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Understand Your Paycheck

Description

Your first Canadian paystub might be a shock. In BC, the gap between your 'Gross' and 'Net' pay includes federal and provincial taxes, plus mandatory pension and insurance contributions. Understanding these ensures you're being paid correctly.

In person N/A
Online 10–15 min

to review your paystub

What to do

1. Locate your paystub (usually via an online portal like ADP, Dayforce, or Workday)
2. Identify 'Gross Pay' (total before taxes) and 'Net Pay' (the amount that hits your bank account)
3. Review mandatory deductions: Income Tax (Federal & BC), CPP, and EI
4. Check for CPP2 (Second Additional CPP) if your annual salary is above $74,600
5. Verify your 'Vacation Pay' — in BC, you usually earn 4% on top of your wages or it's accrued for time off
6. Compare your net pay with an online 'BC Salary Calculator' to ensure your employer is withholding the right amount

Warnings

The TD1 Form Error

  • If your tax deduction seems too high, you might have filled out your TD1 tax forms incorrectly on day one
  • If you are a student, you can claim tuition credits on your TD1 to lower the tax taken from your paycheck
  • Ask HR to update your TD1 forms if your personal situation changes

CPP/EI Annual Limits

  • CPP and EI deductions stop once you hit the annual maximum (around $4,230 for CPP and $1,123 for EI in 2026)
  • This means your paychecks might suddenly get bigger near the end of the year
  • Don't panic if deductions restart in January — the limits reset every year

Tips

What is CPP2?

In 2026, if you earn between $74,600 and $85,000, a second layer of pension contribution (CPP2) at 4% is applied. It's a long-term investment in your Canadian retirement.

EI is your safety net

Employment Insurance (EI) takes 1.63% of your pay. If you lose your job through no fault of your own, this is what pays you while you look for a new one.

Company Benefits (Health/Dental)

If your company has a private health plan, you might see a deduction for 'Health & Dental'. Often the employer pays a portion, and you pay the rest. This covers what MSP doesn't (glasses, dental, massage).

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