How To Read Your Canadian Pay Stub: 6 Sections (2024)

Over half of Canadians don’t regularly monitor their pay stubs for errors. That could lead to mistakes that cost you money each pay period.

Your pay stub will show the number of hours you worked, along with your gross pay and applicable deductions. Plus, it’s not hard to decipher once you know what each section means.

Luckily, I’m here to help you understand what all those numbers and abbreviations mean, and I’ll show you how to read your Canadian pay stub.

What Is a Pay Stub?

A pay stub keeps track of your earnings and calculates your wages based on your pay period. Your stub will include information like year-to-date earnings, hours worked, pay rate, and deductions.

A pay stub differs from a paycheque as it records your wages. A paycheque is a physical cheque you will receive as payment for services rendered during a predetermined pay period.

Most employers use direct deposit to pay their employees instead of a physical cheque. Direct deposit is a faster way for employees to receive payment, and it cuts down on fraud and stolen cheques while keeping employers in greater control of the payroll process.

How To Read a Pay Stub

The example below is a sample pay stub. Although it includes a lot of information and might be overwhelming at first glance, it’s not as complicated as it looks. Here’s a breakdown of each numbered area.

pay stub

1 – Employee Information

The first section includes all employee information. This will include your name, address, and employee number, if applicable. In addition, you’ll notice a line for the exemption amount under the address. When you start work at a new employer, you’ll fill out Form TD1, which determines the amount of federal and provincial taxes deducted.

There are separate Form TD1s for both federal and provincial purposes. If you start at a new employer or wish to change your exemption amount, make sure you fill out a form for each.

2 – Pay Period Information

The information in this section includes pay period data. That means you’ll find your pay period length, whether it’s weekly, bi-weekly, or monthly. In the example above, you can see it’s a bi-weekly pay period, and this stub information is for paycheque four of twenty-six.

This section will also include the dates covered in the pay period as well as the actual pay date.

3 – Hours and Pay Rate

Section three shows how many hours you worked within the pay period and your hourly or salary rate. From there, you’ll find the calculated amount of wages based on that information. You’ll also find your year-to-date earnings and hours worked in this section.

If you get bonuses or work overtime, you’ll find that information here too. In addition, many employers will manage your vacation time or personal time off in this area.

4 – Gross Earnings

Gross earnings are what you earn before taxes. It’s the amount calculated based on the hours worked multiplied by your hourly rate.

5 – Deductions

Deductions will lower your gross pay amount and include the following:

  • Taxes (both federal and provincial)
  • EI (Employment insurance). EI helps those currently unemployed and looking for work or upgrading their skillset.
  • CPP or QPP (Canada Pension Plan or Quebec Pension Plan). These deductions provide retirement, disability, and survivor benefits to those who contributed in the past. The plans will pay out a monthly benefit when you retire, become disabled, or are the recipient (survivor) of a plan member’s benefit.

Other Deductions

While the three deductions above are the main ones, you might find other ones on your pay stub. They can include contributions to a retirement plan, health insurance premiums, union dues, or long-term disability premiums.

Basically, any sort of deductions that will lower your gross pay will show up in the deductions section.

Similar to the hours and pay rate section, you’ll find the year-to-date amounts for each deduction found here, as well.

6 – Net Pay

In the example above, you can find net pay after the deductions. Net pay, also called “take-home pay,” is the money you get after subtracting all deductions from your gross pay.

It is the amount of money you will be depositing into your account or the amount already direct deposited for you.

Still need more help deciphering your pay stub? Check out this video to help you learn the ins and outs.

How Long To Keep Your Pay Stubs?

You should keep your pay stubs for a year or when your employer provides you with your T4 form. This form summarizes all the money your employer has paid you during the calendar year, and you will need it to help file your taxes.

Keeping your pay stubs throughout the year will not only give you a good idea of where you’re at financially but may be needed to help verify your income if you’re looking to apply for loans.

What If Your Pay Stub Is Wrong?

Mistakes get made, even by the best of us, so it’s possible someone within your payroll department can make an error on your pay stub. That’s why it’s always important to keep track of your hours yourself so you can match your records with your pay stub.

If something is incorrect or doesn’t seem quite right, it’s best to go to your payroll department and get to the bottom of it right away.

Final Thoughts

How To Read Your Canadian Pay Stub

Your pay stub shows you all the hours you worked, your pay rate, and applicable deductions. It isn’t difficult to read once you know what each section means.

As you’re learning more about paycheques and pay stubs, maybe you want to know more about other financial instruments. How about writing a cheque? If you’ve never written one or need a lesson on how to do it, check out my article on the topic.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Read about how he quit his 6-figure salary career to travel the world here.

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