October Payroll Check-In: Year-End Prep, Compliance Reminders, and an Ontario Wage Hike
Hello Payroll Insiders,
Welcome to your October edition of the PayRescue Monthly Insider. Fall is always a pivotal time—the major mid-year changes have settled, but the critical push for year-end compliance is just beginning.
This month, we’re focusing on a key provincial minimum wage hike, ensuring you’ve implemented the last major federal change, and getting a head-start on T4 season.
1. Critical Compliance Alert: Ontario Minimum Wage Increase
For those with employees in Ontario, this is a non-negotiable, immediate update:
- What Changed: Effective October 1, 2025, Ontario’s general minimum wage increased from $17.20/hour to $17.60/hour.
- Action Required:
- Verify Payroll Systems: Immediately check that all hourly employees earning the old minimum wage are updated to the new $17.60 rate, effective for the first pay period in October.
- Review Budgets: Ensure your quarterly and year-end budgets have absorbed this increased labour cost, as it will impact your Q4 and next year’s projections.
PayRescue Best Practice: Don’t forget to update the minimum wage for students and liquor servers if you have those classifications, as those rates also adjust based on the general increase.
2. Federal Check-In: Confirming the July Tax Rate Change
The government reduced the lowest federal tax rate from 15% to 14%, effective July 1, 2025. While this change should have been implemented in your software months ago, October is the ideal time to do a spot check before year-end.
- Key Reminder: The 14% rate applies to the portion of income under the first tax bracket limit ($57,375 for 2025, prorated).
- Action Required: Pull a payroll report from July 1 onward and confirm that your payroll software or provider applied the updated deductions to ensure employee remittances are accurate before T4 season. Any errors now will be compounded and harder to correct in January.
3. Budgeting Best Practice: Preparing for 2026 Rate Hikes
While the official 2026 rates for CPP, EI, and the new CPP2 earnings ceilings won’t be finalized until November/December, the trend is clear: Employer costs are increasing.
- The Trend: For 2025, the Year’s Additional Maximum Pensionable Earnings (YAMPE/CPP2) ceiling was $81,200 (up from the base YMPE of $71,300), which requires a new layer of contributions. You should anticipate another increase in all contribution maximums for 2026.
- Action Required: Use your October and November budgets to model the impact of a conservative 2.5% to 3% increase in the CPP and EI maximums for your highly compensated employees. This proactive step helps avoid budget surprises in the new year.
4. Year-End Best Practice: The Mandatory Digital Filing Transition
The CRA continues its shift to digital-only interaction.
- T4 Filing Threshold: Remember, employers issuing more than five T4 or T4A slips must file electronically. This threshold is only getting lower, so relying on paper filing is becoming a compliance risk.
- CRA Communications: Ensure your My Business Account contact information is active and monitored. The CRA no longer sends most compliance and penalty notices via paper mail. Missing a notification due to an inactive email is no longer an excuse.
Need to Tweak Your Systems Before Year-End?
If the thought of auditing your past three months of deductions or preparing for T4 season is causing stress, have fun.
To your compliance and budgeting success,
Marc Laflamme Payroll Professional & Founder, PayRescue
Marc Laflamme 