What’s New in Payroll 2024?

Most people will have received – or are about to receive – their first pay of 2024 and there will be some changes to note.  In particular, the Canada Pension Plan premiums have increased and that is becoming the subject of some controversy of late.  Is this really the right time to burden taxpayers and small business owners with these extra taxes, or is it time to take a pause?  The Employment Insurance (EI) premiums have also risen and some tax free benefits and tax provisions that were available through COVID have ended. The T4 slips are due on February 29 with some new information require on group dental plans as well.  Overall, payroll clerks may find they need to sharpen up their skills to explain well.

Tax Backgrounder. The new payroll guide issued by CRA begins by saying that major income tax changes recently announced effective January 1, 2024 are still in proposal stage but recommends the use of the new payroll deductions tables for withholding should start with the first payroll in January 2024, anyways.  It’s always tax-efficient, however, for payroll pros to provide employees with the TD1 Personal Tax Services Return confirm federal and provincial withholding instructions as well as Form T1213 to request reductions in withholdings when certain tax deductions are claimable in 2024.

Second additional CPP contributions (CPP2).  This year marks an important change for higher income earners regarding their CPP pensionable earnings.  If they are between the Year’s Maximum Pensionable Earnings (YMPE) and a second earnings ceiling, referred to as the Year’s Additional Maximum Pensionable Earnings (YAMPE), they are subject to a new tier of contributions. That means that payroll professionals must keep track of the year-to-date pensionable income earned throughout the year.

Here's what that looks like, from an income point of view.  Note that even the base contribution has increased by 1% - these additional contributions can be claimed as a tax deduction; whereas the base contributions are claimed on the tax return as a non-refundable tax credit.  

Canada Pension Plan (CPP) and Employment Insurance (EI) - CPP contributions for 2024

Employers contribute equal amounts.   Note that the employer, must remit both the employer’s and employee’s share of CPP and CPP2 contributions. That means budgeting – especially for gig economy workers or small consulting enterprises which must remit their CPP on net self-employment income (both portions) and also pay their taxes on April 30, 2024.

Note.  Again, employers remit a portion too – this time 1.4% of the employee’s share of EI premiums.

Employee reports to employer’s establishment.  Starting January 1, 2024, there is a new administrative policy on how to determine the province of employment for tax withholding purposes. Where a full-time remote work agreement was made, an employee will be considered to report to the employer’s establishment where they are reasonably considered to be "attached to an establishment of the employer".  CRA directs employers to go to their website to learn more: Determine the province of employment (POE).

Provincial legislative updates.  There have been some changes in Manitoba (which significantly  increased its tax brackets), BC, Saskatchewan, Alberta and Ontario.  We’ll cover those next time. 

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