financial stability.

Understanding Canadian Paystubs: A Comprehensive Guide


What common errors should I look for on my Canadian paystub?


Look for incorrect deductions, inaccurate tax withholdings, miscalculated hours, and errors in overtime pay.

How can I verify the accuracy of my tax withholdings on my paystub?


Compare the tax deductions on your paystub with the tax rates provided by the Canada Revenue Agency (CRA) for your income bracket.

What should I do if I find a discrepancy on my paystub?


Report the error to your employer's payroll department immediately and provide any necessary documentation to support your claim.

Why is it important to regularly check my paystub for errors?


Regularly checking your paystub ensures you are paid correctly, helps you catch mistakes early, and prevents financial issues related to incorrect pay.

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