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Canadian Payroll Deduction Formulas

  1. #1
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    Question Canadian Payroll Deduction Formulas

    In an effort to speed up the payroll process, I did up an Excel workbook with in/out time columns that calculates total hours worked in a 14-day period, and the Gross $ Total for the pay period based on the wage.

    However, I want to take the Gross Total and perform the calculations that the Canada Revenue Agency online calculator (http://www.cra-arc.gc.ca/esrvc-srvce.../pdoc-eng.html) does directly in the Excel workbook. Since these are hourly positions, rather than salaried ones, the hours may change from pay-period to pay-period. As such, it would be time consuming to need to go back to the on-line calculator every two weeks to redetermine deductions.

    The following data is an example of what I have to work with...

    Wage: $9.00/hr
    Hours per Week: Variable, determined by timesheet input (max 40)

    These are the rates (on the Gross) that I believe the CRA calculator is deducting (as of April 1, 2009)...
    CPP rate: 4.95%
    EI rate: 1.73%
    Fed. Tax.: 15% (Minimum)
    Prov. Tax.: New Brunswick?


    Simplified Example: Considering a New Brunswick incorporated small business in the minimum bracket with no other deductions than mandatory... What would be the deductions from a $720.00 bi-weekly pay cheque (80 hrs @ 9.00/hr). This can be easily found on the website above. Now how do I make Excel do that?

    Hope this wasn't too confusing...


    Thanks!

  2. #2
    Forum Expert Paul's Avatar
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    Re: Canadian Payroll Deduction Formulas

    Hi Mark, and welcome to the forum.

    If you know how much the employee earned in the two weeks, and you can research the current rates and taxes on that (or another) website, wouldn't it simply be a matter of mutliplying the gross $ by each of the rates and then subtracting all of those calculations from the gross $ to get net $?

    Let's say column A has employee names, and hours worked for Sun-Sat (two weeks worth) are in columns B through O. Column P has total hours. Column Q has their hourly wage. Column R has their gross $ (column P * column Q).

    If you had the CPP, EI, Fed Tax and Prov Tax rates in, for example, S1, T1, U1 and V1, you could then use formulas like

    =$R2*$S$1 to get CPP deduction
    =$R2*$T$1 to get EI deduction
    =$R2*$U$1 to get Fed Tax deduction
    =$R2*$V$1 to get Prov Tax deduction

    Fill those down columns S, T, U and V for as many employees as you have. Then in column W you could use the formula
    =R2-(SUM(S2:V2)) to get net $.

    Hope that make sense!
    Last edited by Paul; 05-07-2009 at 01:15 PM.

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