Here’s everything Canadian businesses need to know about payroll remittances

Let’s start at the beginning - what is a remittance?

By definition, the term “remittance” encompasses the act of sending or transferring money to another party. In the context of talking about a business’s payroll and workforce management, a remittance specifically refers to money that’s legislatively required to be sent via a wire transfer, electronic payment system, mail, draft or cheque to a governing body (such as Canada Revenue Agency [CRA], Revenu Québec [RQ] and/or a provincial or territorial government).

How many payroll remittances are there?

For Canadian businesses, payroll remittances are required by several different governing bodies. Here’s the breakdown:

• The federal government
  • This can include federal and provincial income tax (excluding Québec), Canadian Pension Plan (CPP), and Employment Insurance (EI)
    • For more information on CPP from the CRA, visit: https://www.canada.ca/en/services/benefits/publicpensions/cpp.html
    • For more information on EI from the CRA, visit: https://www.canada.ca/en/services/benefits/ei.html
  • The Québec government
    • This can include Québec’s provincial income tax, Québec Pension Plan (QPP), Québec Parental Insurance Plan (QPIP), and Québec Health Services Fund (QHSF)
      • For more information on Québec’s provincial income tax from RQ, visit: https://www.revenuquebec.ca/en/businesses/income-tax/
    • Provincial and territorial governments other than Québec
      • In British Columbia and Ontario, this can include Employer Health Tax
      • In Manitoba and Newfoundland and Labrador, this can include Health and Post-Secondary Education Tax
      • In the Northwest Territories and Nunavut, this can include Payroll Tax
      • In all provinces and territories, this includes the local Workers Compensation Board (WCB)*

Why are government remittances important for businesses?

Canadian businesses are legally required to collect source deductions from their employees' pay in order to submit remittances (alongside other employer contributions) to the appropriate government body on a pre-determined schedule. This can have significant impacts on Canadian businesses.

Organizations can face costly penalties and fines levied by those government bodies if remittances are incorrect, late or not sent at all. For example, penalties for federal remittances are up to 10% depending on the length of the delay, or even double that in the case of multiple occurrences. The fines and penalties charged for late or missed remittances vary dependent on which government body an employer might remit to. For more information on those rates, consult the provincial or territorial legislation.

How and when should businesses submit payroll remittances?

There are up to four ways Canadian businesses can submit their payroll remittances:

1. Cheque
2. Funds transfer through a Canadian financial institution
3. Electronically, by registering for an online government account
4. Through a third party service provider who does the heavy lifting for you – like Payworks!

As mentioned above, the “when” is super important for payroll remittances.

The remittance frequency set up by CRA and RQ for each employer is based on the employer’s average monthly withholding amount (AMWA) – which means that larger employers are required to remit more often.

• For more information on how and when remittances are due from the CRA, visit: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/remitting-source-deductions/how-when-remit-due-dates.html.
• For more information on how and when remittances are due from RQ, visit: https://www.revenuquebec.ca/en/businesses/source-deductions-and-employer-contributions/remitting-source-deductions-and-employer-contributions/frequency-of-remittances/changing-your-remittance-frequency/.

How can Payworks help?

We make remittances simple! Payworks collects income tax, CPP and EI amounts with each payroll run, and remits these source deductions on your business’s behalf. Plus, our annual fees can actually end up costing less when compared to facing one substantial penalty for late filing or failure to deduct.

• Our Payroll application calculates government remittances and submits them to the CRA and RQ on your behalf
• Upon request, most provincial and WCB premiums can also be remitted directly by Payworks
• We help ensure those year-to-date amounts are accurate – so businesses can stay on top of whether they’re deducting the right amounts for CPP, QPIP, EI, QPIP, as well as federal and provincial income tax
• Once businesses have finalized their year-end by the processing deadline, Payworks electronically submits tax form information and remittances directly to the CRA and RQ
• Each client is assigned a dedicated Client Service Representative (CSR) who is always a click or call away should questions arise about remittances (or anything else with your payroll!)

For Payworks clients looking for a little extra guidance when it comes to payroll remittances, head to the Help Centre and search for “remittance.” You can also reach out to your dedicated CSR anytime!

For Canadian businesses looking to further explore how our Payroll solution can support their business’s success, reach out to sales@payworks.ca today.

*Workers Compensation Boards (WCB) can go by a different name depending on the jurisdiction in Canada.