Pay Types tell Jane how each person on your team gets paid. The Pay Type you choose for each staff member affects payroll tax deductions, vacation pay accrual, and how income is reported on T4s and T4As at year-end. Choosing the right Pay Type from the start keeps your payroll accurate and your staff's pay stubs clear.
Jane includes a set of system-default Pay Types to choose from. You don't need to use all of them, just the ones that match how you pay your team. We strongly recommend creating your own custom-named version of each default you use, because the name of the Pay Type is what appears on your staff's pay stubs, and it can't be changed after you've run payroll with it.
If you're not sure which Pay Type to use, reach out to the payroll support team at [email protected], or check with your accountant for questions related to year-end reporting and compliance.
How-To Guides
FAQ Guides
Pay Type Reference
| Pay Type | Description (When to Use) | Subject to CPP | Subject to EI | Subject to Federal/Provincial Income Tax | T4 Box | T4A Box |
|---|---|---|---|---|---|---|
| Bonus - Discretionary | Lump-sum payments tied to performance or company results. | Yes | Yes | Yes | 14 | 48 |
| Bonus - Work related | Lump-sum payments tied to performance or company results. | Yes | Yes | Yes | 14 | 48 |
| Controlled Tips | Tips collected and distributed by the employer. | Yes | Yes | Yes | 14 | 48 |
| Double Overtime | Additional pay for hours worked beyond standard hours defined by employment standards. | Yes | Yes | Yes | 14 | 48 |
| Fee Split Compensation | Base wages or salary for time worked during a regular pay period. | Yes | Yes | Yes | 14 | 48 |
| Hourly Compensation | Base wages or salary for time worked during a regular pay period. | Yes | Yes | Yes | 14 | 48 |
| Other Earnings | Base wages or salary for time worked during a regular pay period. | Yes | Yes | Yes | 14 | 48 |
| Overtime | Additional pay for hours worked beyond standard hours defined by employment standards. | Yes | Yes | Yes | 14 | 48 |
| Owner's Draw | For sole proprietor owners to draw funds from their bank account, or for incorporated owners to pay themselves a dividend. No source deductions. | No | No | No | — | — |
| Pay Adjustment | Adjustments for previously unpaid or underpaid wages. | Yes | Yes | Yes | 14 | 48 |
| Performance-based Commission | Earnings based on sales or performance metrics. | Yes | Yes | Yes | 14/42 | 20 |
| Reimbursement | Funds to repay an employee for an out of pocket expense. | No | No | No | — | — |
| Salary Compensation | Base wages or salary for time worked during a regular pay period. | Yes | Yes | Yes | 14 | 48 |
| Services Compensation | Base wages or salary for time worked during a regular pay period. | Yes | Yes | Yes | 14 | 48 |
| Severance | Compensation provided upon termination under employment standards or contract. | No | No | Yes | 67 | 48 |
| Stat Holiday Pay - Avg Daily Wage | Pay for public holidays when the worker qualifies under provincial law. | Yes | Yes | Yes | 14 | 48 |
| Stat Holiday Pay - Hours Worked | Pay for public holidays when the worker qualifies under provincial law. | Yes | Yes | Yes | 14 | 48 |
| Stat Holiday Pay - Custom Amount (Not Worked) | Pay for public holidays when the worker qualifies under provincial law. | Yes | Yes | Yes | 14 | 48 |
| Stat Holiday Pay - Custom Amount (Worked) | Pay for public holidays when the worker qualifies under provincial law. | Yes | Yes | Yes | 14 | 48 |
| Taxable Benefit (cash) | A benefit paid to the employee directly in cash or a near-cash alternative (for example, a gift card or gold bars). | Yes | Yes | Yes | 14/40 | None |
| Top-up | Extra pay for working undesirable or special shifts (for example, nights). | Yes | No | Yes | 14 | 48 |
| Vacation Pay - Cashout | Paid out unused vacation upon leave or termination. | Yes | Yes | Yes | 14 | 48 |
Hourly Compensation
A great fit for any staff paid by the hour, typically administrative staff, front desk, support roles, and anyone whose hours you track with Timesheets.
