Chapter

2
Federal Remittances and
Reconciliations

Chapter 2 2
Learning Objectives:

Upon completion of this chapter, you should be able to:

1. Differentiate between monies held in trust and operating capital

2. Apply statutory remittance schedules
3. Calculate statutory remittances
o Canada Pension Plan
o Employment Insurance
o Federal and non-Québec provincial income taxes
4. Reconcile the Canada Revenue Agency account

Communication Objective:

Upon completion of this chapter, you should be able to explain the financial and legal
consequences of non-compliance with statutory remittance requirements.

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Chapter Contents

Introduction....................................................................................................................2-4
Remittance Responsibilities............................................................................................2-4
In Trust ......................................................................................................................2-4
Remitter Type ............................................................................................................2-5
Remittance Schedule ..................................................................................................2-5
Content Review ........................................................................................................ 2-19
Review Questions ..................................................................................................... 2-20
Remittance Calculations ............................................................................................... 2-22
Content Review ........................................................................................................ 2-24
Review Questions ..................................................................................................... 2-25
Reconciling the Canada Revenue Agency Account....................................................... 2-26
Content Review ........................................................................................................ 2-28
Review Questions ..................................................................................................... 2-29
Chapter Review Questions and Answers ......................................................................2-30

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Introduction
The Payroll Compliance Legislation course provides information on when to withhold, and
how to calculate, the statutory deductions for Canada Pension Plan contributions,
Employment Insurance premiums and federal and non-Québec provincial income taxes. This
chapter focuses on the remittance of these statutory deductions, along with the employer
portion, to the Canada Revenue Agency (CRA). This material discusses the concept of
monies held in trust, the required remittance reporting forms, remitter types, remittance
schedules, the calculation of the remittance amount and source deduction account
reconciliations.

The statutory deductions withheld from employees’ pays, along with any employer portion,
must be held in trust for the Receiver General until the remittance is made. The remittance,
payable to the Receiver General for Canada, must be calculated accurately, accompanied by
the correct reporting form and received by the Canada Revenue Agency on or before the
established due date, according to schedule.

A periodic reconciliation of the source deduction account is necessary to ensure that all
deductions and employer portions have been remitted to the Receiver General accurately and
on time, keeping in compliance with legislation.

Remittance Responsibilities
Employers are responsible for registering and maintaining a payroll program account with
the Canada Revenue Agency. The employer will remit the statutory deductions withheld
from the employees’ remuneration for Canada Pension Plan (CPP) contributions,
Employment Insurance (EI) premiums, and federal and non-Québec provincial income taxes,
along with the employer portions of CPP and EI to this account.

In Trust
Statutory deductions are deemed to be held in trust for the Receiver General for Canada. This
means the amounts withheld from employees, along with the employer’s portion, must be
kept separate from the operating funds of the business and cannot be part of an estate in
liquidation, assignment, receivership, or bankruptcy.

Employers who make their own government remittances, as opposed to having them remitted
by a service provider, must separate all CPP contributions, EI premiums and income tax
withholdings, along with any employer portion, from the organization’s regular bank
account. All statutory deductions and contributions must be held in a separate payroll account
until the remittance is made to the Receiver General.

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Remitter Type
An organization’s remittance frequency depends on its average monthly withholding amount
for the second preceding calendar year. For example, the withholding amount for 2021 will
depend on the employer’s average monthly withholding amount made in 2019. Employers
may apply to the Canada Revenue Agency to have their average monthly withholding
amount for the current or previous year used instead of the second preceding year. This
would be advantageous if the employer’s payroll for the previous year was lower than the
payroll for the second preceding year.

Note:
The average monthly withholding amount is based on the total withholding amount of all
associated corporations as defined by the Income Tax Act.

There are four remitter types as shown in the following chart:

Exhibit 2-1
REMITTER TYPE DEFINITION
Quarterly For new employers who have a monthly remittance of less
than $1,000.00, perfect compliance history for their payroll
and GST/HST tax obligations and who have been notified
that they qualify for quarterly remitting
For employers whose average monthly withholding amount
is less than $3,000.00
Regular For employers whose average monthly withholding amount
is from $3,000.00 to $24,999.99, and for new employers who
have not been notified by the CRA that they qualify for
quarterly remitting
Accelerated threshold 1 For employers whose average monthly withholding amount
is from $25,000.00 to $99,999.99
Accelerated threshold 2 For employers whose average monthly withholding amount
is $100,000.00 or more

Remittance Schedule
Once an employer has been advised by the CRA what type of remitter they are, a schedule,
based on that type, is used to determine when the remittances are due to the CRA.

The payment for the first three types of remitters – quarterly, regular, and accelerated
threshold 1 – is due by a specified date based on the payroll payment date.

The remittance for accelerated threshold 2 remitters is due three business days after the end
of the weekly period, established by the CRA, in which the payroll payment date falls.

