What is payroll remittance?

Payroll remittance is the amount of money business owners in Canada send to the Canadian Revenue Agency (CRA) after paying compensation or benefits for an employee on payroll.

Whenever employers pay salaries, wages, or give employees taxable benefits, they also need to make source deductions from those amounts, paid regularly to CRA. Remunerations include any type of compensation and benefits offered to employees that are required by law. They include salaries, wages, commissions, taxable benefits, and pension income.

How do employers make a payroll remittance?

When employers pay remuneration, they need to make source deductions from that amount and remit these deductions to the CRA. The CRA mandates that all employers must make deductions (withhold) from employees’ salaries and remit them with their percentage of Canada Pension Plan (CPP) and employment insurance (EI) contributions and premiums.

How often should you remit payroll deductions?

Remittance frequency is based on the type of remitter employers qualify for. An employer’s remitter type is calculated by their average monthly withholding amount (AMWA) from the two calendar years prior to the current reporting period. The AMWA is the total of all the CPP, EI, and income tax employers had to remit for the year, divided by the number of months (maximum 12) that they had to remit. This total amount determines whether the business is a new remitter, regular remitter, accelerated remitter, or quarterly remitter. The parameters for each type are:

• New remitter- For new employers who have never made remittance payments, payments are due on the 15th of the month.
• Regular remitter- For new employers with fewer than two years of AMWA history or with an AMWA of fewer than $25,000, payment is due on the 15th of the month.
• Accelerated remitter- There are two types of accelerated remitters with different due dates: The first type is the 25th of the month (if payroll was processed on 15th) or by the 10th of the following month. The second type is due by the third business day after payroll was processed.
• Quarterly remitter- Organizations with an AMWA of fewer than $3,000 for the last two years or those with a perfect compliance history, pay on or before April 15th, July 15th, October 15th, and January 15th for payrolls processed in the previous quarters.