What are the main payroll remittance options businesses can choose from?

Businesses generally have three payroll remittance options: electronically through the CRA's My Business Account, via their financial institution, or by utilizing third-party payroll service providers. The most suitable method for your business depends on its size and internal accounting resources.

What is the required frequency for businesses to remit payroll deductions to the CRA?

The frequency for remitting payroll deductions to the CRA is determined by the total amount of withholdings a business typically makes. While some businesses remit monthly, those with higher withholding amounts may be required to remit twice a month or more frequently. Understanding your specific remittance schedule is crucial to avoid penalties.

What are the benefits of prompt payroll remittance for businesses?

Prompt payroll remittance is crucial for businesses to ensure compliance with CRA regulations and avoid costly penalties and interest charges. It also helps maintain accurate employee benefits and tax calculations, fostering good standing with both tax authorities and employees.

How can a business adjust its payroll remittance frequency if withholding amounts change?

If your business's total withholding amounts change significantly, you can adjust your payroll remittance frequency. Contact the CRA or your accountant to review your situation and determine the appropriate steps to formally request a change in your remittance schedule.

Payroll Remittance Options and Requirements

Understand your payroll remittance options and requirements. Learn when and how to remit to CRA based on your business’s withholding amounts.

Depending on the amount of your payroll remittance you may have some options as to when you are required to remit it to CRA.

Regular Payroll Remittance

You are a regular remitter if you are a new employer or your average monthly withholding amount (AMWA) two years ago was less than $25,000. In this case you are required to have your payroll remittance to CRA on or before the 15^th of the month following the month you paid your employees.

Quarterly Payroll Remittance

This option is available to new small employers or to existing companies who have had their payroll account for at least a year and meet certain criteria.

New small employers

You qualify for quarterly payroll remittance for the first year if your monthly withholding amount is less than $1,000 and you have a perfect compliance history. Perfect compliance history means that over a 12 month period, you have made all deductions and payroll remittances on time, have paid and filed your GST on time and have filed your T4 information returns on time.

All payments made after the due date may be charged a 3% to 10% penalty

Existing small employers

To qualify for quarterly payroll remittance you have to have an average monthly withholding amount of less than $3,000 in either the first or second preceding calendar year and have a perfect compliance history as explained above.

Due dates

If you qualify for quarterly payroll remittance, CRA must receive your payroll remittance on or before the 15^th day of the month immediately following each quarter. Quarters are: January to March; April to June; July to September and October to December.

Accelerated Payroll Remittance Threshold 1

This includes employers who had a total average monthly withholding amount of $25,000 to $99,999 two calendar years ago. Note that if a corporation is associated with one or more corporations in the current year, and the total AMWA of all the associated corporations was $25,000 or more two years ago, CRA considers all the associated companies to be accelerated remitters. The same rule applies to companies with more than one payroll account such as RP0001 and RP0002. If the AMWA was $25,000 or more two years ago, CRA considers both accounts to be accelerated remitters.

Due dates

If you are an accelerated remitter threshold 1, CRA must receive your deductions by the following dates:

For remuneration paid in the first 15 days of the month, remittances are due by the 25^th day of the same month.

For remuneration paid from the 16^th to the end of the month, remittances are due by the 10^th day of the following month.

Accelerated Payroll Remittance Threshold 2

This includes employers who had a total average monthly withholding amount of $100,000 or more two calendar years ago. Note that if a corporation is associated with one or more corporations in the current year, and the AMWA of all the associated corporations was $100,000 or more two years ago, CRA considers all the associated companies to be accelerated remitters. The same rule applies to companies with more than one payroll account such as RP0001 and RP0002. If the AMWA was $100,000 or more two years ago, CRA considers both accounts to be accelerated remitters.

Due dates

Amounts deducted from remuneration paid at any time during the month must be received by your Canadian financial institution no later than the third working day after the end of the following periods:

From the 1^st through the 7^th day of the month
From the 8^th through the 14^th day of the month
From the 15^th through the 21st day of the month
From the 22nd through the last day of the month

(For example, for a payday that falls on Friday June 17th, the remittance due date would be June 22^nd, three working days after the payday.)

Note: Employers In this category MUST pay their payroll remittance at their financial institution. Payments made on the due date but not at a financial institution may be charged a penalty of 3% of the amount due. All payments made after the due date may be charged a 3% to 10% penalty, depending on how many days late the payroll remittance is.

If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.

Thanks to Haley Bistretzan of KWB Chartered Accountants for providing this content.