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In all cases, the payroll cheque/deposit date is the date when the money is paid to the
employee or directly deposited in their bank account. The period end date, the payroll
processing date and the date the pay statement is handed to the employee are all irrelevant in
determining the remittance date.

The remittance schedule for the four types of remitters is as follows:

Exhibit 2-2
REMITTER PAYROLL CHEQUE/DEPOSIT REMITTANCE IS DUE NO
TYPE DATES LATER THAN...
Quarterly January 1 – March 31 April 15
April 1 – June 30 July 15
July 1 – September 30 October 15
October 1 – December 31 January 15
Regular 1st of the month to the end of the The 15th of the following month
month
Accelerated 1st to 15th of the month The 25th of the same month
threshold 1 16th to end of the month The 10th of the following month
Accelerated 1st to 7th of the month 3 business days from the last
threshold 2 8th to 14th of the month day of each weekly period
15th to 21st of the month
22nd to end of the month

Note:
If the remittance due date falls on a Saturday, Sunday or statutory/general/public or bank
holiday recognized by the CRA, the remittance is due on the next business day.

Example:
Regular remitter:
 The remittance for all remuneration paid during the month is due no later than the
15th of the following month

Employees are paid semi-monthly with payments dated the 15th and the end of the month.
The statutory deductions withheld from the payments dated the 15th and the 31st of May,
along with the employer’s portion of CPP contributions and EI premiums, are due to the
CRA by June 15th (presuming June 15th is not a Saturday, Sunday or a statutory/bank
holiday).

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Example:
Accelerated threshold 1 remitter:
 The remittance for remuneration paid from the 1st to the 15th of the month is due on
the 25th of the month
 The remittance for remuneration paid from the 16th to the end of the month is due
on the 10th of the following month

Employees are paid semi-monthly with payments dated the 15th and the end of the month.
The statutory deductions withheld from the payments dated May 15th, along with the
employer’s portions of CPP contributions and EI premiums, are due to the CRA by May 25th
(presuming May 25th is not a Saturday, Sunday or a statutory/bank holiday).

The statutory deductions withheld from the payments dated May 31st, along with the
employer’s portion of CPP contributions and EI premiums, are due to the CRA by June 10th
(presuming June 10th is not a Saturday, Sunday or a statutory/bank holiday).

Using the ‘current’ year calendar provided in this material, June 10 th falls on a Sunday. In
this situation the remittance would be due on June 11th, the next business day.

Example:
Accelerated threshold 2 remitter:
 The remittances are due three business days after the end of each weekly period:
1st to 7th of the month
8th to 14th of the month
15th to 21st of the month
22nd to the end of the month

Employees are paid bi-weekly with payments for May dated the 11th and the 25th. The
statutory deductions withheld from the payments dated May 11th, along with the employer’s
portions of CPP contributions and EI premiums, are due to the CRA by May 17th, three
business days after the end of the weekly period, May 14th (presuming May 15th, 16th and/or
17th are not Saturday, Sunday or a statutory/bank holiday).

The statutory deductions withheld from the payments dated May 25th, along with the
employer’s portions of CPP contributions and EI premiums, are due to the CRA by June 3rd,
three business days after the end of the weekly period, May 31st (presuming June 1st, 2nd
and/or 3rd are not Saturday, Sunday or a statutory/bank holiday).

Using the ‘current’ year calendar provided in this material, June 2 nd and 3rd fall on a Saturday
and Sunday. In this situation the remittance would be due on June 5th, three business days
after the end of the weekly period, May 31st.

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Accelerated threshold 1 and threshold 2 remitters who have a monthly payroll are considered
by the CRA to be monthly accelerated remitters. The average monthly withholding amount
for the second previous taxation year will determine whether these organizations use the
remittance schedule for an accelerated threshold 1 or threshold 2 remitter; they do not follow
the regular remitter schedule. The payroll payment date will determine the due date.

Example:
Monthly accelerated remitter – average monthly withholding amount between
$25,000.00 and $99,999.99 – follows the accelerated threshold 1 remittance schedule:
 The remittance for remuneration paid from the 1st to the 15th of the month is due on
the 25th of the month
 The remittance for remuneration paid from the 16th to the end of the month is due
on the 10th of the following month

Employees are paid once a month on the 15th of every month. The statutory deductions
withheld from the payments dated May 15th, along with the employer’s portions of CPP
contributions and EI premiums, are due to the CRA by May 25th (presuming May 25th is not
a Saturday, Sunday or a statutory/bank holiday).

Monthly accelerated remitter – average monthly withholding amount over $100,000.00

– follows the accelerated threshold 2 remittance schedule:

 The remittances are due three business days after the end of each weekly period:

1st to 7th of the month

8th to 14th of the month
15th to 21st of the month
22nd to the end of the month

Employees are paid once a month with the payments for May dated the 15th. The statutory
deductions withheld from the payments dated May 15th, along with the employer’s portions
of CPP contributions and EI premiums, are due to the CRA by May 24th, three business days
after the end of the weekly period, May 21 st (presuming May 22nd, 23rd and/or 24th are not a
Saturday, Sunday or a statutory/bank holiday).

