Key points
- Open a payroll (RP) program account before your first payday.
- Deduct CPP, EI and income tax; the employer also pays its own share of CPP and EI.
- Late remittances attract penalties, and directors can be personally liable for unremitted amounts.
Before the first payday
- Open a payroll program account (your business number followed by
RP0001). - Collect a completed federal and provincial TD1 form from each employee.
- Register with WSIB where required, and check whether Ontario's Employer Health Tax applies once payroll exceeds the exemption.
What to deduct and contribute
| Item | Employee | Employer |
|---|---|---|
| Canada Pension Plan (CPP), including second additional CPP on higher earnings | Deducted from pay | Matches the employee amount |
| Employment Insurance (EI) | Deducted from pay | 1.4 times the employee premium |
| Federal and provincial income tax | Deducted from pay | None |
Rates and maximums change every January, so use the CRA's current Payroll Deductions Online Calculator or up-to-date payroll software.
Remitting
How often you remit depends on your average monthly withholding. Most small employers are regular remitters and must remit by the 15th of the month following the month employees were paid. Late remittances attract graduated penalties of up to 10%, plus interest.
Director liability: directors of a corporation can be held personally liable for source deductions that are withheld but not remitted. Treat payroll remittances as the first bill you pay.
Year-end and other slips
- T4 slips and summary: due by the last day of February for the previous calendar year.
- Record of Employment (ROE): issue when an employee has an interruption of earnings, such as a layoff, leave or termination.
Official sources
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