Let's discuss an essential part of running your company: payroll deduction remittances.
Sounds complex? Don’t worry — we're here to help break it all down.
When it comes to payroll remittances, employers act as intermediaries between employees and the Canada Revenue Agency (CRA). As an employer, you're responsible for deducting specific amounts from your employees' paychecks and sending them to the CRA. These deductions include federal income tax, Canada Pension Plan (CPP & CPP2) contributions, and Employment Insurance (EI) premiums. It's a big responsibility, but it's crucial for keeping everything above board with the Canadian government.
The CRA’s Employers’ Guide to Payroll Deductions and Remittances outlines when and how to make these payments. Sticking to the remittance schedule is super important to avoid late-payment penalties.
In this comprehensive guide, we'll walk you through everything you need to know about managing your payroll remittances like a pro. We’ll spill all the beans out in the open for all those who administer payroll. Let's dive in to ensure you're handling this essential part of your business confidently!
Required payroll remittances
Required payroll remittances include the following source deductions taken from your employees’ incomes. It includes the employer’s share of contributions and premiums:
- Canadian Pension Plan (CPP) and CPP Enhancement contributions (CPP2)
- Employment insurance (EI) premiums
- Federal, or provincial taxes, such as Employer Health Tax (EHT), are remitted to the respective provincial governments.
- CRA garnishments for collecting unpaid tax obligations by issuing a "requirement to pay" (RTP) notice to the third party.
Businesses pay an average monthly withholding amount or the sum of all payroll deductions to the CRA in a calendar year. Further deciding the remittance submission schedule for payroll deductions.
Your remittance classification and subsequent remittance due dates are categorized by CRA while considering your company’s yearly AMWA data and information return. To make any changes in the frequency, all payroll providers need to avail an official letter from CRA.
What is CPP2?
The second additional CPP Contribution (CPP2) is CPP’s newest feature. It took effect on January 1, 2024. This contribution applies to earnings exceeding the Year’s Additional Maximum Pensionable Earnings (YAMPE), which for 2024 was set at $73,200 and AMPE for 2024 was $68,500.
The contribution rate for both employees and employers is 4%, resulting in a maximum annual contribution of $188 for each party. Self-employed individuals must pay both the employer and employee share, and will face a maximum yearly contribution of $376 in 2024.
The rates and maximums for CPP2 are set to increase in 2025, with the AMPE rising to $81,200. Consequently, the maximum annual contribution for employees and employers will increase to $396 each, while self-employed individuals will see their maximum rise to $792.
It is the responsibility of employers to deduct CPP2 contributions from their employees' remuneration and remit these amounts to the CRA. The CPP2 aims to provide Canadian workers with increased retirement benefits in the future.
Remitter types
Don’t know which type of remitter you are? We’ll run through all the remitter types in Canada:
Remitter status notice
The CRA typically sends an official letter late in the calendar year notifying employers of their remitter type (Regular, Quarterly, or Accelerated) for the following year, based on their past two years of activity. Employers must rely on this official notice to categorize their remitter type and not rely solely on their own calculations for compliance purposes.
You are a new remitter if:
- You are a new employer or an employer who has never made remittance payments before for CPP and CPP2 contributions.
- New employer remittances have the due date on the 15th day of the month following the one in which deductions were made from your business account.
You are a regular remitter if:
- You are a new employer with less than 2 years of AMWA history, or an average 2-year monthly withholding amount of less than $25,000 and the remittance voucher.
- Canadian remittances are due on the 15th day of the month following the one in which deductions were made from your employment income for the Canada Pension Plan.
You are an accelerated remitter if:
- You are an employer with a two-year AMWA of $25,000 to $99,999.99 (Threshold 1)
- Threshold 1 Accelerated Remitters: Remittances for payroll are processed within the first 15 days of the month and are due on the 25th day of that same month.
- If the payroll deduction is processed on the 16th day of the month to the end of that same month, the remuneration is due by the 10th day of the following month.
- You are an employer with a two-year AMWA greater than $100,000 (Threshold 2)
- If you are a Threshold 2 Accelerated Remitter, you need to send payroll remittances up to four times per month. Payments are due by the third business day after each of these periods: the 1st to 7th, 8th to 14th, 15th to 21st, and 22nd to the last day of the month. Saturdays, Sundays, and statutory public holidays are not considered business days.
- Regarding the above-excluded dates, the CRA considers payments expected to be on time if received on the next business day.
You are a quarterly remitter if:
- It is a small business with an AMWA of less than $3,000 over the previous two years and maintains a complete compliance history with the CRA and tax deductions.
- Payments for quarterly remitters are scheduled before April 15th, July 15th, October 15th, and January 15th for the total payroll accounts processed in the previous quarter.
- The due dates for remittances are based on the exact date on which your employees were paid the federal tax and collected pensionable earnings.
