FREQUENTLY ASKED QUESTIONS  —

PAYROLL ACCOUNTING

HOW DO I PAY MY PAYROLL TAXES?

CRA offers many payment options.

For all payments, indicate your 15 digit business number (ending RP0001, in most cases) and the period it applies to (year or quarter).

If paying by cheque, make your cheque payable to “Receiver General of Canada” and send it to:

Canada Revenue Agency
PO Box 3800 STN A
Sudbury ON P3A 0C3

Attach a remittance voucher, or else clearly mark on the cheque your SIN or business number (ending RT0001 for HST payments, RP0001 for payroll and RC0001 for corporate taxes) and the period it applies to (year or quarter).

HOW MUCH PAYROLL TAX SHOULD I REMIT?

If you are incorporated, we recommend that you establish a consistent salary, pay yourself regularly (weekly, bi-weekly, or monthly) and send in payroll taxes each month.

Please call or email our office (t-slips@rosspc.ca) for help in calculating your remittance payments.

Alternatively, you can use a payroll calculator, such as:

CRA Payroll Deductions Online Calculator
Payment Evolution Payroll Calculator (More flexible CRA’s calculator, as it allows you to calculate payroll remittances based on net salary, and/or based on a yearly salary.)

Reminder: if you are paying yourself from your own corporation, you will be EI exempt unless you have “opted in.”

HOW OFTEN SHOULD I MAKE PAYROLL REMITTANCES IF I AM INCORPORATED?

We strongly encourage regular payroll remittances to CRA.

If paying monthly, you must remit payment for the current month’s salary by the 15th day of the following month (e.g. your payment for December salary would be due to CRA by January 15th.)

If you are eligible for quarterly remitting, CRA must receive payment by the 15 th day of the month immediately following the end of each quarter. The quarters are:

January to March (payment due by April 15th)
April to June (payment due by July 15th)
July to September (payment due by October 15th)
October to December(payment due by January 15th)

I’M NOT CURRENTLY PAYING MYSELF A SALARY, DO I STILL HAVE TO MAKE SOURCE DEDUCTIONS?

If you skip one or more salary payments, you do not have to make source deductions for that period.

***However, you should inform CRA that no salaries are being paid; otherwise, CRA will expect a remittance and may fine you for skipping payment.

You can update your information via CRA’s My Business Account service, by mail (using a remittance voucher sent to you by CRA), or by telephone (1 800 959 5525). Our office can also update your information, upon request.

THE SALARY ON MY T4 DOESN’T MATCH MY RECORDS OF WHAT I PAID MYSELF. WHY NOT?

You may be calculating your pay records based on withdrawals from your corporate bank account. However, these withdrawals represent your net pay (aka pay after payroll deductions).
Since the T4 must show your gross pay (income before tax and CPP deductions), a calculation is performed to arrive at the gross pay and deductions.

In certain cases, taxable benefits may also be added to your gross pay to arrive at the T4 amount.

THE AMOUNTS ON MY T4 SLIPS DON’T REFLECT ALL THE PAYROLL TAXES I PAID; WHY NOT?

The remittances you make to your RP (payroll) account may include:
Income tax withheld
CPP – employer portion
CPP – employee portion
EI – employer portion
EI – employee portion

However, the T4 slip does NOT show
Employer CPP paid (equals the employee amount)
Employer EI paid (equals 1.4 times the employee amount)

For example: X Corp has paid $10,000 in payroll tax.
The T4 shows:
Box 16 (income taxes withheld) – $4911.40
Box 22 (employee CPP) – $2544.30
TOTAL: 7455.70
The remaining $2544.30 was the employer CPP portion, which was remitted to CRA.

I AM HIRING A NANNY/CAREGIVER. WHAT DO I NEED TO DO TO SET UP PAYROLL?

If you hire a caregiver, baby-sitter, or domestic worker, you are considered to be the employer of that person. You are considered to be an employer when you:

Hire a person,
Establish regular working hours, and
Assign and supervise the tasks performed.

As an employer you will have to open a payroll account with CRA. This can be done by calling CRA at 1-800-959-5525 and requesting a business number with a payroll account. CRA will assign you a business number over the phone and send you a confirmation letter.

You can also register on line.

Once you have a business number, you must calculate your employee’s deductions (tax, CPP, and EI) and periodically remit them to the government. You can use an on-line salary calculator such as the one offered by Payment Evolution or CRA.

After the end of the calendar year you must prepare a T4 slip for your employee and send a T4 summary to the government.

Please note that our office does provide T4 preparation services, including calculating deductions, and remitting payroll taxes to the government.

HOW DO I KEEP TRACK OF WHAT I PAY MYSELF THROUGH MY CORPORATION?

If your corporation is not preparing proper pay stubs (showing earnings and deductions), you can track your draw using the bank statements for your business account. The total of your withdrawals can be analyzed at the end of the year, and classified into the following categories:

Salary payments (bank withdrawals are net income amounts; the gross amounts and related payroll deductions can be calculated from the net amounts)
Dividend payments
Loan to shareholder
Repayment of loan from shareholder

For salary and dividend payments, a tax slip (T4 for salary, T5 for dividends) must be issued by the last day in February.

Loans to shareholder and repayment of loans from shareholder do not require that slips be issued, but will be reflected on the corporate balance sheet.

We have your covered. If your question isn't listed above, write or call us and we will respond to you at the earliest.

Query resolved?

FAQs  —

HARMONIZED SALES TAX (HST)

CORPORATE BUSINESSES 

PAYROLL ACCOUNTING

OUR OFFICE

UNITED STATES

CANADIAN NON-RESIDENT / CROSS-BORDER

CANADIAN PERSONAL TAXES

CANADA REVENUE AGENCY

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