ARCHIVED CD 2006-035: Information Notice to Employees
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Changes to the Net Pay Amount Commencing January 2007
Note This document has been modified. The changes are identified by a vertical line "|". Revision (|)
The purpose of this notice is to provide you with information about changes to the net amount of pay commencing with the first pay of January 2007.
The following factors may affect your net pay:
- PSPP , CPP and QPP Contributions
At the beginning of each year, the lowest rate of the two possible rates of contribution to the Public Service Pension Plan (PSPP) is used until the maximum level of contribution for that rate is reached. Then, the higher rate of contribution is used for the remainder of the year. Beginning with the new year, PSPP contributions recommence at the low rate, until such time as they reach the maximum level of the contributions for the low rate. Therefore, if you are a contributor under the PSPP and you compare your last pay in December to your first pay in January, you may see that you have paid a larger amount of PSPP in December than in January.
For the calendar year 2007, the contribution rate will increase by 0.3%. Effective January 1, 2007, PSPP contributions will be 4.6% (to a maximum of $2010.20 for the 2007 taxation year) on all pensionable earnings below and equal to the yearly maximum pensionable earnings (YMPE) ($43,700 for the 2007 taxation year) and 8.1% on all pensionable earnings over the YMPE.
Contributions to PSPP have a direct bearing on the income tax deducted at source since these contributions are deducted from the gross pay before determining the tax rate. Once the contributions reach the maximum PSPP low level, the contributions to PSPP will increase from 4.6% to 8.1%. The larger the PSPP contribution, the less income tax will be withheld from your pay.
Many employees reach their maximum level of Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) contributions sometime during the year. If you reach the maximum level of CPP/QPP, you will see an increase in the amount of your net pay as there will no longer be CPP/QPP deductions withheld. Beginning with the new year, you will recommence paying CPP/QPP contributions until such time as you reach the maximum CPP/QPP contribution level for 2007.
The CPP and QPP rate, effective January 1, 2007, remains at 4.95% of pensionable earnings. The maximum CPP/QPP contribution is $1,989.90 for the 2007 taxation year.
The CPP contributions provide a federal tax credit of 15.5%. This tax credit is applied directly to the income tax that is owing and is not dependent on your income tax bracket. Please note that the Quebec Tax Reform eliminated the Quebec provincial tax credit for QPP effective January 1, 1998. The tax credit for QPP is now included in the basic credit amount of $9,750 for the 2007 taxation year. - Employment Insurance (EI) Premiums
Your rate of EI premiums (excluding employees working in the province of Quebec), for the 2007 taxation year has decreased from 1.87% to 1.80%. The annual maximum insurable earnings have increased from $39,000 to $40,000. If you reached the maximum EI premiums during the previous year, you will recommence paying EI premiums in the new year until the maximum premium level is reached. Once you reach the annual maximum premium deduction of $720.00 in 2007, you will see an increase in the amount of your net pay as there will no longer be EI deductions withheld from your pay.
If you work in the province of Quebec, your rate of EI premiums for the 2007 taxation year has decreased from 1.53% to 1.46%. The annual maximum insurable earnings have increased from $39,000 to $40,000. If you reached the maximum EI premiums during the previous year, you will recommence paying EI premiums in the new year until the maximum premium level is reached. Once you reach the annual maximum premium deduction of $584.00 in 2007, you will see an increase in the amount of your net pay as there will no longer be EI deductions withheld from your pay. - Quebec Parental Insurance Plan (QPIP)
Effective January 1, 2007, your QPIP premium rate will remain at 0.416% of insurable earnings. The annual maximum insurable earnings will be increased from $57,000 to $59,000. If you reached your maximum QPIP premiums during the previous year you will recommence paying QPIP premiums in the new year until the maximum premium level is reached. Once you reach the annual maximum premium deduction of $245.44 in 2007, you will see an increase in the amount of your net pay as there will no longer be QPIP deductions withheld. - Federal Tax Brackets and Rates Effective January 1, 2007
The federal income tax table has changed effective January 1, 2007, as follows:
Federal Tax Brackets and Rates
(indexing factor 2.2%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 36,378 15.5% 0 to 37,178 15.5% 36,378 to 72,756 22% 37,178 to 74,357 22% 72,756 to 118,285 26% 74,357 to 120,887 26% Over 118,285 29% Over 120,887 29%
| Canada Employment Credit
| Effective January 1, 2007, the maximum amount on which the credit is calculated will be increased from $500 to $1,000. - Provincial and Territorial Tax Brackets and Rates Effective January 1, 2007
Prince Edward Island
There are no changes to the tax brackets or rates.
Newfoundland and Labrador
There are no changes to the tax brackets or rates.
Nova Scotia
There are no changes to the tax brackets or rates.
Alberta
There are no changes to the tax brackets or rates.
