In Canada, salaries are paid to employees after all deductions. A deduction is an amount of money removed from your pay/salary by your employer for the following contributions. These deductions could reduce your pay by as much as 25% to 35% of your total income. This money goes towards:

• Income taxes
• Canada Pension Plan or Quebec Pension Plan
• Employment Insurance
• Union dues - if you belong to a union
• Contributions to a retirement or pension plan
• Any other necessary or agreed upon deductions between you and your employer

Gross income is the total amount of money that you earn before deductions.

Net income or take-home pay is the amount of money that you keep after all the deductions are removed.

Sales Taxes

In Canada it is common to add sales taxes to the price of goods and services.

Common goods and services taxes include:

Goods and Services Tax (GST)

GST is a Government of Canada tax of 5% added to the price of goods and services.

Provincial Sales Tax (PST)

PST is added in most provinces and will range from an additional 7% to 10%. Alberta, Nunavut, Northwest Territories, and the Yukon do not have provincial or territorial sales taxes.

Harmonized Sales Tax (HST)

In some provinces, the GST is combined with the PST, and is called the HST.