Payroll Basics for New Canadian Employers
Canadian employers have payroll responsibilities from the moment they begin paying employees. Proper setup, accurate calculations and timely reporting are essential.
Payroll Begins Before the First Paycheque
Hiring your first employee is an important milestone, but it also creates new employer responsibilities. Before processing payroll, an employer should confirm that the business has the required CRA payroll deductions account and has collected the information needed to calculate and report payroll correctly.
Payroll records should be maintained consistently from the employee’s first day of work.
Calculating Payroll
Payroll may include regular wages or salary, commissions, overtime, vacation pay, statutory holiday pay, taxable benefits, bonuses, and other compensation. The treatment of these amounts can depend on the employment arrangement and applicable federal or provincial employment standards.
Employers are generally responsible for calculating and withholding applicable income tax, Canada Pension Plan contributions and Employment Insurance premiums, as well as paying required employer portions.
CRA Remittances
Amounts withheld from employees, together with applicable employer contributions, must be remitted to the CRA according to the employer’s assigned remitter type and due dates. The remittance frequency can vary, so employers should not assume that every business follows the same schedule.
Late or incorrect remittances can result in interest and penalties, making accurate payroll processing and deadline tracking important.
Records of Employment
A Record of Employment (ROE) is generally required when an employee experiences an interruption of earnings. ROEs are important because Service Canada uses the information to determine eligibility for Employment Insurance benefits.
The deadline depends on how the ROE is issued and the employer’s pay period. For many electronic ROEs with weekly, biweekly, or semi-monthly payroll, the deadline is generally five calendar days after the end of the pay period in which the interruption occurs.
Year-End Payroll Reporting
Employers must also complete year-end payroll reporting. T4 slips report employment remuneration and applicable deductions and are generally due, along with the related information return, by the last day of February following the calendar year. Other information returns, such as T4A, may apply depending on the payments made.
Employers remain responsible for the accuracy and timely filing of payroll information even when payroll processing is outsourced.
Payroll and Workers’ Compensation
Payroll information often connects directly with provincial workers’ compensation reporting. Employers operating in more than one province may have different registration, reporting, and premium requirements. This is especially relevant for construction, contracting, retail, beauty and wellness, transportation, and other businesses with employees working in multiple jurisdictions.
How M&L Accounting Inc. Can Help
M&L Accounting Inc. provides weekly, biweekly, semi-monthly, and monthly payroll support. Services can include employee setup, payroll calculations, vacation and statutory holiday pay, payroll adjustments, termination pay, ROEs, CRA payroll remittances, T4/T4A/T5 preparation where applicable, and payroll-related CRA correspondence.
Contact M&L Accounting Inc. if you are setting up payroll or need ongoing payroll support for your Canadian business.
Important Information
This article provides general information only. Requirements can vary based on the facts, jurisdiction, industry and type of business. It is not legal advice. Government rules and administrative procedures can change, so current requirements should be confirmed before taking action.
Request a consultation with M&L Accounting Inc. to discuss the accounting, tax, payroll or corporate compliance needs of your business.
