Payroll Remittance in Canada: A Complete Guide for Small Business Owners
If you pay employees in Canada, you are responsible for withholding CPP contributions, EI premiums, and income tax from every paycheque. However, withholding them is only half the obligation. You must also send those amounts to the CRA on a schedule, and that schedule is stricter than most new employers expect.
Remittance errors are among the most common CRA compliance issues for small businesses. Missing a deadline by even one day triggers an automatic financial penalty. Payroll remittance is not a quarterly task you can set and forget. It is a recurring obligation with specific deadlines tied to your payroll size, and the penalties for missing those deadlines compound quickly.
That is why this guide exists. We walk through exactly what payroll remittance is, when it is due, how to remit it correctly, and what happens if you miss a deadline. By the end, you will have a clear picture of your obligations and the options available when something goes wrong. If you would rather hand this off to a professional team, explore our payroll services Ottawa businesses trust at HAT Accounting.
Quick answer for busy owners:
Payroll deductions are remitted to the CRA on a schedule set by your remitter type. Most small businesses are regular monthly remitters, due by the 15th of the month following the pay period. Remit late and the CRA charges 3% (1–3 days), 5% (4–5 days), 7% (6–7 days), or 10% (more than 7 days), plus daily compounding interest. A second failure in the same calendar year can reach 20%.
What Is Payroll Remittance?
When you run payroll, you withhold a portion of each employee’s earnings on behalf of the government. You withhold their share of CPP, their EI premium, and their estimated income tax for the year. The employee never sees that money, it goes straight into a liability on your books.
Payroll remittance is the process of sending those withheld amounts to the CRA. In short, you are acting as a tax collector on behalf of your employees and the government. Most small business owners understand this obligation conceptually. Where things go wrong is in the timing, the calculation, and the mechanics of remitting correctly.
What Are You Actually Remitting?
When you run payroll, three types of deductions must go to CRA. Furthermore, each one carries its own calculation rules and deadlines.
Canada Pension Plan (CPP) You and the employee each contribute an equal share of CPP. If an employee contributes $100, your business contributes another $100. The combined $200 goes to CRA as part of your remittance.
Employment Insurance (EI) Employees pay EI premiums on their insurable earnings. Your business contributes 1.4 times the employee’s premium. So if an employee’s EI deduction is $50, your share is $70.
Income Tax This is the employee’s portion only. You do not match income tax, you simply withhold the estimated amount based on their TD1 form and send it to CRA.
These three amounts combined make up your payroll deduction remittance. The total for each pay period goes to CRA, not the individual amounts separately.
When Must You Remit: Frequency Categories Explained
CRA assigns you a remittance frequency based on your payroll size. Simply put, the larger your payroll, the more frequently you must remit. CRA determines your frequency based on your average monthly withholding from two years prior:
| Remitter Type | Average Monthly Withholding | Due Date |
|---|---|---|
| New Employer | Any amount in the first year | 15th of the following month |
| Regular | $25,000 or less | 15th of the following month |
| Accelerated Tier 1 | $25,001 – $99,999 | Within 3 days after each pay date |
| Accelerated Tier 2 | $100,000 or more | Same day or the next banking day |
New employers are a common source of confusion. When you first open a payroll account, you generally start as a regular monthly remitter, with your first payment due by the 15th day of the month following the month you made the deductions. This means when payroll taxes are due depends on your remitter category. Most Ottawa small businesses begin as regular remitters, although employers with a perfect compliance history may qualify to remit quarterly, which can improve cash flow in the early stages. As your payroll grows, however, the CRA may reassign you to a more frequent remittance schedule, even during the year. If you’re unsure of your current remitter frequency, check your CRA My Business Account.
Quick Tip:
If you are still weighing how to handle payroll in the first place, our overview of payroll services in Ottawa and what small businesses need to know covers your options, and our small business bookkeeping guide walks through the foundational systems that make remittances manageable from day one.
How to Remit Payroll Deductions to CRA: Step by Step
If you are asking how do I remit payroll deductions to CRA, this five-step process covers the full cycle from calculation to confirmation.
