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The remittance obligation

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Withholding and remitting are two obligations, not one, and an employer can discharge the first and fail the second. Once amounts have been withheld they are no longer the employer's money — they are held for the Receiver General and must be sent on a schedule that depends on the size of the employer's payroll, not on the employer's cash position. The remittance also includes the employer's own CPP and EI shares, which were never the employee's money at all. The due dates are unforgiving and the penalties for missing them are unusually severe, for reasons the level 3 tutorials in this line explain. This one covers what is remitted, when, how the frequency is set, and what to do when there is nothing to send.

How to work through this tutorial

This covers the second obligation in full: 1. Separate withholding from remitting, and see what each covers. 2. Learn what is included in a remittance. 3. Learn how remitter frequency is set, and that it changes. 4. Learn how a remittance is made and how it must be identified. 5. Learn what to do in a period with no payroll. 6. Understand what happens when a remittance is late, in outline. 7. Work through an example of a payment made on time and applied wrongly. 8. Check your work against the common errors. 9. Verify every specific against CRA's published guidance before relying on it.

Two obligations

The first obligation is to **withhold** the right amounts from each payment of remuneration. The second is to **remit** them to CRA by the due date. They fail independently. An employer can withhold perfectly and remit late. An employer can fail to withhold and still owe the remittance, because the obligation to remit is not conditional on having actually taken the money off the employee's cheque. An employer who paid gross wages with no deductions owes the deductions anyway. That second point is the one that surprises people, and it is worth being able to state without hedging. The employer's failure to withhold does not reduce what is owing; it just means the employer funds it themselves and has limited ability to recover it from the employee afterwards. The money withheld is held for the Receiver General. It is not working capital, it is not available to cover a slow month, and using it that way is the situation the level 3 tutorial on trust amounts describes.

What a remittance includes

A remittance covers, for the period: - income tax withheld from employees; - CPP contributions withheld from employees, **plus** the employer's matching share; - EI premiums withheld from employees, **plus** the employer's share at the applicable multiple. So roughly half of a typical remittance is money that never passed through an employee's pay at all. An employer who has set aside only what they deducted has set aside too little, and this is a common cash-flow miscalculation among new employers rather than an act of bad faith. Where an employer has Quebec employees, the split of what goes to CRA and what goes to Revenu Québec differs, because the pension plan and parental insurance are administered provincially. Do not describe a single remittance covering everything without checking.

How frequency is set

Employers do not choose how often they remit. CRA assigns a remitter type based on the size of the employer's average monthly withholding amount, measured over a prior period that CRA specifies. The structure is that smaller employers remit less often — monthly, or quarterly for the smallest and newest — and larger employers remit more often, in some cases more than once a month, with due dates tied to when in the month the payment was made rather than to a single monthly date. The thresholds separating the categories are published figures and they are exactly the kind of number that should be looked up rather than recalled. Two practical points. First, **the frequency changes**: an employer whose payroll grows moves into a more frequent category, and CRA notifies them. An employer still remitting on the old schedule is late every period, without having done anything differently. Second, a new employer may be eligible for quarterly remitting, which is a genuine easing but is not automatic and has conditions.

Making the remittance

The payment routes are those covered in the E-services line — online banking, CRA's payment service, pre-authorised debit, at a financial institution with a remittance voucher, and third-party providers. What matters here is identification. A remittance has to reach the right payroll program account and be identified with the right period. A payment that arrives correctly in amount and on time but is directed to the business's GST/HST account, or to the wrong payroll reference number, or attributed to the wrong period, leaves the payroll obligation unmet — and penalties for late remittance can apply to an amount that CRA is holding. The timing rule is about when CRA receives it, not when the employer sends it. An employer paying by a route with a processing lag has to allow for the lag. This catches people who mail a cheque on the due date. Where a remittance falls due on a weekend or a public holiday, the next business day generally applies — confirm the rule rather than assuming, since it is not identical across everything CRA administers.

Periods with nothing to remit

An employer with an open payroll account and no payroll in a period does not simply stay silent. CRA expects to be told there is nothing to remit — there is a nil remittance process for exactly this. Silence looks like a missed remittance, and it produces follow-up an employer then has to resolve. An employer who will have no payroll for a longer stretch — a seasonal business between seasons, for instance — can inform CRA of the inactive period so that remittances are not expected. An employer who has genuinely finished employing people is in the closing tutorial at level 3 instead. The general principle, worth giving to any employer: an open account is a standing expectation. Keeping CRA informed costs a few minutes; leaving them to infer costs a good deal more.

A worked example: paid on time, still late

Teaching example. The figures below are invented to show the method. They are not CRA figures, and no amount here should be used for a real taxpayer.

The figures and details in this example are invented for teaching. Nothing here should be quoted as CRA's position. Suppose Aisha runs a small clinic with four employees. She is a monthly remitter. Her withholding and her arithmetic are correct throughout. In March she pays her remittance — suppose $6,150 — through online banking, on the due date. The money leaves her account that day. In May she receives notice that her March remittance was not received and a penalty has been applied. She is certain this is a CRA error, and from where she is standing it plainly is: she has a bank record showing the payment, on the day it was due, to CRA. What happened is that her bank's payee list has several CRA options, and she selected the one for corporate income tax. The clinic is incorporated, so it genuinely has that account. The money arrived, was applied to corporation tax, and sits there as a credit against a balance she does not currently owe. Her payroll remittance was never made. The penalty is correctly applied, because the remittance genuinely is outstanding — and it is outstanding despite CRA holding her money. What Aisha needs is a transfer between her own accounts, and an explanation that starts by agreeing with her: she did pay, on time, and to CRA. She just did not pay this account. Then the practical advice — check the payee and the account number before every remittance, because this is not a one-off kind of mistake, it is a repeatable one. The habit: on any late-remittance call where the employer insists they paid, ask which account and which period before anything else.

Common errors

Treating withholding and remitting as one obligation. They fail separately. Telling an employer who did not withhold that there is nothing to remit. The obligation stands. Forgetting that the remittance includes the employer's own CPP and EI shares. Assuming an employer chooses their remitting frequency. CRA assigns it. Assuming the frequency an employer had last year still applies. It changes as payroll grows, and CRA notifies. Quoting the thresholds that set remitter type from memory. Treating the sending date as the remittance date. Receipt is what counts, and routes have lags. Overlooking a remittance directed to the wrong account or period. The money is present and the obligation is unmet. Telling an employer with no payroll in a period to do nothing. There is a nil remittance process. Assuming a single remittance covers everything for an employer with Quebec employees.

What to verify this tutorial against

This was drafted without a source document. The remitter categories, thresholds and due dates are all published, and all of them are load-bearing. CRA's employers' guide to payroll deductions and remittances is the primary reference for what is remitted, the remitter types, the due dates for each, and the nil remittance process. Confirm the guide's current number. CRA's remitting source deductions pages set out the remitter type thresholds and the due date for each category. Take the thresholds from the page; they are exactly the kind of figure that gets misremembered. CRA's guidance on quarterly remitting for new and small employers sets out the eligibility conditions. CRA's payment pages carry the routes and their processing times, which is what the timing rule in this tutorial depends on. CRA's guidance on transferring a payment between accounts covers the resolution in the worked example. CRA's guidance on penalties for failing to remit is covered in this line's level 3 tutorial; confirm the two are consistent when either is revised. Revenu Québec's remittance guidance is the reference for employers with Quebec employees.

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