Module 8

Module 8: Daily Living

 

Try This

 

Work with a partner, if possible.

 

The Online Payroll Deductions Calculator may be found by entering the following terms into an Internet search engine: CRA Payroll Deductions Online Calculator. If you need help locating the calculator, ask your teacher.

 

Once you find the calculator, bookmark the web page for easy access. This calculator will help you determine CPP, EI, and income tax deductions from gross salary.

 

Study these examples to see how to use the Online Payroll Deductions Calculator.

 

Example 6

 

In 2010, Evangeline worked in Yorkton, Saskatchewan. She received a gross salary from her employer of $4520.00/mo. She fell under Claim Code 1. Use the online calculator to determine her monthly CPP contributions, EI premiums, and federal and provincial taxes. Determine her net monthly income.

 

View and carefully follow the steps in “Example 6 Solution.”

 

So, Evangeline’s net monthly pay was $3285.08. Evangeline’s deductions are as follows:

 

CPP Contribution	$209.30/mo
EI Premium	$78.20/mo
Federal Tax	$576.11/mo
Provincial Tax	$371.31/mo
Total Deductions	$1234.92/mo

 

Did you know there are circumstances that can reduce the income taxes owed? In Example 7 you will meet Perry. Perry earned income in the Northwest Territories. He made the same salary as Evangeline. However, because he works in the North, Perry’s taxable income is reduced.

 

Example 7

 

In 2010, Perry worked in Yellowknife, NWT. He received a gross salary from his employer of $4520.00/mo. He was listed under Claim Code 1. He lived in an apartment with two friends and shared expenses. Use the online calculator to determine Perry’s monthly CPP contributions, EI premiums, and federal and provincial taxes. Determine Perry’s net monthly income.

 

View and carefully follow the steps in “Example 7 Solution.”

 

So, Perry’s monthly net pay was $3504.91. His deductions were as follows:

 

CPP Contribution	$209.30/mo
EI Premium	$78.20/mo
Federal Tax	$520.90/mo
Provincial Tax	$206.69/mo
Total Deductions	$1015.09/mo

 

Notice the CPP and EI deductions are the same as they were for Evangeline in Saskatchewan, but the federal tax is less. This is because of Perry’s reduced taxable income for northern residency. Also, the territorial tax was less for two reasons: the taxable income was less, and the Northwest Territories’ tax rates are different from Saskatchewan’s.

 

Now it is your turn to explore the CRA Payroll Deductions Online Calculator.

 

TT 1. Complete the following table using the CRA Payroll Deductions Online Calculator. Set the date on the calculator for the current year!

 

Name	Gross Income	Province or Territory	Claim Code	Taxable Income	CPP Contribution	EI Premium	Federal Tax	Provincial/ Territorial Tax	Net Pay
Clive	$3200.00/mo	AB	1	$3200.00/mo
Lil	$925.00/wk	MB	1	$925.00/wk
Tom	$2700.00 biweekly	BC	2	$2700.00 biweekly
Wing	$2100.00 semimonthly	YT	1
John	$5200.00/mo	NU	3

 

TT 2. Tina lives in Alberta and is paid a monthly salary by her employer of $2400.00. Her claim code is 1.

1. What is Tina’s net pay per month?
   
   
2. Tina had been hoping to receive a raise of $100.00/mo. If her salary had been $2500.00, what would Tina’s take-home pay have been? Would it have been $100.00 more? How can you explain this result?

Share

 

Once you have completed TT 1 and TT 2, discuss the following questions with a partner or group:

• Why is it important to ensure the appropriate period of required salary or commission is selected when using the CRA Payroll Deductions Online Calculator?
  
  

• Why do you think the CRA developed, at their own expense, the Payroll Deductions Online Calculator for employers and other taxpayers?

After your discussion, place your answers to TT 1 and TT 2 in your course folder along with the summary of your discussion.

Mathematics 10-3 Learn EveryWare © 2010 Alberta Education