Direct deposit, pay stubs and what comes off your pay

When you start work in Canada, your employer will likely pay you by direct deposit straight into your bank account every two weeks. Your pay stub shows exactly what you earned and what was deducted before that money hit your account. Understanding these documents is essential—landlords and lenders will ask to see your pay stubs as proof of income, and your annual tax slip ties it all together.

Setting Up Direct Deposit

Direct deposit is an electronic transfer of your wages from your employer's bank account straight into yours. Most Canadian employers use this method because it is fast, reliable, and secure. Your employer will ask you to provide your banking information so they can set up the deposits.

What Your Employer Needs From You

Your employer will ask for either a void cheque or a direct deposit form. A void cheque is a blank cheque with the word VOID written across it in ink. It shows three pieces of banking information at the bottom: your transit number (also called branch number), your institution number, and your account number. Never sign a void cheque or make changes to it—write VOID only to prevent it from being cashed.

If you do not have a chequebook, you can get a digital void cheque or direct deposit form from your bank's online banking portal or mobile app. Most Canadian banks allow you to download this as a PDF and email it to your employer. This works just as well as a physical cheque. If you cannot generate one online, visit your bank branch and ask for a direct deposit form—they can print one for you.

When and How Often You Will Be Paid

Biweekly pay (every two weeks) is the most common payroll frequency in Canada. With biweekly pay, you receive 26 paycheques per year. Your employer will choose a regular payday—often Friday—so you know exactly when to expect your money. The direct deposit typically arrives in your account 1–2 business days after your employer submits the payment.

Understanding Your Pay Stub

Your pay stub is a document (either printed or digital) that breaks down your earnings and deductions for that pay period. Each stub shows your gross pay (total earnings before any deductions) and your net pay (what you actually take home after deductions). It also lists every mandatory deduction the government requires your employer to remove and send to the Canada Revenue Agency (CRA).

Gross Pay

Gross pay is your total earnings before any deductions. For salaried employees, this is usually a fixed amount each pay period. For hourly employees, it is your hourly rate multiplied by the hours you worked. Some stubs also show overtime pay or shift premiums added to gross pay.

Mandatory Deductions: Income Tax

Your employer must withhold federal and provincial income tax from each paycheque. The amount depends on your salary, where you work (your province), and the personal credits you claimed on your TD1 form when you started the job. The TD1 is a form you fill out when hired that tells your employer how much tax to withhold. Claiming more credits lowers the tax withheld from each cheque, but claiming fewer credits means more tax is held back. The money withheld is an estimate; your actual tax is calculated when you file your annual return.

Each province has its own tax rates and brackets. For example, Ontario's provincial tax ranges from 5.05% to 13.16% depending on income level. The federal Basic Personal Amount (roughly $16,452 for 2026) is the income level below which you pay no federal tax. This amount reduces your taxable income automatically.

Mandatory Deductions: Canada Pension Plan (CPP)

CPP is a federal retirement pension program. As an employee, you contribute a percentage of your earnings to build your pension for retirement. In 2026, the employee CPP rate is 5.95% on earnings between roughly $3,500 and $74,600 per year. Once you reach the maximum annual contribution (around $4,230 per year), no further CPP is deducted for the rest of that calendar year.

Your employer also pays a matching CPP contribution on your behalf (1.4 times what you pay), but this employer cost does not appear on your pay stub. CPP contributions build your eligibility for retirement benefits starting at age 60 or 65, depending on when you choose to begin receiving them.

Mandatory Deductions: Employment Insurance (EI)

EI provides temporary income support if you lose your job, and also covers parental leave, compassionate care leave, and other life events. The EI premium rate for 2026 is 1.64% of your insurable earnings up to an annual maximum. Like CPP, once you hit the maximum (roughly $1,077 per year), no further EI is deducted for the remainder of that year.

Your employer also pays an EI contribution on your behalf (1.4 times your premium), which also does not appear on your stub. If you work in Quebec, the EI rate is lower because Quebec has its own parental insurance program (QPIP) that replaces some of what EI covers.

Year-to-Date (YTD) Totals

Your pay stub includes a YTD column that accumulates all earnings and deductions from January 1 to the current date. This is critical for tracking when you hit the annual CPP and EI maximums. Once your YTD CPP reaches its limit, that line stops appearing on subsequent stubs. The same happens with EI. When these deductions stop, your net pay increases even though your gross pay stays the same.