Tax treatment: Subject to CPP, EI, and income tax. Reports as regular employment income on T4 Box 14 (employees) or T4A Box 48 (contractors).
Salary Compensation
Use this for any staff who receive a fixed annual salary, regardless of hours worked or services provided.
Tax treatment: Subject to CPP, EI, and income tax. Reports as regular employment income on T4 Box 14 (employees) or T4A Box 48 (contractors).
Fee Split Compensation
A very common way to pay practitioners. Use this when a staff member earns a flat fee or percentage of the services they provide to patients. This is sometimes called a "service split" or "revenue split." If you calculate someone's pay using the Compensation Report, Fee Split Compensation is almost always the right choice.
Tax treatment: Subject to CPP, EI, and income tax. Reports as regular employment income on T4 Box 14 (employees) or T4A Box 48 (contractors).
Performance-based Commission
Use this for staff who meet the CRA's definition of a commissioned employee, typically someone whose role is primarily commission-based. This is less common in clinic settings. Most practitioners paid on a revenue split are not CRA-defined commissioned employees. For them, Fee Split Compensation is usually the right choice. If you're unsure which applies, check with your accountant.
Tax treatment: Subject to CPP, EI, and income tax. Reports as commission income on T4 Box 14 with code 42 (employees) or T4A Box 20 (contractors).
Owner's Draw
Use this when paying yourself as the business owner. No CPP, EI, or income tax is withheld. This Pay Type moves money from your business bank account to you, and you handle income reporting at tax time.
- Sole proprietors: use this for owner's draws from your business
- Incorporated owners: use this for occasional dividends, and customize the name to something like "Dividend" to keep your records clear
🩵 Jane Tip: When you assign Owner's Draw to your staff profile, you can enter a default amount that auto-fills each payroll run. You can still adjust it if you want to draw more or less in a given period.
Tax treatment: No source deductions. Not reported on T4 or T4A. Owners handle this at tax time with their individual filings.
Reimbursement
A flexible Pay Type with no source deductions and no year-end reporting. Use this any time you're paying a staff member back for something that isn't income.
A common contractor use case: if your contractors collect HST or GST on the services they deliver, you can set up a separate Reimbursement Pay Type (named something like "HST amounts") to show those tax amounts on their pay stub separately from their actual income. This keeps those amounts off their T4A at year-end.
Tax treatment: No source deductions. Not reported on T4 or T4A.
Bonus - Discretionary
Use this for performance bonuses or year-end bonuses. Jane handles the bonus tax calculations automatically.
Tax treatment: Subject to CPP, EI, and income tax (calculated using the CRA's bonus tax method). Reports on T4 Box 14 (employees) or T4A Box 48 (contractors).
Final Vacation Payout
Use this when paying out a staff member's accumulated vacation balance. This Pay Type is not for regular vacation pay. It's specifically for situations where a lump sum payout is needed, such as when a staff member is leaving your practice or when you're switching them from accrued vacation to per-paycheck vacation pay.
Tax treatment: Subject to CPP, EI, and income tax. Reports on T4 Box 14 (employees) or T4A Box 48 (contractors).
Controlled Tips
Use this for tips you collect from patients and distribute to staff through payroll. Tips handed directly to staff by patients ("direct tips") don't need to flow through Jane Payroll.
If you use Jane Payments and patients can leave tips for practitioners, use Controlled Tips to separate tip income from service compensation on pay stubs. When entering values into payroll, make sure to separate the tip portion of the Compensation Report from the overall compensation number, otherwise tips could be paid out twice.
Tax treatment: Subject to CPP, EI, and income tax. Reports on T4 Box 14 (employees) or T4A Box 48 (contractors).
Stat Holiday Pay
There are a few Stat Holiday Pay options in Jane, depending on whether your staff worked the holiday and how you calculate the average daily wage. See our guide on Jane Payroll: Statutory Holidays in Canada for help choosing the right one.