Statutory deductions withheld from manual payments issued outside of the normal payroll
cycle must also be taken into consideration in determining the remittance amount for the due
date as defined above. The date of the manual payment determines the remittance period for
the statutory deductions withheld. In other words, if a manual payment is issued on the 12th
of the month and the employer is an accelerated threshold 1 remitter type, the remittance due
date is the 25th of the same month.

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Special attention is required at year-end when processing any manual payments issued in the
month of December. Remittances to the federal government for any CPP contributions, EI
premiums, and federal and non-Québec provincial income tax deductions on the manual
payment, including any employer portions, must be received by the CRA by the regular due
date for that remittance period.

Example:
Loges Entertainment is paying bonus payments to their employees after the last bi-weekly
payroll for December has been processed. Loges is a regular remitter whose payroll
remittances are made by their payroll service provider; their December remittance is due by
January 15th.

The payroll service provider will make the remittance for the December payrolls processed
through their system. However the payroll service provider will not remit the withholdings
on the manual payments issued after the last payroll for the year has been processed.

Loges is responsible for remitting the statutory deductions withheld on the bonus payments,
along with their portions for CPP contributions and EI premiums, by the December
remittance due date of January 15th.

Penalties and Interest Charges

The CRA may assess a penalty of up to 10% of the required amount of CPP contributions, EI
premiums and income taxes due for late remittances (20% on the second and later
occurrences). An employer who withholds the statutory deductions but does not remit them,
or fails to deduct the required deductions will be subject to a 10% penalty for the first
occurrence on the amount that should have been deducted and remitted (20% on the second
and later occurrences).

The penalties for late remittances are as follows:

 3% if payment is late 3 business days or less

 5% if payment is late 4 or 5 business days
 7% if payment is late 6 or 7 business days
 10% if payment is 8 or more business days late

Normally the penalty is only applied to the part of the amount that the employer fails to remit
that is more than $500.00, however the CRA may apply the penalty to the total amount if the
failure to remit, or the late remittance, was made knowingly or under circumstances of gross
negligence.

Again, special attention is required at the end of the year if producing any manual payments
after the final pay period for the year has been processed.

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Example:
If you are an accelerated threshold 2 employer, your last remittance for the taxation year is
due three business days after December 31st. Any payment made after this date is considered
a late remittance.

The CRA also charges interest, compounded daily, on any unpaid remittances and unpaid
penalties from the day the payment was due. The interest rate is determined every three
months, in accordance with the prescribed interest rates, and is available on CRA’s website.

Failure to comply with the withholding, remitting, and reporting requirements may result in
prosecution. Fines from $1,000.00 up to $25,000.00, or imprisonment for a term of up to 12
months may also be imposed.

Remittance forms
The remittance forms for the statutory deductions for CPP contributions, EI premiums and
income tax, along with any employer portion, are as follows:

 Statement of Account for Current Source Deductions PD7A, for regular and quarterly
remitters
 Statement of Account for Current Source Deductions PD7A(TM), for accelerated
threshold 1 and 2 remitters
 Remittance Voucher for Current Source Deductions PD7A-RB, a booklet of PD7A-
RB forms that is sent to accelerated threshold 1 and 2 remitters each December for the
next year’s remittances

If an organization remits electronically for six months in a row or its first remittance on the
account is made electronically, the CRA will stop sending paper statements of account and
remittance vouchers. These organizations can view their statements and transactions online
through My Business Account or contact the CRA to resume receiving paper statements and
vouchers.

Forms PD7A and PD7A(TM)

Forms PD7A and PD7A(TM) are statements of account and current source deductions
remittance vouchers. The PD7A form is for regular and quarterly remitters and the
PD7A(TM) form is for accelerated remitters. The PD7A(TM) is sent in April, July, October
and January for the previous quarter’s transactions.

The information sections on the PD7A and PD7A(TM) are similar. An explanation of the
sections is provided below; a sample PD7A page 1 follows.

