Why Is My Paycheque Different This Week? Every Reason Your Pay Changes

Your paycheque amount changes regularly throughout the year for reasons that are often predictable once you know what to look for. This page goes through each one; the other guides to tax on your pay, and the calculators, are in the income tax hub.

Common causes at a glance

CPP and EI maximums

CPP, CPP2 and EI are deducted only until your earnings for the year reach each one’s ceiling. Once you hit a ceiling, your employer stops deducting that contribution for the rest of the year and your take-home pay rises by that amount; all three restart on January 1 at the new year’s rates. Each employer counts only what it has deducted itself, so if you change jobs during the year the new employer starts again from zero; any amount over the yearly maximum comes back when you file your return. EI usually stops first, because its maximum insurable earnings are lower than the CPP ceiling. This year’s ceilings and maximum contributions are on CPP contribution rates and EI contribution rates, and the withholding tax calculator works out the average deductions per pay at a given salary.

TD1 and withholding adjustments

Your TD1 tells your employer what personal tax credits you are claiming, and your employer withholds tax based on it. Filing a new TD1 changes the claim amounts your employer uses to work out the tax withheld from later pays, so a life change (marriage, separation, a new dependant, disability tax credit approval) that changes your credits can change your pay. The TD1 form guide lists the credits on the form and what to enter for each.

Retroactive pay: why one paycheque looks bigger

When a salary increase is applied backward to earlier pay periods, your employer works out the arrears and pays them all at once, usually with a regular pay:

• Tax: the CRA has employers withhold tax on a retroactive pay increase the same way as on a bonus. The increase is added to your pay for the whole year and tax is withheld at the rate for that total, so the extra withholding is close to your marginal rate rather than the rate a single large paycheque would suggest.
• CPP and EI: both are deducted from retroactive pay until you reach the year’s maximums.
• Arrears for earlier years: some retroactive payments that relate to previous years qualify for a special tax calculation when you file your return.

The bonus tax calculator shows how that bonus method works out in each province.

Garnishments and a CRA Requirement to Pay

A wage garnishment directs your employer to withhold a portion of each paycheque and send it to a creditor or the CRA:

A garnishment usually follows an earlier notice (a court judgment or a CRA letter). What the CRA can do when a tax debt goes unpaid, and how to arrange payment, is covered in what happens if you don’t pay the CRA.

When benefit deductions change

Common scenarios where new payroll deductions appear mid-year:

If you do not recognize a deduction, payroll can give you a detailed breakdown of it.

When the paycheque still doesn’t add up

1. Ask payroll for an explanation of each line on your pay stub; how to read a pay stub explains the usual codes and deductions
2. Identify gross pay, CPP, CPP2, EI, income tax (federal + provincial), benefits, RRSP and any other deductions
3. Check the TD1 form on file: payroll can tell you what credits they have recorded
4. Review your benefit enrollment confirmation if deductions changed recently
5. If you believe there is an error, raise it with payroll; an employer that deducted too much CPP or EI is expected to pay it back to you, and anything over the yearly maximum comes back when you file

Related pages

• Salary after tax calculator
• How to know if your employer is paying CPP
• Why do I owe taxes this year?