Your gross annual pay is $19 163. Employment insurance premiums are deducted at a rate of 2.25% and Canada Pension Plan premiums are 3.75% based on total earnings. You pay income taxes at a rate of 17% on all amounts over $8131. What is your Net Pay for the year?

Question

Quizplus · Accepted Answer

Step 1: Calculate Employment Insurance Premiums 
$19,163 x 2.25% = $431.17 (deducted from gross pay) 
Remaining gross pay = $18,731.83

Step 2: Calculate Canada Pension Plan Premiums 
$19,163 x 3.75% = $720.86 (deducted from gross pay) 
Remaining gross pay = $18,011.97

Step 3: Determine taxable income 
Taxable income = Gross pay - Employment Insurance - Canada Pension Plan premiums - Basic Personal Amount 
Basic Personal Amount = $13,229 for 2020 
$18,011.97 - $431.17 - $720.86 - $13,229 = $3,630.94

Step 4: Calculate Income Tax 
$3,630.94 x 17% = $617.26

Step 5: Calculate Net Pay 
Net Pay = Gross Pay - Employment Insurance - Canada Pension Plan premiums - Income Tax 
Net Pay = $19,163 - $431.17 - $720.86 - $617.26 = $16,137.78

Therefore, the best choice is D with Net Pay of $16 137.78.

Your Gross Annual Pay Is $19 163