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Exhibit 2-3
PAGE 1
Top left The organization’s name and address is shown.
Statement details The organization’s payroll account number and the date the form
was issued is shown on the top right.
Centre of form General information is provided
Bottom of form The organization’s current year remittance account balance is
shown in the box at the bottom of the form
PAGE 2
Account Summary This section details the transactions posted since the last
statement:
 remittance account balances – shows paid and unpaid
amounts for the year and will only be shown if there has
been any remittance activity during the statement period
 arrears account balances – shows assessed amounts,
including any accumulated balance owing, if there was any
arrears activity during the statement period
 explanation of changes and other important information –
provides a more detailed explanation of the activity on the
account, if required

PAGE 3
How do you remit? This section lists the ways an organization can remit its
deductions.
NIL remittance If no remittance is being made for the statement period, this
section must be completed.
Remittance Voucher This section must be completed when using the voucher to make
a remittance:
 end of remitting period
 gross payroll in remitting period (dollars only)
 number of employees in last pay period
 amount paid
PAGE 4
More information This section details how to:
 get more payroll information
 access and manage a payroll account
 register for direct deposit
 get a statement in another format, for those with a visual
impairment

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PD7A

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Form PD7A-RB
Each December, the CRA provides accelerated remitters a booklet of PD7A-RB forms
(either 27 or 54 forms) to use to remit their payments. If a company has been sending their
source deduction remittances to the CRA electronically for at least six months, they will not
receive a paper remittance booklet (PD7A-RB) in December. If a company receives a paper
remittance booklet but has started to send in their remittances electronically, the company
can choose not to receive the booklet in the future.

The form has two parts as follows:

Exhibit 2-4
PART COMMENTS
Top – Part 1 The top part of the form is a receipt.
Receipt
If making the remittance at a financial institution, the top part
will be date-stamped and returned.
Bottom – Part 2 The bottom part of the form is the remittance form for the
Remittance form for current remittance. It is completed with the following
current remittances information:
 employer name, address and account number
 gross payroll for the remitting period (rounded to nearest
dollar)
 end of the remitting period
 number of employees in the last pay period
 the amount paid - the total CPP contributions, EI premiums
(employer and employee portions), and income tax being
remitted

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PD7A-RB

Remittance methods
There are several methods available for remitting payroll deductions and employer portions.
Accelerated threshold 2 remitters must make their remittances through a Canadian financial
institution (either electronically or in person) or through their payroll service provider.

Payments are considered paid to the CRA at the time indicated by the date stamped by the
financial institution on the remittance voucher or receipt.

 Electronic Payments
Employers can make their payments online using the CRA’s My Payment service.
Employers may be able to pay their remittances electronically through their financial
institution’s telephone or Internet banking services. Information on these methods is
available from the CRA and the financial institution.

Pre-authorized debit payments can be set up using My Account, authorizing the CRA to
withdraw a pre-set payment from the employer’s Canadian chequing account on one or
more dates.

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 Financial institution
Employers can make remittance payments in person at their Canadian financial
institution. The payment is presented with the required CRA remittance form, a portion
of which will be date-stamped by the financial institution and returned to the employer as
a receipt.

Employers who make their payments at an Automated Teller Machine (ATM) must allow
sufficient time for the financial institution to process the payment, even though the
employer’s account will be debited at the time of payment. An ATM receipt is not proof
of payment by the due date.

 By mail
Employers can mail a cheque or money order payable to the Receiver General for Canada
to the address listed on the back of the remittance form. The payroll program account
number should be referenced on the cheque or money order. The payment must be sent
with the bottom part of the remittance form (or a note attached to the cheque or money
order providing instructions on how the payment must be applied), allowing for sufficient
mailing time to ensure that the CRA receives the payment by the due date. Cheques that
are post-dated to the due date are acceptable.

 Service Provider
Employers who have their payroll processed by a service provider have the choice of
making the remittance themselves using one of the options above or having the
remittance done by the service provider. If the employer chooses to have the service
provider do the remittance on their behalf, they must give the provider a copy of the
notice from the CRA advising of their remittance schedule. The provider will debit the
employer’s bank account on a pre-established day and make the remittance on their
behalf.

Note:
CRA has closed all of their payment and enquiry offices across Canada. Therefore,
employers and individuals are no longer able to use the self-stamping machines or make
payments in-person. However, the CRA has maintained their external after hours drop boxes
for employers and individuals to leave their returns and payments.

No Remittance
When there is no remittance due, employers may notify the CRA by:

 using the "Provide a nil remittance" service in My Business Account or Represent a

Client
 using TeleReply or
 sending the remittance form, or a letter by mail.

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My Business Account is a secure online portal that provides an opportunity to interact

electronically with the CRA on various business accounts such as GST/HST, payroll,
corporation income taxes, excise taxes and excise duties.

TeleReply is a secure reporting service where employers inform the Canada Revenue Agency
by phone when they have no payroll deductions remittance to make during a remittance
period; the remittance form is completed and kept on file for future reference, it is not sent to
the CRA.

TeleReply is available across Canada to employers who meet all of the following conditions:

 they had no employees who are subject to payroll deductions

 they want to report a nil remittance
 the correct name and payroll program account number are on the remittance form sent
by the CRA
Employers can also submit their regular remittance form by mail to show no remittance for
the period and indicate when they expect to make their next remittance.

