Grade 10 — Mathematics 10-3 › T3U10 Income

Grade 10 › T3U10 Income › L3
GRADE 10 · ALBERTAOUTCOME AB-MAT10-3-N2

L3 · Deductions and Net Pay

Learning goal

“I can explain why gross pay and net pay differ, calculate CPP, EI and income tax deductions when the problem GIVES me the rates, subtract other given deductions, and arrive at net pay - the amount that actually lands in the bank account.”

Net pay — what is left after all deductions are subtracted from gross pay: net = gross - total deductions. This is the amount paid to the worker.
Deduction — an amount taken off gross pay before the worker is paid: payroll deductions (CPP, EI, income tax) and others such as health plans, union dues, uniforms, charitable donations.
CPP (Canada Pension Plan) — a payroll deduction that funds retirement pensions. The rate is set by the federal government and changes by legislation - in every problem here, the rate is GIVEN.
EI (Employment Insurance) — a payroll deduction that funds benefits for workers who lose a job. Like CPP, its rate is set by government and is always GIVEN in the problem. Income tax is the third government deduction, also computed here only from a given rate.
Worked example

A worker's gross pay is $1,000. The problem gives these deduction rates: CPP 5%, EI 2%, income tax 10%. Find each deduction and the net pay. Step 1: CPP = 5% of 1,000 = $50. (The rate is given in the problem - CPP rates are set by government and change, so they are never memorized for this course.) Step 2: EI = 2% of 1,000 = $20. Income tax = 10% of 1,000 = $100. Step 3: Total deductions = 50 + 20 + 100 = $170. Step 4: Net pay = 1,000 - 170 = $830. Pay stub model: GROSS $1,000 -> less CPP $50, less EI $20, less income tax $100 -> NET $830. Say it plainly: gross is what you EARN; net is what you KEEP. The gap is not an error - it pays for pensions, insurance against job loss, and public services. And notice what this lesson is NOT: nobody here fills in a personal income tax form or return. We calculate deduction amounts from given rates - nothing more.

Check yourself — explain it

Net pay is smaller than gross pay because...

Paired problem — example still visible

Gross pay $800; given rates: CPP 5%, income tax 10% (no EI in this problem). Find the net pay. -> CPP 40; tax 80; net = 800 - 120 = $680

Faded completion — last step is yours

"Gross $950; income tax at a given rate of 12% = $114; net = 950 - ___ = $___" -> 114; 836

Ready to practise?

10 scored questions with a 3-rung hint ladder. Mastery needs 8/10 plus both gate questions.

Start practice →Take the unit quiz