When you're hiring an employee:
- If you don't already have one, be sure to register for a payroll program account before your first remittance due date. We touch on payroll program accounts and remittances below.
Best practice tip: Register for a payroll program account as soon as you hire an employee.
- Get your employees’ social insurance number (SIN) within three (3) days of when they start working for you. If they don’t have a SIN, advise them to apply for one at a Service Canada Centre and then give it to you within three days after they receive it.
- Ask your employees to fill out a TD1, Personal Tax Credits Return (TD1 form) within seven (7) days of when they start working with you.
Pro tip on TD1 forms from Wagepoint's Community Manager:
“It’s good practice to have your employees review their TD1 form each year and fill out a new one if there are any life changes. Life events, such as having a baby or a dependent, can affect their taxes. Having your employees review their TD1 form annually ensures the correct tax amounts are being deducted each year.”
— Bianca Mueller, CPB, Community Manager, Wagepoint
Open a payroll program account.
Once you become an employer and pay a salary, wage or give remuneration (including taxable benefits and allowances) to an employee, you have to make source deductions from that amount. To remit (pay) your deductions, you will need to open a payroll program account.
Note: Before you can register for a payroll program account, you will need to have a unique 9-digit business number (BN). Both your business number and your payroll program account tell the Canada Revenue Agency (CRA) who you are.
Pro tip: Have your SIN on hand if you're opening a payroll program account for the first time.
When to remit source deductions:
As mentioned earlier, as an employer, the CRA requires that you pay and file your payroll taxes accurately and on time. When you have to remit depends on the type of remitter you are and when your employees get paid. For most employers, source deductions are to be paid and filed by the 15th of the month AFTER you pay or give remuneration to your employees.
Here's a table that summarizes the different remitter types and corresponding frequencies:
Late fees and penalties.
Missed or late payments will result in fines along with daily compound interest on any outstanding balance of $500 or more.
Here is CRA’s current penalty structure:
- 3% — if your payment is 1-3 days late.
- 5% — if your payment is 4-5 days late.
- 7% — if your payment is 6-7 days late.
- 10% — if your payment is more than 7 days late or if you fail to pay at all.
- 20% — for repeat failures and violations.
Statutory holidays (stat holidays) — or general holidays — are public holidays recognized by the federal government or your province.
Federally regulated employees are entitled to the following 10 paid holidays each year. (Note: The actual amounts and dates depend on a few factors such as whether your employees are provincially regulated, part-time or are part of the private sector):
- New Year’s Day
- Canada Day
- Remembrance Day
- Good Friday
- Labour Day
- National Day for Truth and Reconciliation*
- This federal holiday was introduced in 2021 and seeks to honour First Nations, Inuit and Métis Survivors and their families and communities. Learn more.
- Christmas Day
- Victoria Day
- Thanksgiving Day
- Boxing Day
Pro tip: Banks are also closed on stat holidays so if you're running payroll, please take this into account as it can affect your processing time.
Did you know? When a stat holiday falls on a weekend or an employee’s day off, the paid day off is observed on the first working day immediately following the general holiday.
Read our article to learn about statutory holidays.
Calculating stat holiday pay.
Answering the question of "How do you calculate stat holiday pay?" isn't entirely straightforward because statutory holiday eligibility rules and calculations vary from province to province. You'll need to consult with the Employment Standards Branch of the province or territory you're working in to confirm.
Using payroll software like Wagepoint will also help as we can automate stat holiday calculations for you. Just sayin'.
Pro tip: If you use Wagepoint, simply load your company holidays and stat holiday pay will be automatically calculated for all hourly employees using the federal formula.
When to issue T4s, T4As and RL-1s:
T4s, T4As and RL-1s — the “holy grail” of payroll documents.
These tax documents need to be sent to your employees, your contractors and the Canada Revenue Agency (CRA) or Revenue Québec (RQ) by the last business day of February each year. If the last business day happens to fall on a Saturday, a Sunday, or a public holiday recognized by the CRA (which we covered in the section above), your tax information return is due the next business day.