Payment on Filing (PoF)

Employers often rely on essential third party information to accurately report earnings and
taxable benefit values for T4 slip reporting. These amounts may not become available until
after the final regular pay period of the year. A new policy from CRA will enable a final
remittance of statutory withholding amounts on or before the last day of February, under
certain circumstances, without late payment penalties being assessed.
This new policy comes into effect for the 2019 tax reporting year, with any final remittances
being due on or before February 28, 2020.
To be eligible for a penalty-free payment on filing the employer must meet certain
conditions:
 The remittance amount must be:
o received by CRA on or before the last day of February following the tax year
in which the amounts were or should have been deducted
o less than 1% of the total annual remittances (total paid plus unpaid)
 The employer must have a perfect payroll compliance history
o No late or outstanding remittances for the tax reporting year
o No assessments
o The annual T4 slip filing was completed on or before the due date
 The employer experiences one of the following circumstances:
o Employees exercise stock-based remuneration
o Employees that reside in a different tax jurisdiction
o Third-party information is required to accurately report amounts for taxable
benefits such as insurance and employer-provided automobile benefits

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Example:
Marlow Consulting Services provides company vehicles to its employees who are required to
travel to client sites as part of their employment responsibilities.
The employer requires detailed mileage logs from these employees to reconcile and report the final
taxable benefit value for the year. However, as some employees are out on the road the employer
often receives these reports in early January after the last regular pay run of the year from their
third party benefit provider.
Under the new PoF policy, the employer can now calculate any adjustments to the taxable benefit
value and remit outstanding CPP contributions with no penalty, as long as they have met the PoF
policy conditions.

If the final remittance due is equal to or greater than 1% of the total remittances for the year PoF does
not apply and a late penalty will be assessed.

The perfect payroll compliance history applies to each individual payroll remittance account. An
employer that has established multiple accounts will still be eligible to apply PoF on each account
with a perfect compliance history.

CONFIRM ELIGIBILITY FOR PAYMENT ON FILING

1. Validate that the final remittance will be less than 1% of total annual remittances.

A Year-to-date remittances processed $

B Final remittance due $
C Total annual remittances (A + B) $
D 1% of total remittances (C x 1%) $
If value B is less than value D proceed to step 2.
If value B is greater than or equal to value D the final remittance will be subject to a late payment
penalty.

2. Validate the organization’s payroll account compliance history for the tax reporting year.

Were there any late remittances? Yes No

Were there any assessments? Yes No

Were T4 slips filed late? Yes No

If all responses are ‘No’ proceed to step 3.

If any responses are ‘Yes’ then PoF does not apply and penalties will be assessed on late
remittances.

3. Confirm the final remittance due is as a result of any of the following:

 Employee stock benefits

 Employee who resides in a different tax jurisdiction
 Third-party information was required to determine taxable benefit values for
o Employer-provided vehicle (fleet mileage)

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o Insurance plans
o Health benefits
o Other taxable benefit _______________________

If the final remittance is not for one of the above reasons PoF does not apply and penalties will be
assessed on late remittances.

4. Process the final remittance, on or before the last day of February via:

a. Pre-authorized debit through My Business Account

b. Online using the CRA My Payment option which requires the following type of bank card
i. VISA® Debit
ii. Debit MasterCard®
iii. Interac®
c. By cheque submitted with the T4 Summary. Note: The CRA will honor the date the mail is
received by CRA and not the postmarked date by Canada Post.
d. Through a financial institution. Request a PD7R PoF remittance voucher from CRA through the
Business Enquiries line 1-800-959-5525

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Content Review
 All statutory deductions for Canada Pension Plan (CPP) contributions, Employment
Insurance (EI) premiums and income tax (except for Québec provincial income tax),
along with any employer portion, must be held in trust for the Receiver General for
Canada.
 All statutory deductions and contributions must be held in a separate payroll account
until the remittance is made to the Receiver General.
 The employer’s remittance frequency depends on the amount of the employer’s
average monthly withholding amount for the second preceding calendar year.
 There are four remitter types: quarterly, regular, accelerated threshold 1 and
accelerated threshold 2.
 A remittance schedule based on remitter type is used to determine when the statutory
deduction remittances are due to the Canada Revenue Agency (CRA).
 Statutory deductions withheld from manual payments issued outside of the normal
payroll cycle must also be remitted according to the remittance due dates.
 The CRA may assess a penalty of up to 10% of the required amount of CPP
contributions, EI premiums and income taxes due for late remittances (20% on the
second and later occurrences).
 Payments are considered paid to the CRA at the time indicated by the date stamped
by the financial institution on the remittance voucher or receipt.

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Review Questions
1. How is an organization’s remittance frequency determined?

2. Complete the following chart:

REMITTER TYPE DEFINITION

For employers whose average monthly
withholding amount is from $25,000.00 and
$99,999.99
For employers whose average monthly
withholding amount is less than $3,000.00
For employers whose average monthly
withholding amount is $100,000.00 or more
For employers whose average monthly
withholding amount is from $3,000.00 to
$24,999.99
For new employers who have a monthly
remittance of less than $1,000.00 and perfect
compliance history

3. True or False. Deadlines for remitting the federal statutory deductions are based on the
actual date of the payroll cheque/deposit, not on the pay period ending date.

