Definition of source deductions
Source deductions are sums of money that are withheld from your paycheque to pay for certain services or taxes.
This money may be used to pay union dues, contributions to a pension fund and/or contributions to group insurance. Such deductions are also used to partially or fully spread out how much you owe each year in taxes.
Your employer is required to take this money off your paycheque and give it to the union, insurer and/or government.
What are the different payroll deductions used for?
You pay into this government insurance so that you can benefit from financial assistance if you lose your job.
You pay into this plan so that new parents can take maternity leave, paternity leave, parental leave or adoption leave.
You pay into these plans so that you can benefit from a government pension once you retire.
If you have a unionized job, you pay union dues.
You pay a certain amount of federal and provincial taxes per paycheque. The exact amount of taxes you owe is calculated when you file your tax return.
When you file your taxes, you could receive a refund (if too much money was taken off your paycheques) or a notice that you owe taxes (if not enough money was taken off your paycheques).