Step 1: Calculate your deductions
Calculate your CPP, EI, and income tax deductions for the pay period. Most small business payroll Ottawa providers use payroll software that handles this automatically. Manual calculation is possible using CRA’s Payroll Deductions Online Calculator, but the margin for error is high.
Step 2: Confirm the amount owing
Add your employee deductions and your employer contributions together. This is your total payroll deduction remittance for the period. Double-check it against your payroll register before remitting.
Step 3: Remit through your CRA My Business Account
You find your CRA payroll account number on your payroll account registration confirmation. Log into My Business Account, navigate to Payroll, and select Make a Payment. You can also remit through your financial institution’s online banking using your 15-digit business number and RT0001 program account identifier.
Step 4: Record the payment
Log the remittance in your bookkeeping software on the date it was made. This keeps your payroll liability account reconciled and creates a clean audit trail.
Step 5: Confirm receipt
CRA My Business Account shows payment confirmation within a few business days. Retain this as documentation. A professional team that provides payroll services will handle this confirmation step as part of their standard process.
What Happens if You Miss a Payroll Remittance Deadline?
Once you miss a deadline, CRA applies penalties and interest immediately, from the first day your payment is late. There is no grace period for payroll remittances. The system is automated.
| Days Late | Penalty Rate |
|---|---|
| 1–3 Days | 3% of the amount owing |
| 4–5 Days | 5% of the amount owing |
| 6–7 Days | 7% of the amount owing |
| 8+ Days | 10% of the amount owing |
| Repeat Failure (Same Year) | 20% of the amount owing |
CRA calculates the penalty as a percentage of the amount owing, not the total payroll. A $5,000 remittance that arrives eight days late triggers a $500 penalty before interest. A second missed deadline in the same year doubles the penalty rate to 20%.
Additionally, interest on late remittances compounds daily at the CRA prescribed rate, which adjusts quarterly. The combination of payroll remittance late penalty charges and daily interest makes any delay expensive.
Because these charges are not tax-deductible either, avoiding them is itself a form of tax efficiency, our guide to tax planning strategies for Ottawa small businesses covers the wider habits that keep more of your profit in the business.
How to Fix a Late Payroll Remittance
If you have already missed a deadline, act immediately. Moreover, the sooner you address it, the lower your total penalty exposure will be.
Step 1: Remit the outstanding amount right away. Every additional day adds penalty and interest. Do not wait until you have a complete picture, remit what you know is owing and adjust later if needed.
Step 2: Contact CRA if you have a history of compliance. First-time late remitters who contact CRA proactively sometimes receive penalty relief under the First Time Penalty Abatement policy. This is not guaranteed, but it is worth pursuing.
Step 3: Explore Voluntary Disclosure. If you have multiple unfiled or unpaid remittances, CRA may accept voluntary disclosure if you have not already received a notice of assessment. This program can reduce penalties and interest in exchange for full disclosure.
Step 4: Get professional support. A payroll services Ottawa provider can reconstruct missing records, calculate the correct amounts owing, and handle CRA communication on your behalf.
The Most Common Payroll Remittance Mistakes Ottawa Small Businesses Make
Most remittance problems stem from a handful of recurring errors. Fortunately, every one of them is preventable with the right system in place.
Remitting on the wrong date. Many business owners confuse payroll date with remittance due date. These are different. Your remittance due date depends on your remitter type — not when you paid your employees.
Using the wrong account number. Remittances sent to the wrong CRA account create matching problems that take weeks to resolve. Always confirm your 15-digit business number and RT0001 identifier before each payment.
Calculating employer contributions incorrectly. Forgetting to include the employer share of CPP and the 1.4x EI multiplier understates your remittance and triggers a balance owing.
Mixing up pay periods. Remittances must correspond to specific pay periods. Lumping multiple periods together without proper identification confuses CRA’s matching system.
Not reconciling payroll accounts monthly. Without monthly reconciliation, small errors compound quietly into large discrepancies. Ensuring you make deductions on time and remit them correctly requires a monthly reconciliation process, not an annual one.