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4. Complete the following chart with the remittance due date using the current year calendar
provided at the beginning of this chapter.

PAY PERIOD REMITTANCE DUE

PAY DATE REMITTER TYPE
ENDING DATE DATE

January 12 January 19 Quarterly

February 23 March 2 Accelerated threshold 1

March 15 March 15 Regular

June 29 June 29 Accelerated threshold 1

July 13 July 20 Accelerated threshold 2

August 31 September 7 Regular

September 14 September 14 Accelerated threshold 2

October 31 October 31 Quarterly

November 9 November 16 Accelerated threshold 2

November 9 November 16 Regular

5. What are the reporting choices for an employer with no remittance due for the reporting
period?

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Remittance Calculations
Employers are responsible for remitting the following amounts to the Canada Revenue
Agency (CRA):

 employee Canada Pension Plan (CPP) contributions withheld in the remitting period
and the employer portion (employer CPP contributions equal employee contributions)
 employee Employment Insurance (EI) premiums withheld in the remitting period and
the employer portion (1.4 times the employees' premiums, unless the employer has a
reduced EI premium rate, in which case the reduced premium rate would apply)
 employee federal and non-Québec provincial income tax deductions withheld in the
remitting period (Québec provincial income tax remittances will be discussed later in
the material)

To calculate the amount to be remitted to the CRA, add the employee and employer amounts
for CPP contributions and EI premiums and the employee income taxes for each pay date in
the remitting period.

Example:
The payroll register for the first pay of the year shows the following totals:
EMPLOYER EI PROVINCIAL
PAY EMPLOYEE EMPLOYER FEDERAL
EMPLOYEE EI (UNREDUCED TAX (NON- TOTAL
PERIOD CPP CPP TAX
RATE) QUÉBEC)
1 25,000.00 25,000.00 10,000.00 14,000.00 75,000.00 40,000.00 189,000.00

The remittance to the Receiver General for this pay is calculated by totaling the employee
and employer CPP contributions and EI premiums and the employee income taxes.

Employee CPP contributions $25,000.00

Employer CPP contributions 25,000.00
Employee EI premiums 10,000.00
Employer EI premiums 14,000.00
Employee federal income tax 75,000.00
Employee provincial income tax 40,000.00
$189,000.00

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When there is more than one pay period in a remitting period, a spreadsheet can be used to
calculate the total remittance owing to the Receiver General.

Example:
The totals of the payroll registers for the pays dated March 16 and 30 are:
EMPLOYER EI PROVINCIAL
PAY EMPLOYEE EMPLOYER FEDERAL
EMPLOYEE EI (UNREDUCED TAX (NON- TOTAL
PERIOD CPP CPP TAX
RATE) QUÉBEC)

6 2,850.00 2,850.00 1,000.00 1,400.00 7,500.00 4,000.00 19,600.00

7 2,200.00 2,200.00 800.00 1,120.00 7,000.00 3,500.00 16,820.00
Total 5,050.00 5,050.00 1,800.00 2,520.00 14,500.00 7,500.00 36,420.00

The employer is an accelerated threshold 1 remitter; the remittance is due April 10.
The remittance to the Receiver General for these two pays is calculated as follows:

Employee CPP contributions $5,050.00

Employer CPP contributions 5,050.00
Employee EI premiums 1,800.00
Employer EI premiums 2,520.00
Employee federal income tax 14,500.00
Employee provincial income tax 7,500.00
$36,420.00

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Content Review
 Employers are responsible for remitting the following employee statutory deductions
to the Canada Revenue Agency (CRA):
o Canada Pension Plan (CPP) contributions
o Employment Insurance (EI) premiums
o Federal and provincial (non-Québec) income tax
 Employers are responsible for remitting the following employer portions to the
Canada Revenue Agency:
o Canada Pension Plan matching contributions
o Employment Insurance premiums (1.4 times the employees’ premiums, unless
the employer receives a reduced Employment Insurance premium rate)
 To calculate the amount to be remitted to the CRA, add the employee and employer
amounts for CPP contributions and EI premiums and employee income taxes for each
pay date in the remitting period.