Voluntary Deductions

Beyond the mandatory deductions, your pay stub may show voluntary items your employer removes on your behalf. These include Registered Retirement Savings Plan (RRSP) contributions, group benefits premiums (health, dental, life insurance), union dues, or pension plan contributions. These are optional and only appear if you have enrolled or agreed to them. Ask your employer what voluntary deductions are available to you.

Your Net Pay

Net pay is your take-home amount—what actually appears in your bank account. It is your gross pay minus all the mandatory and voluntary deductions listed above. For example, a salaried employee earning $2,884.62 biweekly in Ontario might take home about $2,113.20 after income tax, CPP, and EI deductions. That is roughly 73 cents of every dollar; the remaining 27 cents goes to government and other deductions.

Keep Your Pay Stubs as Proof of Income

Landlords and lenders in Canada frequently ask for pay stubs as proof of income. Before you sign a lease or apply for a mortgage or loan, you may need to provide recent pay stubs (usually the last 2–3 months). Pay stubs are considered reliable proof because they show your gross income, deductions, hours worked, and employer name all on one document.

Save both printed and digital copies of your pay stubs. Store them in a folder on your computer and keep printed copies in a safe place. Do not throw them away after you receive them, even if you are only working there temporarily. When you apply for housing or credit, you may need stubs from several months back.

Mortgage lenders typically require your most recent 2–3 pay stubs plus your T4 from the previous year. Landlords may ask for 2–3 recent stubs to verify you earn at least 3–4 times the monthly rent. Pay stubs are the fastest and easiest way to prove steady employment income.

Your T4 Slip: The Year-End Summary

Each February, your employer must give you a T4 slip—a tax document that summarizes all your employment income and deductions for the previous calendar year. The T4 reports your total gross earnings, total income tax withheld, total CPP contributions, and total EI premiums. It is the official document you use to file your income tax return with the CRA.

When You Receive Your T4

Your employer must deliver or mail your T4 by February 28 each year (or the next business day if February 28 falls on a weekend). Many employers now provide T4s digitally through an employee payroll portal or secure email. Some employers still mail paper T4s. If you do not receive your T4 by early March, ask your employer to check on it.

Once your employer files the T4 with the CRA, it becomes visible in your CRA My Account (the online portal where you manage your taxes) by mid-March. You can view and download it from there, even if your employer has not sent you a copy yet.

How Your T4 Connects to Your Pay Stubs

Your final pay stub of the year shows YTD totals that should match your T4 exactly (or very closely). The T4 simply totals up all the information from every pay stub you received during the year. If you see a discrepancy between your final pay stub and your T4, contact your payroll department immediately to investigate.

The T4 includes several numbered boxes. The most important are: Box 14 (your total employment income), Box 22 (total income tax deducted), Box 16 (CPP contributions), and Box 18 (EI premiums). When you file your tax return, your tax software will ask for information from these boxes.

Using Your T4 to File Your Taxes

You must file an income tax return with the CRA every year if you earned employment income (even if you think no tax is owed). The CRA receives a copy of your T4 from your employer and compares it with what you report on your return. If there is a mismatch, the CRA will contact you.

If your employer withheld more income tax throughout the year than you actually owe, you receive a refund when you file. If you did not have enough withheld, you may owe money to the CRA. The T4 tells you exactly how much tax was deducted, so you know what to expect.

Tax-filing software such as CloudTax and StudioTax can pull your T4 information directly from CRA My Account using the Auto-fill My Return feature, making the process much faster. You do not have to type in the numbers manually.

Quebec Residents: Different Forms

If you work in Quebec, you will receive both a federal T4 and a provincial tax slip called the RL-1. Quebec has its own provincial tax system and sends T4 information to Revenu Québec (the Quebec tax authority) rather than the CRA. You must report both slips when you file your Quebec provincial return.

What to Do If You Lose Your Job or Change Employers

If you leave a job during the year, your employer should still issue you a T4 for the income you earned up to your last day. This T4 is issued in February of the following year along with all other T4s. If you work for multiple employers in the same year, you will receive multiple T4 slips (one from each employer). You must report all of them on your tax return.

Keep Records for the CRA

Canada Revenue Agency rules require you to keep copies of your pay stubs and T4 slips for at least six years. Store them safely in case you need them for proof of income, mortgage applications, or if the CRA ever asks questions about your tax return. Digital copies are fine, but make sure they are legible and stored securely.