Examples of Wage Basis Rules

The following examples illustrate how wage basis rules affect a tax calculation and pay.

Province of Employment

The province in which you carry out work controls your payroll deductions. So, if I live in Ontario but work in Quebec, my deductions are based on the Quebec deduction guidelines, and not those of Ontario.

Each province has two levels of Income Tax, Federal Tax and Provincial Tax. In all provinces except Quebec, this tax is calculated separately but deducted as one tax called Federal Tax. Each employee paid in Quebec receives both a Federal Tax and Quebec Tax (provincial tax) deduction.

Quebec Parental Insurance Plan (QPIP) provides wage loss replacement to those who take time off from work for parental, maternity, or adoption leave. This tax is deducted only in Quebec.

Similarly, the Northwest Territories and Nunavut territories each have a Payroll Tax based upon the total wages paid to an employee.

For example, a person working in:

• Ontario is subject only to Federal Tax deductions, Canada Pension Plan (CPP), and Employment Insurance (EI)..

• Quebec is subject to the Federal Tax, Provincial Income tax and , Quebec Pension Plan, QPIP, EI.

• Northwest Territories is subject to the Federal Tax deductions, CPP, EI, and the territorial taxes.

This table shows how wage basis rules for tax calculation vary for three different provinces:

Region (Reference Value)	Federal Deductions	Provincial Income Tax Deductions	Territorial Taxes	Parental Insurance Plan
Ontario	Yes	Included in Federal Tax Deductions	No	No
Quebec	Yes	Yes	No	Yes
Northwest Territories	Yes	Included in Federal Tax Deductions	Yes	No