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Review Questions
6. Employee contributions for Canada Pension Plan are matched by the employer at a rate
of:

a. 100%
b. 200%
c. 1.4%
d. 50%

7. Employee premiums for Employment Insurance are matched by the employer at a non-
reduced rate of:

a. 100%
b. 1.4 times the employees’ premium
c. 1.4%
d. 1.257 times the employees’ premium

8. True or False. Provincial income tax deductions for all provinces are remitted to the
Canada Revenue Agency.

9. The payroll register for Parker Flooring shows the following employee withholdings for
the month of February. The company has a reduced Employment Insurance premium rate
of 1.257. The employer is an accelerated threshold 2 remitter.
i) Calculate the remittance total for each pay period and the total amount remitted for
the month.
ii) The pay date for pay period 3 is February 2; the pay date for pay period 4 is February
16. Using the current year calendar provided in the chapter, when are these
remittances due to the Canada Revenue Agency?
Remittance due date for pay period 3:
Remittance due date for pay period 4:
PROVINCIAL
PAY EMPLOYEE EMPLOYER EMPLOYEE EMPLOYER FEDERAL
TAX (NON- TOTAL
PERIOD CPP CPP EI EI TAX
QUÉBEC)

3 15,000.00 18,000.00 95,000.00 45,000.00

4 22,000.00 21,000.00 102,000.00 53,000.00

Total

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Reconciling the Canada Revenue Agency

Account
As discussed, the Canada Revenue Agency (CRA) issues the Statement of Account for
Current Source Deductions. This form is used for both remitting and tracking the payments
made to the CRA. It summarizes any payments made since the previous statement. Any
discrepancies between the employer’s records and the CRA’s statement that cannot be
resolved internally should be reported to the tax services office or tax centre immediately.

The payroll register totals, or an internally developed summary spreadsheet, can be used to
verify that all the statutory deductions withheld from the employees’ pay, along with any
employer portion, have been accurately remitted to the Receiver General by the appropriate
due dates and for the correct business number or payroll program account number.

The amounts reported in the account summary and remittance account balance sections as
being received, should be the same as the amounts for CPP contributions, EI premiums and
income tax remitted for the calendar year to date, according to the employer’s records. These
totals will be used to balance the year-end information slips and summaries.

By reconciling the organization’s payroll remittance totals to the statements on a monthly

basis or at the end of each remitting period, employers will find any discrepancies as they
occur and resolve them in a timely manner.

Note:
The statement should also be checked for errors in the posting date which could result in a
late payment charge.

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Example:
This organization remits to the CRA under two separate payroll program account numbers,
23451 6789 RP0001 and 12345 6780 RP0001. The payroll summaries for each account
number are below.
BN 23451 6789 RP0001 payroll summary report
PROVINCIAL
EMPLOYER EI
PAY EMPLOYEE EMPLOYER EMPLOYEE FEDERAL TAX
(UNREDUCED TOTAL
PERIOD CPP CPP EI TAX (NON-
RATE)
QUÉBEC)
1 25,000.00 25,000.00 10,000.00 14,000.00 75,000.00 40,000.00 189,000.00
2 22,000.00 22,000.00 8,000.00 11,200.00 70,000.00 35,000.00 168,200.00
3 22,000.00 22,000.00 8,000.00 11,200.00 70,000.00 35,000.00 168,200.00
Total 69,000.00 69,000.00 26,000.00 36,400.00 215,000.00 110,000.00 525,400.00

BN 12345 6780 RP0001 payroll summary report

PROVINCIAL
EMPLOYER EI
PAY EMPLOYEE EMPLOYER EMPLOYEE FEDERAL TAX
(UNREDUCED TOTAL
PERIOD CPP CPP EI TAX (NON-
RATE)
QUÉBEC)
1 35,000.00 35,000.00 13,000.00 18,200.00 120,000.00 80,000.00 301,200.00
2 32,000.00 32,000.00 12,000.00 16,800.00 100,000.00 70,000.00 262,800.00
Total 67,000.00 67,000.00 25,000.00 35,000.00 220,000.00 150,000.00 564,000.00

When the PD7A for 23451 6789 RP0001 was received it reported the balance on the last
statement as $490,200.00. On reviewing the payroll summary reports, it was determined that
the $301,200.00 from pay period 1 for 12345 6780 RP0001 was remitted together with the
$189,000.00 from pay period 1 for 23451 6789 RP0001, totaling a remittance of $490,200.00
made to 23451 6789 RP0001. The last statement was not reconciled to the employer’s
payroll summary reports.

If left uncorrected, the organization would have an under-remittance of $301,200.00 in 12345

6780 RP0001, and an over-remittance of the same amount in 23451 6789 RP0001. The CRA
should be contacted, in writing, through My Business Account, or by phone immediately to
report the error and request that the monies are transferred to the correct account.

This discrepancy would have been more difficult to identify had the payroll summaries and
statements been left unreconciled over a number of months. A reconciliation of government
remittances should be processed on a monthly basis or at the end of each remitting period.

Remitting Error
If you discover that you made an error when remitting your source deductions, you should
remit any underpayment as soon as possible using another remittance form, or by sending a
short letter with the payment to the CRA, stating your payroll program account number and
the pay period for which the payment applies. If your remittance is late, the CRA may apply
a penalty. An over-remittance discovered in the same calendar year can be corrected by
reducing the next remittance by the amount of the overpayment.

