Payroll Withholdings Remittance Requirements

Every person, business or other organization in Canada that employs one or more people must register for and make employer source deductions. This includes even the small, one-person corporation, if the owner draws any salary or wage. However, a proprietorship that does not have any other employees, and a partnership in which only the partners are working, does not register for source deductions. In these cases, the people are considered by Canada Revenue Agency (CRA) to be self employed, and any remittances made will be in conjunction with personal income tax returns.

Most employers are required to remit withholding amounts on a monthly basis; large employers remit more frequently. As a small business employer, you may be eligible to make quarterly remittances of taxes and payroll deductions.  CRA will automatically notify you if you qualify for this program. No application is required. You can continue to remit monthly if you prefer.

It is the employer's responsibility to contact the nearest Source Deduction office to apply for a business number. The application will normally be taken over the phone. You will be sent an employer's kit along with official notification of your registration number. The kit will include a guide book, payroll deduction tables, remittance forms, T4s, TD1s, a T4 Summary form and a consent form for access to employer information. If you do not have employees and are calling to find out what you might have to do, simply ask them to send you an employer's kit, but remember that this will not include an application form unless it is specifically requested.

As an employer, you also have to:  

1. deduct income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from amounts you pay to your employees;

2. send in these amounts along with your share of CPP contributions and EI premiums that you have to pay throughout the year on your employees’ behalf on CRA’s prescribed schedule;

3. report these amounts by employee and summarized on an information return by the end of February of the following calendar year.

As an employer or payer, you hold payroll deductions in trust for the Receiver General. Therefore, you have to keep these amounts separate from the operating funds of your business. They must not be part of an estate in liquidation, assignment, receivership or bankruptcy.  

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