What are Payroll Deductions and Remittances?

Being an employer, you pay salaries and provide benefits to your employees; you must calculate, deduct and remit the source deductions every time you issue payroll. These deductions depend on the income earned by each employee. The premises include CPP contributions, Employment Insurance premiums, and income tax.

Which Remittance Schedule You Should Follow?

Your remittance schedule is determined by your average monthly income withholding amount (AMWA). AMWA refers to the sum of all the payroll deductions you paid to the CRA within a calendar year. The Average Monthly Income Withholding Amount is used to classify you as a new, regular, accelerated, or quarterly remitter. 

4 Kinds of Remitters

1) New Remitter

If you are a new employee or have never made a remittance before, you will be considered a new remitter. As a new remitter, your payments are due the 15th day of the month following the one you made payroll deductions.

2) Regular Remitter

A regular remitter is also known as a non-accelerated remitter. A regular remitter is a new employer who has less than two years of Average Monthly Income Withholding Amount (AMWA) and a two-year AMWA of less than $25,000. 

3) Accelerated Remitter

There are two categories of an accelerated remitter:

Threshold 1

Employers with two-year AMWA of $25,000- $99,999.99. Remittances for Threshold 1 remitters are due the 25th day of the same month for payroll processed in the first 15 days. For payroll processed after the 16th day of the month, remittances are due by the 10th day of the following month.

Threshold 2

Employers with a two years AMWA greater than $100,00. Remittances for Threshold 2 remitters are due on the third working day (excluding weekends & public holidays) after the 1st-7th, 8th-14th, 15th-21st, and 22nd-last day of the month. In other words, no later than the 3rd business day after the week in which the payroll got processed.

4) Quarterly Remitter

Small businesses can qualify for quarterly remittance if they have an AMWA of less than $3,000 in the previous two years and have a perfect compliance history with the CRA. Remittances for quarterly remitters are due on or before April 15, July 15, October 15, and January 15 for payrolls processed in the previous quarters.  

Payment Methods for Payroll Deductions

The most common payment methods for payroll deductions are:

• By Phone
• Pre-authorized debit
• Third-party service provider, e.g., a payroll company
• Using a personalized remittance voucher at some financial institution.
• By mail to the CRA
• Online
• By using Visa Debit

Time to Take Action!

When you remit your payroll deductions, make sure that, being an employer, you must complete a T4 slip for each employee and also complete your T4 summary form. When it comes to payroll deductions, you are holding CRA’s money on behalf of the Government. It means that you are not remitting your money. Instead, you are remitting CRA's money. If you need any assistance regarding the remittance of your payroll deductions, feel free to contact Yogi & Associates because we never disappoint our clients!