The Canada Revenue Agency released the 120th edition of its T4127 Payroll Deductions Formulas guide on November 15, 2024. This guide, effective January 1, 2025, provides the approved formulas for calculating federal and provincial payroll deductions, including income tax, CPP, and EI. Ontario shop owners using payroll software or in-house systems must ensure their calculations align with these updated formulas to avoid unremitted source deductions, which carry personal director liability and CRA penalties.
Provincial changes include Alberta raising personal income tax amounts by 2% for 2025, and Prince Edward Island adjusting its first tax bracket to 9.50% for income up to $33,328. The guide also details indexing changes for CPP contributions and updates to basic personal amounts in several provinces. Employers can see exactly how every number is calculated using the CRA-approved formulas, trace every deduction, and check it themselves to confirm remittance compliance.