New Brunswick
The provincial income tax table has changed effective January 1, 2007, as follows:
New Brunswick Tax Brackets and Rates
(indexing factor 2.2%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 33,450 9.68% 0 to 34,186 9.68% 33,450 to 66,902 14.82% 34,186 to 68,374 14.82% 66,902 to 108,768 16.52% 68,374 to 111,161 16.52% Over 108,768 17.84% Over 111,161 17.84%
Manitoba
The provincial income tax table has changed effective January 1, 2007, as follows:
Manitoba Tax Brackets and Rates Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 30,544 10.9% 0 to 30,544 10.9% 30,544 to 65,000 13.5% 30,544 to 65,000 13% Over 65,000 17.4% Over 65,000 17.4%
Ontario
The provincial income tax table has changed effective January 1, 2007, as follows:
Ontario Tax Brackets and Rates
(indexing factor 2.1%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 34,758 6.05% 0 to 35,488 6.05% 34,758 to 69,517 9.15% 35,488 to 70,976 9.15% Over 69,517 11.16% Over 70,976 11.16%
The provincial surtax payable has been revised as follows:
Where the basic provincial tax payable is less than or equal to $4,100 (formerly $4,016), the surtax payable is $0.
Where the basic provincial tax payable is greater than $4,100 and less than or equal to $5,172 (formerly $5,065), the surtax payable is 20% of the basic provincial tax payable in excess of $4,100.
Where the basic provincial tax payable is greater than $5,172, the surtax payable is the total of 20% of the basic provincial tax payable in excess of $4,100 and 36% of the basic provincial tax payable in excess of $5,172.
Saskatchewan
The provincial income tax table has changed effective January 1, 2007, as follows:
Saskatchewan Tax Brackets and Rates
(indexing factor 2.2%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 37,579 11% 0 to 38,405 11% 37,579 to 107,367 13% 38,405 to 109,729 13% Over 107,367 15% Over 109,729 15%
British Columbia
The provincial income tax table has changed effective January 1, 2007, as follows:
British Columbia Tax Brackets and Rates
(indexing factor 1.9%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 33,755 6.05% 0 to 34,397 6.05% 33,755 to 67,511 9.15% 34,397 to 68,794 9.15% 67,511 to 77,511 11.7% 68,794 to 78,984 11.7% 77,511 to 94,121 13.7% 78,984 to 95,909 13.7% Over 94,121 14.7% Over 95,909 14.7%
Quebec
The provincial income tax table has changed effective January 1, 2007, as follows:
Quebec Tax Brackets and Rates
(indexing factor 2.026%)Tax Brackets and Rates effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 28,710 16% 0 to 29,290 16% 28,710 to 57,430 20% 29,290 to 58,595 20% Over 57,430 24% Over 58,595 24%
Yukon
The territorial income tax table has changed effective January 1, 2007, as follows:
Yukon Tax Brackets and Rates
(indexing factor 2.2%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 36,378 7.04% 0 to 37,178 7.04% 36,378 to 72,756 9.68% 37,178 to 74,357 9.68% 72,756 to 118,285 11.44% 74,357 to 120,887 11.44% Over 118,285 12.76% Over 120,887 12.76%
Territorial Employment Credit
Yukon introduced a territorial Canada Employment Credit. The new credit will be effective January 1, 2007. It will be calculated by using the lowest personal tax rate for the year and will apply on the lesser of $1,000 or the individual's employment income for the year.
Northwest Territories
The territorial income tax table has changed effective January 1, 2007, as follows:
Northwest Territories Tax Brackets and Rates
(indexing factor 2.2%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 34,555 5.9% 0 to 35,315 5.9% 34,555 to 69,110 8.6% 35,315 to 70,631 8.6% 69,110 to 112,358 12.2% 70,631 to 114,830 12.2% Over 112,358 14.05% Over 114,830 14.05%
Nunavut
Nunavut The territorial income tax table has changed effective January 1, 2007, as follows: Nunavut Tax Brackets and Rates
(indexing factor 2.2%)Tax Brackets and Rates Effective
January 1, 2006Tax Brackets and Rates Effective
January 1, 2007Tax Brackets ($) Tax Rates Tax Brackets ($) Tax Rates More than - Not more than More than - Not more than 0 to 36,378 4.0% 0 to 37,178 4.0% 36,378 to 72,756 7.0% 37,178 to 74,357 7.0% 72,756 to 118,285 9.0% 74,357 to 120,887 9.0% Over 118,285 11.5% Over 120,887 11.5% Effective January 1, 2007, the Nunavut payroll tax will be increased from 1% to 2%.
Change in province of work
The income tax deducted from your pay is based on your province of work. In some situations, when you change your province of work, your tax liability may be such that you owe the Canada Revenue Agency (CRA) and/or the "Ministère du Revenu du Québec" (MRQ) at year end.
If you change your province of work at any time during the year, you are encouraged to review your personal tax situation in order to be aware of your tax liability upon filing at year end.
If you wish to have more federal and/or Quebec income tax deducted, you may do so by completing a "2007 Personal Tax Credits Return", form TD1 E (07) and/or, for the province of Quebec, a "Source Deductions Return 2007", form TP-1015.3-V (2007-01), and providing this documentation to your compensation advisor.
Any request for information regarding the content of this document should be addressed to your compensation advisor.
- Date modified: