Most small business owners don’t hear about payroll remittance schedules until they start paying employees. Even though it should be, it’s not common knowledge that when you pay your employees, you also have to pay the government.
Every time you run payroll, you either take out or add payroll taxes. These funds, set aside for the Canada Pension Plan (CPP) (QPP in Québec), Employment Insurance (EI), as well as federal and provincial/territorial income tax, must then be sent to either the CRA or Revenu Québec (RQ). These payments are due on specific dates, set by your payroll remittance schedule (also known as your remittance frequency).
Ok, now that we’ve shared the backstory, let’s turn this tricky and technical topic into a quick and pain-free overview of payroll remittances and payroll remittance schedules.
Payroll remittances are the payments you send to the CRA (and/or RQ) on a quarterly, monthly, semi-monthly or weekly basis. They’re made up of:
Other words for payroll remittances: You’ll often hear “source deductions” or “statutory deductions.” Both mean money taken or added at the source — the paycheque.
As an employer, you’re responsible for:
The short answer: You — the employer and the small business owner — are responsible for these mistakes. Payroll remittances aren’t optional. They’re a legal requirement. Missing deadlines can mean penalties and interest. Following your remittance schedule not only keeps you in good standing with the regulatory agencies, showing employees you’re handling their pay properly builds trust.
It’s a timeline of due dates that outlines when your business is required to send its payroll remittances to the CRA (and/or RQ). It’s the schedule that keeps you in step with government deadlines, helping you avoid late fees and major headaches.
Our friends, the rulemakers at the CRA, have created four payroll remitter types that determine the frequency you follow for your remittance payments:
A note about payroll remittance due dates: If a due date falls on a weekend or holiday, it must be received or processed before the next business day. So, if your payments are due on a Friday that’s also a national holiday, they need to be received or processed no later than Monday.
For more information on payroll taxes, see this helpful overview.
Good question. When you get ready to start paying employees, you request a payroll program account. Like GST/HST account, it’s a version of your business identification number that shows you’ve also registered as an employer.
When you sign up for your payroll account number, the CRA will then send you a letter or email with your remittance schedule. Each November, the CRA reviews the payroll records. If your monthly withholding amounts have increased to $25,000 or more, you’ll be assigned to either a Tier 1 or Tier 2 Threshold.
If your average monthly withholding amount is less than $25,000, you’ll either be a quarterly or regular remitter. However, staying a quarterly remitter requires perfect attendance, meaning you always pay all and report on time, not just payroll, all your taxes, including GST/HST.
Note: If you have Québec-based employees, you’ll also have to register to remit to RQ.
Because there are so many different types of small businesses, you can send your remittances by standard mail or make electronic payments through your CRA business account, your business bank or your payroll software.
If you’re using pen and paper, the CRA requires a PD7A, basically a form that’s like a credit card statement but for your payroll taxes.
Reminder: If you pay employees in Québec, you’ll send employment and pension remittances directly to RQ.
When your payroll remittances are late, the CRA issues a 3% to 10% penalty:
On top of this, interest is added until the balance is paid.
If you’re ahead of the curve, there are no penalties for paying early. It also won’t affect your remitter type unless you cross an AMWA threshold or make an error.
When you find a mistake, whether it's a late payment, underpayment or overpayment, reach out to the CRA (and/or RQ). You can either do this on your own or work with your accountant or bookkeeper to do so. In most cases, as long as you’re honest and take steps to fix it, the CRA (and/or RQ) will usually work with you.
However, if you make the same mistake over and over, without making any effort to correct these mistakes, the agencies will be annoyed, and your penalties will increase. Taken to the extreme, the consequences and pain factors multiply, including the risk of criminal prosecution.
If your payroll remittance mistakes aren’t corrected before you issue your employee T4s, the CRA may issue a Pensionable and Insurable Earnings Review (PIER). It’s kind of like landing on Santa’s naughty list before the holiday rush. You can get back off the list, but it takes time and effort.
You’ll also have to go back and re-issue all the affected T4s. That means you may be on your employees’ baddy list for a bit as well.
Yep. The complexity of payroll taxes, combined with most small businesses figuring these things out on their own equals hours invested in making the best guess or, more often, going back and fixing mistakes.
Yes! We’ve finally reached a point in history where technology is actually levelling the playing field for small businesses.
Tools like Huumans Payroll make it simple to pay employees, take out the right taxes and send these funds to the right places. To help you get started, you can run payroll for up to five employees free for the first year you use the software.
For more on what to look for in small business payroll software, see this checklist.
Want to dig deeper? Here are some reliable links to learn more about payroll remittances:
The CRA (and/or RQ) will determine your remittance schedule when you create your payroll account. This schedule is then reviewed on an annual basis, usually at the end of the year.
The CRA (and/or RQ) will notify you via email or standard mail.
Yes. You’ll need to have this information when you set up any kind of payroll software.
Yes. Huumans Payroll can automatically calculate and send your payroll remittances.
Yes. Once you sign up, you’ll be connected with a dedicated payroll expert who’ll help you get set up.
