You’re Not Taking Home What You Think — The Payroll Deduction Myth
Ever look at your gross pay and feel confused when your actual paycheque is much lower? You’re not alone — many Canadians assume they’re being “shorted,” when in fact, there’s a complex system of deductions at play. Let’s break down the most common misconception about payroll: that gross pay = take-home pay.
Myth: “I earn $60,000, so I should be getting $2,308 every two weeks.”
Truth: That’s your gross pay — your actual take-home is reduced by taxes, CPP, and EI.
1. The Common Misunderstanding
A lot of employees multiply their annual salary by 1/26 (for biweekly pay) and assume that’s what they should see on every paycheque. So when the deposit is smaller, they assume something’s wrong. But that $2,308 gross biweekly pay from a $60K salary? It's nowhere close to your actual take-home.
2. Where Your Money Goes
Here’s what gets deducted from your biweekly gross pay in Ontario:
Federal income tax: Based on your taxable income after the basic personal amount
Ontario provincial tax: Also reduced by personal exemptions
CPP contributions: Canada Pension Plan, mandatory for employed individuals
EI premiums: Employment Insurance deductions apply up to a yearly maximum
These aren’t optional — they’re built into the system. And they can reduce your paycheque by 20–30%, depending on your earnings.
3. A Real Example
Let’s say you make $60,000 a year.
That’s $2,308.00 biweekly before deductions.
Now factor in:
CPP: approx. $103
EI: approx. $37
Federal and provincial tax: approx. $300–$400
Your net pay might come out closer to $1,750–$1,850, depending on the specifics. That’s not because your employer is paying you less — it’s because the system takes its share.
Curious what this looks like for you?
Use the calculator below to estimate your own biweekly net pay based on Ontario rates:
Ontario Payroll Deductions Calculator (Biweekly)
Disclaimer: This calculator provides an estimate of payroll deductions for an Ontario employee paid on a biweekly basis. It includes common federal and provincial marginal tax brackets, CPP, and EI contributions for 2025. It does not replace official CRA tools or professional advice. Actual payroll deductions may differ due to rounding, additional credits, benefits, or payroll-specific rules. Always consult a tax professional for precise calculations tailored to your situation.
Still unsure if your pay is right? Or maybe you’re a small business owner who wants to better understand employee deductions?
Let’s chat — send me a message or book a consult.
