Remitting your Canada Revenue Agency (CRA) source deductions doesn't need to be a lengthy or complicated process. Here are some tips on how to streamline your CRA remittances, and what to do if you need to make a correction.
Payroll remittance refers to the process of employers deducting and submitting a certain amount of their employees wages to the CRA for tax purposes. These deductions include income tax, Employment Insurance (EI), and Canadian Pension Plan (CPP).
Overview of pay remittance to the Canada Revenue Agency
Here’s some information that will help you understand more about CRA remittances.
- If you pay remuneration, you need to remit deductions to the CRA. This includes employers, administrators, trustees, and financial institutions.
- Remuneration is simply money paid for work or a service and includes everything from salary, wages, commissions, taxable benefits, and pension income. EI benefits, some withdrawals from registered plans, and some other types of payments are also remuneration.
Remittance vouchers are needed in order to make payments to the CRA. Remittance vouchers provides the CRA with specific account and payment information.
- There is a complete index of deductions on the Government of Canada website. Check it out here.
- There are different types of remitters. To find out which type your business or your client’s business is, check out the Government of Canada website.
- If you do not remit your source deductions and employer shares of CPP and EI, the CRA can take action against you.
How to make your Canada Revenue Agency remittance payments easy
There are several ways to make a payment (pay remittance) to the CRA, but some are more convenient than others. The CRA has, in recent years, added a few new ways to make payments, which helps to make sure that your payment arrives before the due date.
1. Make online payments through your Canadian financial institution
If you bank with a participating Canadian financial institution, you can likely pay your CRA remittances by making online payments. Simply login to your Canadian bank account, add the CRA to your list of payees, choose the payment type, such as “Federal – Corporation Tax Payments – TXINS” and enter your business number as your CRA account number.
However, be aware that your financial institution may require you to set up online CRA remittances and may have a set-up fee. Most also charge a fee for filing your remittances so the costs can add up.
2. Use a third-party payment provider
You can also use a third-party payment provider for your CRA remittances. Plooto offers this service, and you can find out how to send your CRA remittances using Plooto here.
Third party service providers offer different types of payment services, which means you must ensure that the solution you select is enabled for all of the remittance payment types you need. Most third parties streamline the process and eliminate the paperwork, but be sure to demo the solution to ensure that it will indeed make your payments easier.
3. Make payments through CRA My Payment
Another payment option is paying CRA remittances through My Payment, a payment service created by the CRA. With My Payment, the CRA lets you make payments directly by using your bank access card. You will need to use Interact, Visa Debit, or a Debit MasterCard option.
Be cognitive of your daily or weekly transaction limit through Interac or your Debit/Credit card, as you may exceed these when paying your full remittance.
My Payment is also available only 21 hours per day (though the downtimes are at night) – find the schedules here. While My Payment does give you the option to pay your CRA remittances online, the experience using the site is rather clunky, so you'll save more time using another online payment option.
4. Use the mail or visit your bank branch
The list wouldn't be complete without these options, but sending a cheque through the mail and visiting your bank branch are neither convenient nor efficient methods to make your CRA remittance payments. You can make a payment to the CRA in person at any financial institution using your original remittance voucher.
You can also mail a cheque with your business number in the memo line, and include the remittance voucher if you have it. With these options, you will successfully pay the CRA, but the process will take longer than necessary.
5. Pay with a Pre-Authorized Debit agreement
The last online option is to set up a Pre-authorized debit (PAD) agreement that authorized the CRA to withdraw a set amount from your bank account on a date of your choosing. To create a PAD agreement you must be registered for a business account with the CRA and the agreement must be made at least 5 business days from the date the PAD agreement is made.
The agreement can only be created online, and is not desgned for frequent use due to it's limits and fees.
Did you make a mistake? Here’s how you fix it.
Despite your best efforts, you might make an error when remitting your payments. If that happens, here’s what you can do:
Did you send the CRA less than you should have? Luckily, you can simply remit any shortages using electronic payment with a remittance error form. You can also write a letter outlining the pay period that the shortage applies to and your account number. It’s important to correct this error as soon as possible - pay by the 15th of the following month to avoid a late payment.
If you’ve sent the CRA more than you should have, this error also needs to be corrected. If you over-paid in the current year, you need to reduce your next payment to the CRA by the amount that you overpaid. If you over-remitted in a previous year, you need to request a transfer or refund. You’ll have to explain the over-payment, which you can do online or through the mail using your paper information return.
3. Payment to the wrong account
If you’ve accidentally made a payment to the wrong account, this requires immediate attention. You can use your business account to transfer payments to your various accounts, and the CRA can help you if you have any questions (1-800-959-5525).
Find out how Plooto can help you streamline your Canada Revenue Agency remittances and manage all of your business payments.
Plooto is an AP/AR automation platform that integrates with your financial institution and makes online payments easy. Using our platform can help you manage your CRA payments and help you make payroll deductions/ remit payroll deductions.