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Content Review
 Any discrepancies between the employer’s records and the Canada Revenue
Agency’s statement that cannot be resolved internally should be reported to the tax
services office or tax centre immediately in writing, through My Business Account, or
by phone.
 The payroll register totals, or an internally developed summary spreadsheet, can be
used to verify that all the statutory deductions withheld from the employees’ pay,
along with any employer portion, have been accurately remitted to the Receiver
General by the appropriate due dates and for the correct business number or payroll
program account number.

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Review Questions
10. What is the purpose of reconciling the Canada Revenue Agency account?

11. After reconciling their Canada Revenue Agency account in May, an employer realizes
that they have overpaid their account by $10,000.00. How can they correct this?

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Chapter Review Questions and Answers

1. How is an organization’s remittance frequency determined?

The organization’s remittance frequency depends on the amount of its average

monthly withholding amount for the second preceding calendar year.

2. Complete the following chart:

REMITTER TYPE DEFINITION

For employers whose average monthly withholding amount
Accelerated threshold 1
is from $25,000.00 to $99,999.99
For employers whose average monthly withholding amount
Quarterly
is less than $3,000.00
For employers whose average monthly withholding amount
Accelerated threshold 2
is $100,000.00 or more
For employers whose average monthly withholding amount
Regular
is from $3,000.00 to $24,999.99
For new employers who have a monthly remittance of less
Quarterly
than $1,000.00 and perfect compliance history

3. True or false. Deadlines for remitting the federal statutory deductions are based on the
actual date of the payroll cheque/deposit, not on the pay period ending date.

True.

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4. Complete the following chart with the remittance due date using the current year calendar
provided at the beginning of this chapter.

PAY PERIOD REMITTANCE

PAY DATE REMITTER TYPE
ENDING DATE DUE DATE
January 12 January 19 Quarterly April 16
February 23 March 2 Accelerated threshold 1 March 26
March 15 March 15 Regular April 16
June 29 June 29 Accelerated threshold 1 July 10
July 13 July 20 Accelerated threshold 2 July 25
August 31 September 7 Regular October 15
September 14 September 14 Accelerated threshold 2 September 19
October 31 October 31 Quarterly January 15
(following year)
November 9 November 16 Accelerated threshold 2 November 26
November 9 November 16 Regular December 17

5. What are the reporting choices for an employer with no remittance due for the remitting
period?

Employers with no remittance due can file using My Business Account, TeleReply
or mail in the form or a letter indicating nil remittance. Employers who use My
Business Account or TeleReply do not forward the form but keep a copy on file for
future reference.

6. Employee contributions for Canada Pension Plan are matched by the employer at a rate
of:

a. 100%
b. 200%
c. 1.4%
d. 50%

7. Employee premiums for Employment Insurance are matched by the employer at a non-
reduced rate of:

a. 100%
b. 1.4 times the employees’ premium
c. 1.4%
d. 1.257 times the employees’ premium

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8. True or False. Provincial income tax deductions for all provinces are remitted to the
Canada Revenue Agency.

False. Provincial income tax deductions for all provinces, except Québec, are
remitted to the Canada Revenue Agency.

9. The payroll register for Parker Flooring shows the following employee withholdings for
the month of February. The company has a reduced Employment Insurance premium rate
of 1.257. The employer is an accelerated threshold 2 remitter.

i) Calculate the remittance total for each pay period and the total amount remitted for
the month.
ii) The pay date for pay period 3 is February 2; the pay date for pay period 4 is February
16. Using the current year calendar provided in the chapter, when are these
remittances due to the Canada Revenue Agency?

Remittance due date for pay period 3: February 12

Remittance due date for pay period 4: February 26

PROVINCIAL
PAY EMPLOYEE EMPLOYER EMPLOYEE EMPLOYER FEDERAL
TAX TOTAL
PERIOD CPP CPP EI EI TAX
(NON-QUÉBEC)

3 15,000.00 15,000.00 18,000.00 22,626.00 95,000.00 45,000.00 210,626.00

4 22,000.00 22,000.00 21,000.00 26,397.00 102,000.00 53,000.00 246,397.00

Total 37,000.00 37,000.00 39,000.00 49,023.00 197,000.00 98,000.00 457,023.00

10. What is the purpose of reconciling the Canada Revenue Agency account?

The reconciliation is used to verify that all the statutory deductions withheld from
the employees’ pay, along with any employer portion, have been accurately remitted
to the Receiver General by the appropriate due dates and for the correct business
number or payroll program account number. By reconciling the organization’s
payroll remittance totals to the Statement of Account for Current Source Deductions
on a monthly basis or at the end of each remitting period, employers will find any
discrepancies as they occur and resolve them in a timely manner.

11. After reconciling their Canada Revenue Agency account in May, an employer realizes
that they have overpaid their account by $10,000.00. How can they correct this?

The employer can reduce their next remittance by the amount of the overpayment,
$10,000.00.

© The Canadian Payroll Association – Payroll Fundamentals 2 2-32