Payroll remittance process
The payroll remittance process involves completing a ‘statement of account’ for current source deductions, tied to remittance voucher forms. The forms are:
- Form PD7A for regular, monthly, and quarterly remitters
- Form PD7A(TM) for accelerated remitters
- Form PD7A-RB is the remittance voucher for the accelerated remitter.
Payroll deductions must be held in a trusted separate payroll account from your normal operating program account.
Remittance payments and remuneration should be submitted in electronic format, in person at your local financial institution, or by mail. It has the exception of threshold two accelerated remitter payments, which must be remitted electronically or in person.
Compliance explainer
| Compliance Task | Frequency | Due Date | Automated by Rise |
| Payroll tax remittance | Monthly / Quarterly | 15th of each month | Yes |
| Provincial remittances | Monthly / Quarterly | Province-specific schedule | Partial |
| Record of Employment | As needed | Within 5 days of earnings interruption | Client initiates and finalizes; Rise submits to CRA. |
| T4 / T4A slips | Annual | By February 28 | Client initiates and finalizes; Rise submits to CRA. |
| Employer health tax filings | Annual / Quarterly | Province-dependent | Yes (Ontario) Ontario monthly reporting by the 15th; Client must complete the annual return. Rise does not remit for BC; Quebec handled within QHSF. |
Common payroll remittance errors
Deduction errors in calculating the payroll remittances occur frequently. You may discover the under-remitted or over-remitted amount after the pay period. Employers must alert the CRA and rectify any discrepancies as soon as possible. This will help you get all the taxable benefits you’re entitled to.
You can use a payroll deduction online calculator to get the exact payable amount. This financing tool helps prevent under- or over-remittance on the Social Insurance Number (SIN).
What if you remit less?
If you remitted less, remit the amounts to the CRA immediately and indicate the remitting periods they apply to the same. Note that the CRA may apply a late remitting penalty and interest to your business account if your correct remittance is late.
What if you remit more?
If you remitted more, reduce your next remittance for this year by the amount of the over-remittance. If the over-remittance occurred last year, you can request a transfer or refund of the credit from the CRA.
Note: The over-deductions and under-deductions for the income tax could be adjusted with subsequent pay in the statement of account when caught in the current year.
If the mistake is found by the administrators in the following calendar year, the adjustment will be made once the employee files his or her next personal tax credit return.
Late remittance penalty charges
Timeliness and accuracy are key when it comes to submitting your remittances! The CRA imposes high penalties for late payroll deduction remittances.
These penalties are charged for non-compliance with deducting the correct CPP and CPP2 contributions, EI premiums, or provincial income tax from the amounts paid to your employees. Missed payment fines are also applied to outstanding balances of $500 or more. These penalties are based on the daily compound interest of employees’ pay.
The minimum penalty is 10% of the outstanding total. If the failure to deduct is found to have been made intentionally or due to gross negligence, the charge percentage increases to 20%, according to the information return.
The CRA’s penalty structure for late or missing payments is as follows for different contribution rates.
CRA penalties for late/missed remittances
| Days late | Penalty rate |
| 1-3 days | 3% |
| 4-5 days | 5% |
| 6-7 days | 7% |
| More than 7 days or payment not submitted | 10% |
| Repeated failures/violations | 20% |
Remittances are considered made on the day they are received by the CRA for mailed payments.
Employers can avoid penalties by remitting their payroll deductions before their financial institutions' daily cut-off time to ensure the funds are cleared by the due date.
Rise People makes the payroll remittance process painless with features like automated, guaranteed, and timely filings with the CRA.
| Features | Benefits |
| Automated CPP, EI, and tax calculations | No manual calculations |
| CRA-ready electronic remittances | Accurate and streamlined submissions |
| On-Time Guarantee | Guaranteed on-time filing |
| Provincial compliance | Seamless QPP and QPIP integration |
Payroll remittances for Québec employers
Things are a little different in Québec. In addition to the CPP, CPP2, EI, and tax deductions to the CRA, Québec employers with a Québec-registered business number must also remit amounts for the Québec Pension Plan (QPP), provincial income tax, and the Québec Parental Insurance Plan (QPIP) and mandatory Québec Health Services Fund (QHSF) to Revenu Québec.
To make this easier, employers should use payroll software or a payroll deductions online calculator for accurate amounts payable to Revenu Québec.
Remit payroll deductions with Rise People
Ready to simplify your payroll remittances? Rise’s all-in-one HR and payroll software takes the stress out of managing your payroll deductions.
With Rise, you can easily calculate, track, and remit your CPP and CPP2 contributions, EI premiums, and income tax deductions — all in one place. Say goodbye to manual calculations and hello to automated accuracy!
Payroll remittances, at times, keep business owners up at night. Especially if you are not connected to a fully managed payroll system. Join the vibrant community of Canadian businesses that have incorporated Rise People to manage their payroll.
We have a user-friendly interface that ensures your business remains compliant with the CRA guidelines, and our dedicated support team is available to help you every step of the way.
Take charge of your payroll process and discover how Rise transforms your payroll management. Book a demo with our team today.
