How does the business province setting affect employee income tax?

Last updated: July 21, 2025

The Business province setting directly determines which income tax rates are applied to employees during payroll processing. Even if employees work remotely or in a different province, the business’s registered province controls their income tax calculation in payroll.

Why does this matter?

  • Income tax deductions are based on the province set in your Business settings

  • This ensures consistency with CRA remittance rules

  • Employees may still have to reconcile differences at tax time if their actual work location differs from the business province

Note: If employees live or work in a different province, consult with your payroll or tax advisor to ensure proper withholding practices.

CRA guidance

For more information. please refer to this article.