4.5 Other Mandatory Deductions

The three source deductions, Canada Pension Plan (CPP), Employment Insurance (EI), and income tax, are mandatory by federal legislation. In addition, employers may sometimes be required to make other deductions authorized by law. These deductions may be required by federal legislation, provincial/territorial legislation, court order, or other binding agreements.

4.5.1 Deductions Authorized by Legislation

Employers must comply with legal orders and legislative requirements that direct them to withhold amounts from an employee’s pay. These deductions do not require employee consent and must be prioritized correctly if multiple orders apply.

4.5.1.1 Requirement to Pay (Canada Revenue Agency)

The Canada Revenue Agency (CRA) can require an employer to deduct amounts that an employee owes to the CRA through a legal document called a Requirement to Pay (RTP). The employee also receives a copy of the RTP. The employer is not required to notify the employee further or obtain consent.

• RTPs are authorized by the Income Tax Act (s. 224) and the Excise Tax Act (s. 317) (Government of Canada, 2023).

• The employer must deduct and remit the amounts specified by the CRA until the debt is satisfied.

4.5.1.2 Legal Orders and Priority of Deductions

Employers may also receive legal or court orders requiring them to deduct funds from an employee’s wages. When more than one type of order is received, deductions must be applied in the following priority order:

1. Support Orders – such as family or child support obligations.

2. Garnishment Orders – issued by a court to repay debts owed to creditors.

3. Maintenance Orders – covering ongoing obligations, such as spousal maintenance, not otherwise included under support orders.

4. Court Orders or Writs of Seizure and Sale – used to enforce judgments for other types of debt.

Employers must apply deductions in this order of precedence until the employee’s maximum garnishable income has been reached.

4.5.1.3 Union Dues

Union dues are another type of deduction authorized by legislation. Employee permission is not required once the employee has signed the required membership documentation with the union.

• Deductions are remitted directly to the union.

• Union dues reduce net taxable income at both the federal and provincial/territorial level.

• Exception: Québec – union dues reduce federal taxable income but do not reduce provincial taxable income.

4.5.1.4 Deductions for Meals and Lodging

Employment standards legislation in many Canadian jurisdictions allows for deductions when employers provide meals and lodging (also known as room and board). These deductions are strictly regulated:

• Maximum deduction amounts are set in most provinces and territories, often expressed as a daily, weekly, or monthly limit for minimum-wage workers.

• Industry-specific rules may apply in sectors such as hospitality, agriculture, or caregiving.

• Deductions must not reduce the employee’s wages below the minimum standards established under employment standards legislation.

Payroll administrators must always check the relevant employment standards to confirm allowable amounts. HRinfodesk provides a useful chart of the maximum deduction amounts across Canada (Saint-Cyr, 2023).

References

Government of Canada. (2023). Understanding a requirement to pay. https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/when-you-money-collections-cra/personal-debt/requirement-to-pay.html

Saint-Cyr, Y. (2023.). Maximum deductions permitted for board and lodging & meals/vehicle rates for travel expenses across Canada chart. HRinfodesk. https://www.hrinfodesk.com/preview.asp?article=20682

Image Credit

Napkin, Plate, Cutlery by katjasv, Pixabay licence