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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.

Sam Faris helped me with a complex cross border tax matter. This issue involved 12 years of tax returns and it was as a result from mistakes that my previous accountant did. He was able to perfectly address the issue with the CRA and to fix the returns under the voluntary disclosure program. End results; CRA accepted Sam’s work with not a single question and the returns were reassessed to my satisfaction without penalties and interest. Many thanks to Sam brilliant work.
Response from the owner:Dear Sir It was a pleasure working on your file and get you the results that you aimed to have and to your satisfaction. We have been dealing with similar cases for many years and we were confident that the results are favorable. Please feel free to contact us in the future if you do require further help.
I found Sam’s firm online and I read the excellent Google reviews about him and his team. I decided to hire him to help me navigate an issue with the CRA. Sam delivered as expected and as promised. Results were to my satisfaction and I am very happy with how the process was handled. Highly professional and extremely knowledgeable.
Response from the owner:Dear Tanya Thank you for the 5 stars Google review and your kind words. We strive to provide the best customer service and make our clients relax and calm during the process. The cases we are taking are very sensitive so providing quality work to the CRA is extremely important so just to avoid any escalation and to make sure that our package is accepted from the first round. We will remain at your disposal anytime you require our services. Sam Faris
You will notice Sam is very quick with his responses. He knows his stuff and gives solid advice. Highly efficient, would recommend.
Response from the owner:Dear Jay Thank you for the 5 stars positive review. Working with you was pleasant too. Many thanks for your business and please do feel free to contact me if you have any questions. Sam Faris
after the initial assessment I had with Sam, he proposed a strategy to dispute CRA decision. He knew up front how to approach my case as he seemed that he dealt with similar cases many times. I hired him the end results were as promised and no surprises. Sam is very trust worthy and has a high business standards. May thanks Sam.
Response from the owner:Many thanks for the positive review.
I recently turned to Faris CPA for help with my tax filing, and I must say, I'm over the moon with the results! The whole process was a breeze, saving me time and stress. What really stood out was the friendly professionalism, impressive expertise, and crystal-clear communication from Sam and his team. They made what could've been a daunting task feel like a walk in the park! If you're looking for a warm, approachable tax expert who genuinely cares about his clients, I wholeheartedly recommend Sam and the folks at Faris CPA - they're great tax consultants!
Response from the owner:Many thanks.
Working with Sam and his team was an extremely valuable experience. One of the best Tax consultants in Toronto I've ever come across.

He has a ton of experience resolving problems with the CRA and was truly a big asset to me when I had issues I needed help with.

Would highly recommend Sam and Faris CPA, thanks again for all the great work!
Response from the owner:Thank you Paul for your positive feedback and we are glad we met your expectations.
I had an amazing experience working with Faris CPA for my CRA needs. They really know the CRA processes and made everything so easy. They were super professional, always ready to answer my questions, and made sure everything was done right. I couldn't have asked for better help. Highly recommend their services for anyone dealing with the CRA! -Sara
Response from the owner:Thank you Sara for the 5 stars review.
Faris CPA absolutely fantastic tax consultant firm. Sam and his team help me with an extremely difficult tax audit by CRA. They have done an amazing job. You guys are amazing and well deserve five star.
Response from the owner:Dear Eliyas Thank you for the positive Google review and the kind words. We heave dealt with many CRA audit cases. We have delivered the best services to our clients as we are confident with our work and its quality. Please feel free to reach out us if you require our services in the future. Sam Faris
Sam Faris is number one tax advisor and consultant. I contacted a few professionals but he was the only one who was able to help me with my dispute with the CRA. Many thanks to him.
Response from the owner:Said Thank you for the kind words and the 5 stars Google review. CRA issues may get very complicated. I am glad that everything worked out perfectly with you. Feel free to reach out to us any time you require our services. Sam Faris