A little bit more on T4s, T4As and RL-1s.
- T4 Statement of Remuneration Paid (T4):
- T4s are given to both employees and the CRA. Note: Employers need to create a T4 for each province and territory in which the employee earned income.
- When you submit your T4, you also need to include a T4 Summary of Remuneration Paid (T4SUM).
- If you have 50 or more employees, the T4s have to be sent electronically.
Pro tip: If you use Wagepoint, we can send this information to the CRA for you — just be sure to set your “auto-submit” status to “YES” in your Company & Payroll settings. Learn more.
- T4A Statement of Pension, Retirement, Annuity and Other Income (T4A):
- T4As are given to both contractors and the CRA. Note: Similar to T4s, employers need to create one for each province and territory in which the contractor was paid.
- If you pay a contractor $500 or more for their services, you must issue a T4A.
- Relevé 1 Employment and Other Income slip (RL-1):
- RL-1s are given to RQ.
- You must also file an RL-1 if your business is based in Québec or you have workers based in Québec and you have paid salaries, wages, gratuities, tips, fees, scholarships or commissions as an employer.
- Relevé 1s are an additional item that gets submitted to RQ — you are still on the hook for completing your T4s and T4As for federal reporting.
- If you have 50 or more employees, RL-1s must be submitted online.
Pro tip: Wagepoint can submit and create RL-1s for you . For the RL-1 summary, we provide you with the payroll information you need but you must submit the RL-1 summary yourself.
Late fees and penalties
For T4s, you may be fined if:
- You file your information past the due date.
- You fail to file electronically when sending more than 50 T4s.
Your T4 return is still considered to be “on time” if the CRA receives it or if it’s postmarked on or before the due date. Note: Penalties are assessed based on the number of information returns you filed late. Exact fines and penalties are outlined here.
Similarly, if you file an RL-1 slip or RL-1 summary late and if you fail to file electronically when sending more than 50 RL-1 slips, you may be subject to a penalty of $100. Details can be found here.
When to issue a Record of Employment (ROE):
When an employee stops working for seven (7) consecutive days, they experience what’s called an “interruption of earnings”. Employers are required at this point to issue a Record of Employment (ROE) electronically or manually (paper copy).
Here’s when you’ll have to issue the ROE:
If you’re filing by paper, you must submit the ROE within five (5) calendar days of the employee’s last day of work regardless of why they left.
If you’re filing electronically and your pay period is weekly, biweekly, or semi-monthly, you have up to five (5) calendar days after the end of the pay period in which an employee's interruption of earnings occurs to issue an electronic ROE.
If you have a monthly pay period or 13 pay periods per year (every four weeks), you must issue electronic ROEs by whichever date is earlier:
Five (5) calendar days after the end of the pay period in which an employee experiences an interruption of earnings.
15 calendar days after the first day of an interruption of earnings.
In other words, you have less time to issue an ROE if you do it manually. Failure to do so may have serious consequences such as fines or prosecution.
Pro tip: If you use Wagepoint, we can submit ROEs electronically on your behalf. Learn how.
Heads up! We’ll be introducing a new ROE processing system called Record of Employment Secure Automated Transfer (ROE SAT) in September 2021. Learn more about ROE SAT.
Get your free 2021 Canadian Small Business Payroll Calendar
Stay on top of payroll dates and deadlines with our 2021 Canadian Small Business Payroll Calendar. It gives you an overview of key small business payroll deadlines so you can focus on running your business without worrying about missing important dates.
Disclaimer: This article is intended to be informational and does not replace the need for working with an accountant, bookkeeper or other financial professional. While every care has been taken to ensure the accuracy of this content, the relevant laws undergo constant revision. It is a best practice to stay informed on these topics and to consult with experienced professionals. Any errors or inaccuracies brought to our attention will be corrected as quickly as possible.
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