Do You Need Professional Payroll Services?
Managing payroll deductions manually is possible for very small teams with stable payroll. However, once you add variable hours, bonuses, taxable benefits, or multiple employees, the margin for error grows significantly. Instead of managing the complexity yourself, many Ottawa business owners outsource to a payroll services Ottawa provider. As a result, they eliminate the risk of missed deadlines, calculation errors, and CRA notices entirely.
A professional small business payroll Ottawa team manages remittance dates, calculates every deduction correctly, ensures you make deductions on time, and handles year-end T4 preparation, so you can focus on running your business.
Moreover, if past remittances have already slipped through the cracks, catch-up bookkeeping brings your records back into order, reconciling the missed periods, correcting the numbers, and confirming exactly what was remitted and when. Consequently, you start fresh with a clean, accurate payroll history and a reliable system that keeps every future deadline on track.
What HAT Accounting Covers
HAT Accounting handles the full payroll remittance cycle for Ottawa small businesses. Additionally, our team manages the setup, calculation, and filing so you never face a missed deadline.
Our payroll services cover:
- New payroll account setup with CRA
- Regular calculation of CPP, EI, and income tax deductions
- Timely remittance to CRA on your due date
- Year-end T4 and T4 Summary preparation and filing
- Payroll account reconciliation
- CRA communication and account management
Because we also handle your Ottawa bookkeeping, the numbers behind your payroll are always reconciled and audit-ready. To understand where a specialist adds the most value, our guide on what a bookkeeper actually does is a useful next read.
If you are currently managing payroll manually and want to hand it off, contact HAT Accounting to discuss how our small business payroll Ottawa services can take this obligation off your plate entirely.
Final Thoughts
Payroll remittance is not complicated once you understand the structure. but it is unforgiving when mistakes happen. The penalties are automatic. The interest compounds daily. And CRA does not issue warnings before applying charges.
If this process feels complicated, it is worth asking whether managing it manually is the right use of your time. In short, the cost of a missed deadline almost always exceeds the cost of professional support. Ultimately, the goal is simple: remit on time, every time, and never give CRA a reason to send you a notice.
HAT Accounting provides complete payroll services Ottawa small businesses rely on. From initial CRA account setup to monthly remittances and year-end T4 filings, we handle the full cycle so you can focus on your business. Contact us today to get started.
Get Payroll & Remittance Support Built for Ottawa Businesses
Staying on top of CRA deadlines does not have to be complicated. HAT Accounting handles payroll processing, deductions, and remittance filing for Ottawa small businesses, so every pay run is accurate and every remittance is on time.
FAQs
What is payroll remittance and why does it matter?
When you pay employees, you withhold CPP, EI, and income tax from their pay. Payroll remittance is the process of sending those withheld amounts to CRA on a set schedule. Missing deadlines triggers penalties and interest that escalate quickly.
When are payroll taxes due in Canada?
When are payroll taxes due depends on your remitter category. Regular remitters send payment by the 15th of the following month. Accelerated Tier 1 remitters pay within three business days of each pay date. Accelerated Tier 2 remitters pay on the same day or next banking day. Check your CRA My Business Account to confirm your category.
What is the penalty for late payroll remittance in Canada?
Missing a deadline means CRA applies penalties starting at 3% for one to three days late and reaching 10% for eight or more days late. Furthermore, interest accrues daily until you pay the full amount owing. A second late remittance in the same calendar year triggers a 20% penalty rate.
How do I remit payroll deductions to CRA?
You send payroll deductions to CRA through CRA My Business Account, through your financial institution’s online banking, or through a pre-authorized debit. Use your 15-digit business number and RT0001 program account identifier to ensure payments post to the correct account.
Can I remit payroll manually without payroll software?
Technically yes. CRA provides online calculators for manual calculation. However, manual remittance for anything beyond one or two employees creates significant risk of calculation errors, missed deadlines, and payroll deduction discrepancies. Most Ottawa small business owners find that professional payroll services pay for themselves in time saved and penalties avoided.
