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CRA Employer Payroll Remittance & Deductions

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When a business has employees, the law requires the employer to withhold and remit to the Canada Revenue Agency (“CRA”) certain amounts from gross pay. At first, you have to register for a payroll program account with the CRA. You have to register if you pay salaries or wages, pay tips or gratuities, pay bonuses or vacation pay, or provide benefits or allowances to employees.

The employer is responsible for properly classifying employees as separate from independent contractors, and withholding the right amounts. Businesses often try to call persons who would be employees under the heading of independent contractor to save money. The classification is a matter of law and a question of fact. Often this attempt to save on payroll remittance taxes comes back to haunt employers, sometimes forcing them into bankruptcy. The classification of employer and employee can be tricky, but a tax professional will be able to help you make the right decision.

Employers must make deductions from employee pay. Most employees (there are a few exceptions for some deductions) have Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax deducted, withheld, and remitted.) These amounts can be calculated using the CRA’s online payroll remittance deductions calculator. Note that there are other payroll taxes that may apply, such as worker’s compensation premiums, but these are not part of the amount deducted and remitted to the CRA. An employee can ask you to withhold less income tax, because of their personal circumstances, by filling out Form TD1 “Personal Tax Credits Return”. This allows them to have access to more of their pay during the year rather than have to wait for a refund after the end of the year.

Depending on the number of employees you have and, therefore the amount you remit monthly, you can be either a new small employer remitter, a regular remitter, or one of two categories of accelerated remitters. A regular remitter is a new employer that has monthly average monthly remittance amounts of more than $1,000 and less than $25,000, or a remitter that has been remitting for more than 12 months has had an average monthly remittance of $3,000 or more. As a regular remitter, you have to remit the amounts to the cra online payroll on the 15th day of the month after you pay or give employees their remuneration.

The amounts that are required to be withheld are considered to be held in trust for the government and can be collected by the cra payroll deductions immediately. The failure to withhold and remit payroll taxes is a common reason a business may get in trouble with the tax man. In a corporation, directors can be personally liable for the failure of the corporation to withhold and remit required amounts. Always seek out a tax professional so you know what your payroll obligations are.

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Testimonial

Sam Faris reduced the significant unreported income based on net worth audit to be nil. Sam’s approach in fighting these types of complex audits is unique and sophisticated. He found countless mistakes made by the auditor which were rectified when Sam appealed the audit decision. Instead of owing significant amount of taxes, Sam reduced it to zero. I highly recommend to hire Sam for this type of audits and any CRA problem.”

E.M., Ottawa
pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.

This is an announcement from Aaron Baer, legal counsel to Faris CPA.

I have been working with Faris CPA for more than 10 years.

Faris CPA is being attacked by Kenneth John Weakley (Oct 1969).

I am posting this review because Kenneth John Weakley has been deleting his reviews and has been reposting them, so that Faris CPA's responses don't always show up.

Faris CPA's position is as follows:

Faris CPA is a well-regarded firm that is compliant with CPA Ontario obligations and has a good track record.

Under no circumstances will Faris CPA be paying Kenneth John Weakley any amount.

Kenneth John Weakley's claims do not have any merit.
Response from the owner:Thank you Aaron for your help with this matter. Please see below my entire response to Kenneth John Weakley (DOB: October 20, 1969). “Attention all readers: Faris CPA and 3 other reputable lawyers in the GTA are being aggressively attacked with fake Google reviews posted by Kenneth John Weakley (DOB October 20, 1969). Unfortunately, his repeated blackmailing and extortion attempts for the past few months have failed and he is still hoping to be successful by keep posting those false and fake reviews. Please note all personal information mentioned in our response is available online, publicly available and anyone can access it and none of the information was obtained while doing business with Kenneth John Weakley. Feel free to Google his name and see the below link to confirm. As such, there is no breaching confidentiality issue whatsoever. https://find-and-update.company-information.service.gov.uk/officers/EfbNEs5kNSRQeb9uq8kdZL0LGm8/appointments This is a fake review posted by Kenneth John Weakley (DOB: October, 20 1969). Address: 821A Fulham Road, London, U.K. SW6 5HG
Had a very good experience with Sam and his team. They dealt with my CRA audit in the most efficient way possible. I admire their professionalism and expertise in providing answers to the CRA and providing a perfectly reconciled package which was a key to resolve the tax issue. If you look for a tax consultant firm, hire Farid CPA. 10 stars
Response from the owner:Thank you for the five stars and the positive review.
I was referred to Sam Faris by a family member who highly recommended him to deal with my CRA audit matter which has been ongoing for almost 2 years. Considering that this was a sensitive issue, I needed to make sure that Sam would be the right fit to handle my case. I requested an in-person meeting. I met with Sam for more than 2 hours. He went through CRA proposal letter and immediately identified the weaknesses in CRA’s calculations. He immediately advised on the best approach to dispute this proposal and provided a time line when he will submit the counter analysis. I was impressed with his confidence and his expertise and decided to retain his services. He worked on my file around the clock to ensure meeting the deadline. At the end, Sam was able to reduce the tax bill and I was able to pay it with no hesitation. While Sam was working on the file, he was in a full control with the situation by communicating with the auditor on timely and professional manners. I never felt that I was left in the dark as Sam was always providing me with an update. I do recommend to hire Sam for any dispute with the CRA. Thanks
Response from the owner:Thank you for your positive reviews and kind words.
Had a consultation with Sam about a tax situation and very glad I got professional advice on how to proceed.
Response from the owner:Many thanks for taking the time writing this amazing review.