8 Steps to Ensure an Accurate & Compliant Year-End Payroll Filing

Updated — December 2018

How time flies! Can you believe it's time for year-end routines already? 

In order to ensure a stress-free wrap up of your fiscal year, we've outlined 8 steps that will work for anyone — whether you're a payroll DIYer,  working with your accountant or using payroll software to manage your company's payroll.

By following these basic steps, both you and your employees can minimize any of the surprises or stressors that typically come year-end — the overpayment of CPP/EI, incorrect SINs or employee details and missed remittances among other things.

1. Confirm Statutory Holiday Payouts are Being Handled in a Timely Manner. 

In Canada, there are nine general holidays that apply to all companies federally:

  • New Year's Day
  • Good Friday
  • Victoria Day (National Patriots' Day in Quebec) 
  • Canada Day 
  • Labour Day
  • Thanksgiving Day
  • Remembrance Day
  • Christmas Day
  • Boxing Day 

Additionally, there are certain holidays that apply to specific provinces and territories.
Below are the dates for 2019:

  • Islander Day — February 18 (Prince Edward Island only)
  • Heritage Day — February 18 (Nova Scotia only)
  • Family Day — February 18  (Alberta, British Columbia, Ontario and Saskatchewan only)
  • Louis Riel Day — February 18 (Manitoba only)
  • Heritage Day — February 22  (Yukon only)
  • National Aboriginal Day — June 21 (Northwest Territories only)
  • Quebec's National Day — June 24 (Quebec only)
  • Nunavut Day —July 9 (Nunavut only)
  • Orangeman's Day — July 15 (Newfoundland and Labrador only)
  • Civic Holiday — August 5 (All except Quebec and Yukon)
  • Discovery Day — August 19 (Yukon only)

As an employer, you are legally required to pay out statutory holiday pay for employees who work on that holiday, but those requirements can vary based on your province or territory.

A good first step is to ensure that your company's payroll calendar accounts for those holidays. Then, if your employees meet eligibility requirements, you should make sure that they have been paid out for those holidays. 

Related: Statutory Holidays and Payroll 

2. Maintain Accurate Employee Details

As an employer, you are legally required to collect and record your employees' SIN within three (3) days of their hire date. You also want to ensure that for all of your employees:

  • The SINs are correct
  • First and last names are correct
  • Addresses are current and accurate 

If you are using an online payroll solution, employees can access and update their personal details like address, date of birth, etc. online — which is a lot easier than you making those edits individually.

Another aspect to consider is ensuring that you have your employees classified properly as either an employee or contractor. Mistakes from misclassification, such as failing to withhold the proper tax amounts, can add up quickly. 

Related: Employee vs. Contractor — The Answers 

3. Verify Your Business Number and/or Quebec Remittance Account Number

One of the first steps of setting up your business is to register your company with the government, and through the registration process, you get a unique business number for your company. 

This business number forms the basis for all your program accounts with the government, including your payroll account (it typically follows the 123456789RP0001 format). 

As all of your tax remittances are paid out to the payroll account, associated with your company — your business number is a piece of information you never want to get wrong.  

While we strongly recommend checking this during and immediately after setting up with your payroll provider or bookkeeper, it's something you can always check again at the end of the year. 

4. Review Your WCB, WSIB and/or CSST Account Numbers and Rates

This may or may not apply to your company specifically, but if you are required to register your company for Workers' Compensation, you will be assigned an account number and a percentage rate by the Workers' Compensation Agency in your province.

For a comprehensive list of all the Provincial and Territorial Workers' Compensation Boards across Canada, download our FREE Comprehensive Guide to Hiring Your First Employee

In addition to checking the account number and the rates, you should also make sure that all the applicable employees are enrolled in the program from a payroll standpoint. In a payroll app like Wagepoint, it's as simple as assigning the right Workers' Compensation rate to a specific employee within their Job Tab. 

This is also a good time to make sure that you are fully caught up on all Workplace Safety & Insurance Board (WSIB)/La Commission de la santé et de la sécurité du travail (CSST) reporting. Because these agencies typically deal with the company directly, the employer is responsible for completing and submitting these reports, usually on a quarterly basis. You should always confirm your reporting frequency with the Workers' Compensation board in your province. 

Most payroll providers can provide a report of all the remittances that have been made on your behalf, which is a handy report to accurately complete your WSIB/CSST reports.

5. Confirm That Your CRA/Revenu Quebec Statement of Account Matches Your Remittances Paid Out To Date

Assuming your bookkeeper or payroll provider is handling government remittances on your behalf, they should be able to provide you with a Receiver General Report that outlines all the remittances that have been paid out to date. 

You should compare the Receiver General Report with the Statement of Account you receive from the CRA/Revenu Quebec. 

This will help you spot any missed remittances, detect over or underpayments and catch up your payments well before you rack up any serious penalties. 

6. Ensure You're Using the Right Remittance Frequency and Updating it as Needed

Most companies typically fall in the New or Regular Remitter Frequency, where your remittances have to be paid by the 15th of the month following the month you paid your employees. 

Once your Average Monthly Withholding Amount (AMWA) starts to increase, your company might be required to remit taxes more frequently than a New or Regular Remitter. 

It's really important that you notify your bookkeeper or update the frequency in your payroll software as soon as you receive the notice from the government. The penalties can be pretty severe for missed remittances. 

7. Update Your Company's Employment Insurance (EI), Quebec Parental Insurance Plan (QPIP), Health Services Fund (HSF) or Employer Health Tax (EHT) Rates

Stating the obvious here, but any notices you get from the government are important. 

If you get reduced rates for EI, QPIP, HSF or EHT, you have to notify your bookkeeper or payroll provider immediately so that there are no discrepancies at year-end. 

8. Make Sure Your Year-to-Date (YTD) and Accrued Vacation Amounts are Accurate

The YTD amounts are mostly applicable for companies who are switching payroll providers or systems. The YTD amounts have to be entered for all employees who are on payroll, especially if they have been paid previously in the year. These amounts all tally up at the end of the year and are reflected in the T4s / T4As.  

Another thing to bear in mind is if the YTD amounts are incorrect, you might end up overpaying taxes and other source deductions like CPP or EI. 

You should also check accrued vacation amounts to make sure that the amounts match up to what they should be for your employees. Typically, vacation is accrued at 4% of your gross annual wages, but some employees might be accruing vacation at a higher percentage, say 3-weeks, which works out to 6% of annual gross wages. You should also ensure that any time taken as vacation time was reported and deducted from their balances. 

By following these eight steps, your year-end reporting should run smoothly for you and your employees. Plus, you minimize the risk of any penalties or discrepancies, and that's always a good thing! 

About the Author

Leena Thampan

Leena worked for some of the big guns in the media industry before deciding her true calling was to be the ultimate curator of our brand - this is our version of the story, of course. She spends her days cooking culinary masterpieces from all over the world. And if you are not really careful, she might just offer it to you.

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