Context: I am trying to learn more about Canadian payroll and finance so that I can properly understand the business logic when implementing new finance and payroll features in Business Central. I will be using the CRA’s website for my source of knowledge.
Employers Guide: Payroll Deductions Remittances
What is payroll deduction remittance? – The process of employers deducting and submitting certain amounts from their employees’ wages to the CRA as part of their tax obligations.
In Canada, the CRA requires employers to remit payroll deductions on a regular schedule to ensure that employees’ taxes and benefits are properly accounted for. Depending on the institution’s Average Monthly Withholding Amount, remittance due dates are different.
Responsibilities for Employers (According to CRA):
- Open and maintain a payroll program account. If you meet the conditions in Chapter 1 for opening an account, you must register for one
- Get your employee’s social insurance number (SIN). Every employee must give you their SIN to work in Canada. For more information, see Social insurance number
- Get a completed federal Form TD1, Personal Tax Credits Return, and, if applicable, a provincial or territorial Form TD1. New employees or recipients of other amounts such as pension income must fill out this form. For more information, see Chapter 5
- Deduct CPP contributions, EI premiums, and income tax from remuneration or other amounts, including taxable benefits and allowances, you pay in a pay period. You should hold these amounts in trust for the Receiver General and keep them separate from the operating funds of your business. Make sure these amounts are not part of an estate in liquidation, assignment, receivership, or bankruptcy
- Remit these deductions along with your share of CPP contributions and EI premiums. The CPP and EI chapters of this guide explain how to calculate your share of contributions and premiums. Chapter 8 explains how and when to remit these amounts
- Report the employee’s income and deductions on the appropriate T4 or T4A slip. You must file an information return on or before the last day of February of the following calendar year. For more information, go to T4 slip – Information for employers, and T4A slip – Information for payers
- Prepare a Record of Employment (ROE) when an employee stops working and has an interruption of earnings. For more information, see Record of employment (ROE)
- Keeping records of what you do because our officers can ask to see them. For more information, see Keeping records
This is the payroll calculator from the CRA: https://www.canada.ca/en/revenue-agency/services/e-services/digital-services-businesses/payroll-deductions-online-calculator.html