Payroll is the process of paying employees and remitting the required income tax, CPP and EI withholdings to the CRA, along with issuing T4 slips.
Running payroll means calculating each employee's gross pay, withholding income tax, CPP and EI, and paying the net amount, then remitting the withholdings plus the employer's share of CPP and EI to the CRA. Remittances are generally due by the 15th of the following month, with faster schedules for larger payrolls.
Payroll withholdings are trust funds, and the penalties for late remittance are among the harshest in the tax system, up to 10% for a single failure and 20% for a repeat, with directors personally liable. At year-end, T4 slips summarising pay and deductions are due to employees and the CRA by the end of February.
An employee earns $5,000 a month. You withhold income tax, CPP and EI, pay them the net, and remit the withholdings plus your employer CPP and EI to the CRA by the 15th of the next month. In February you issue their T4.
Our certified accounting firm handles this for businesses and individuals across Canada, at fixed fees with no surprises.
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