A Primer on Payroll in Canada employee, the year's basic exemption must be prorated over the number of fees paid during the year. Example: CPP Quarterly Frequency paid 2020 Basic exemption Number of fees to be paid ÷ Quarterly exemption Directors' fee Quarterly exemption Contributory earnings 2020 CPP rate CPP contribution x Example: ÷ Quarterly exemption Directors' fee Quarterly exemption Contributory earnings 2020 QPP rate QPP contribution 4 $ 875.00 $3,000.00 $ 875.00 $2,125.00 5.25% $ 111.56 QPP Quarterly Frequency paid 2020 Basic exemption Number of fees to be paid $3,500.00 x $3,500.00 4 $ 875.00 $3,000.00 $ 875.00 $2,125.00 5.70% $ 121.13 EMPLOYMENT INSURANCE PREMIUMS Directors' fees are not subject to EI premiums if the individual is not an employee. INCOME TAX Fees paid to directors who are employed by the company are taxed by adding the fee to the employee's regular pay period's taxable income and applying the regular tax deduction methods. If the director is not an employee estimate the total fees to be paid for the taxation year. If the total fees will not exceed the amount the director is claiming on their TD1 (federal and provincial)/TP-1015.3-V form, then no tax deductions are required. If no TD1/TP-1015.3 has been filed, use the basic amount (for Canadian residents). © The Canadian Payroll Association/L'Association canadienne de la paie 2020 11-81