Compensation and remittances: what do I need to know?
As a dedicated and very busy entrepreneur, the complex task of payroll management probably is not what you look forward to most. However, as an employer, it is still your responsibility. Whether your SME is in operation or soon will be, it is normal for you to have many questions about pay and payroll deductions. To help you, our experts have answered the most frequently asked questions about payroll in this article. Here is a quick-guided tour of what can sometimes seem to be a labyrinth of information!
Q1: Which payroll frequency should you choose?
Before choosing the payroll frequency that best suits your needs, you must first determine your priorities. Weekly payrolls are more administratively time consuming. They entail many calculations and the production of various documents, which leaves little room for a break. If your goal is to save time by spending less of it on the tasks that come with a shorter payroll frequency, you might consider reducing the frequency.
Similarly, if one of your main priorities is saving money, monthly payroll is without a doubt a more interesting option. That is because various fees are attached to the disbursement of wages, from banking fees to labour costs. By choosing to pay your employees on a monthly basis, you can therefore limit your payroll-related expenses.
Furthermore, do not forget to comply with legislation. Each province or territory has their own regulations in regard to the amounts that are due to an employee. You are free to choose the payroll frequency that best meets your needs, as long as you respect the regulations that are in place.
If you would like to learn more, consult this article on our blog.
Q2: How should statutory holidays be compensated?
Whether an employee is entitled to compensation on a statutory holiday depends on various factors. Notably, the employee must meet established eligibility requirements. There is the notion that only full-time employees are entitled to compensation, when in fact all employees are entitled to. However, the compensation to them may be less than that of a full-time employee on a usual workday.
In addition, several kinds of employee may be affected by statutory holiday regulations, such as those who are newly hired, full-time, part-time, casual, contract and student employees.
The five (5) following items are taken into consideration when calculating the compensation that an employee is entitled to: jurisdiction, employee’s eligibility to the holiday, earnings subject to the calculation of statutory holiday pay, if the employee works on the holiday and finally, if the employee wants another day off if worked on the holiday.
Generally, an employee who does not work on a statutory holiday is entitled to compensation for that day. If they work on that day, the salary rate for worked hours varies, whether the day worked was a regular business day or a regular day off.
To learn more, we have put together a resource page outlining all statutory holidays by province and territory, as well as their dates.
Source deductions and government remittances
Q1: Do I have to calculate source deductions?
As an employer, it is your responsibility to deduct source deductions from your employee’s pay. Under federal and provincial tax laws, you must then remit these amounts to the respective government agencies within the prescribed time limits for your business, as late and underpayments are subject to penalties.
Furthermore, a payroll program account is required since all amounts deducted from your employee’s pay will be deposited into it: income tax, employment insurance, Canada Pension Plan, etc. If you are a new employer, you must therefore open a payroll program account with the Canada Revenue Agency (CRA). To find out how to open your payroll program account, visit the CRA website. In Quebec, you must also register for source deductions.
Depending on your province, you may also have to remit other amounts directly to certain organizations that are not linked to your CRA payroll program account or its equivalent at Revenu Québec. Make sure you check which conditions apply to your situation.
Payroll deductions are calculated for each pay period, and the applicable contribution rates may change each year. Thus, the source deduction rates for the year 2022 will not be those in effect in 2021.
Q2: Will the frequency of my government remittances change at year-end?
As the end of the year approaches, many questions arise for employers. A new pay period is synonymous with change and legislative updates. Changes related to the frequency of remittances that will come into effect next year usually happen at this time of the year, between November and December.
The remittance frequency is determined by the different government levels (federal and provincial). If you do not know what it is or do not receive any information in this regard, we invite you to contact the government.
Note that only the government can authorize a new remittance frequency. If you have a payroll provider and your frequency has changed, you must inform them and provide the official government notice.
Nevertheless, at the end of each year, Revenu Québec estimates the frequency with which you will have to make your source deductions and employer contributions. If the estimated frequency differs from that of the current year, you will be notified.
To determine your remittance frequency, which is based on very specific criteria, you must refer to each level of government (federal and provincial).
Federally, there are four (4) remittance frequencies:
|Remitter type||Remitting frequency||Remitting period||Remittance due dates|
|Quarterly||Quarterly||January 1 to March 31|
April 1 to June 30
July 1 to September 30
October 1 to December 31
|Regular||Monthly||Calendar months||15th day of the next month|
|Threshold 1 accelerated||Up to twice a month||1st to 15th of the month|
16th to the end of the month
|25th day of same month|
10th day of the next month
|Threshold 2 accelerated||Up to four times a month||1st to 7th of the month|
8th to 14th of the month
15th to 21st of the month
22nd to the last day of the month
|3rd working day after the 7th|
3rd working day after the 14th
3rd working day after the 21st
3rd working day after the last day of the month
To determine your remittance frequency, you must first determine your remitter type. We recommend that you consult the CRA website.
Provincially, there are five (5) remittance frequencies:
|Annual||The total of your source deductions and employer contributions for 2020 was $2,400 or less, or you estimate that this will be the case for 2021.|
|Quarterly||If you are not a new employer: your average monthly remittance for 2019 or 2020 was $3,000 or less; you fulfilled your fiscal obligations over the last 12 months.|
If you are a new employer: the total of your source deductions and employer contributions for each month is less than $1,000; you have fulfilled all of your fiscal obligations.
|Monthly||Your average monthly remittance for 2019 was less than $25,000.|
|Twice monthly||Your average monthly remittance for 2019 was $25,000 or more, but less than $100,000.|
|Weekly||Your average monthly remittance for 2019 was $100,000 or more.|
For more information, consult the Resources section of our website anytime. We offer a number of tools designed to answer your questions about employer obligations regarding statutory holidays, minimum wages, legislation, etc. And our information is always in accordance with current legislation.
To access legal information with regard to government source deductions and remittances, we recommend that you visit the CRA and Revenu Québec websites. Note that this information takes precedence over any other information and we advise you to consult it first.
Given the current economic situation, Our solutions in response to the COVID-19 pandemic page is actively kept up to date. Internet Nethris Suite users can access the “COVID-19 Documents” section via the Documentation section.
You can also find the various measures put in place by the Government of Canada to support and encourage employers throughout the pandemic on their web site. The “Financial and economic support” section lists the available programs and subsidies.
Compensation and remittances: what do I need to know? The subject of payroll is vast, complex and raises many questions. Whether your SME is in operation or soon will be, you have probably asked yourself about payroll and government remittances management. Thanks to our expertise in the field, we can address the most common concerns that entrepreneurs have, namely:
- Payroll frequency;
- Compensation for statutory holidays;
- Source deductions;
- The frequency of government remittances.
One thing is for sure, your role as an employer entails many responsibilities. And while you are free to choose your payroll frequency, you have to respect established rules. Therefore, we recommend that you choose the option that best meets your needs.
To properly compensate employees for statutory holidays, you must perform your calculation according to five (5) criteria. Keep in mind that part-time work is also affected by statutory holiday compensation.
Finally, you must make your own payroll deductions in accordance with tax legislations, and determine the frequency of your remittances. The source deductions and the payroll frequencies are updated every year, usually at the end of the fiscal year. So make sure that you are aware of the latest updates. This information is available on government websites.
The content of this document is for information purposes only. In the event of a discrepancy between the content of this page and information provided by official agencies, the latter always takes precedence. Nethris is not responsible for errors and omissions that may be on this page nor for consequences resulting from its use.