5.5 Chapter Summary and Additional Readings and Resources

5.5.1 Chapter Summary

Calculating net pay accurately is essential for payroll functions and ensures that employees are paid correctly.

The necessary steps for calculating net pay include gathering payroll information, determining gross earnings, calculating deductions, and subtracting deductions from gross pay.

Payroll professionals should understand how net pay is calculated to verify software accuracy or to complete manual calculations accurately.

Gross earnings can include various types of income. Taxable benefits and allowances will impact the calculation of source deductions; determining whether or not a benefit or allowance is taxable is a key task. Non-taxable benefits and allowances can be added to net earnings at the end of the calculation.

5.5.2 Additional Readings and Resources

Government of Canada. (2024). Payroll deductions online calculator. https://apps.cra-arc.gc.ca/ebci/rhpd/beta/ng/entry

Government of Canada. (2023a). Bonuses, retroactive pay increases or irregular amounts. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/special-payments/bonuses-retroactive-pay-increases-irregular-amounts.html

Government of Canada. (2023b). Employers’ guide: Taxable benefits and allowances. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4130/employers-guide-taxable-benefits-allowances.html

Government of Canada. (2022). Set up and manage employee payroll information: Get the completed TD1 forms from the individual. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/set-up-new-employee/filing-form-td1.html