Client training source deductions - 2020
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This document provides information about source deductions for payroll, including: 1) As an employer, you are responsible for remitting CPP contributions, EI premiums, and income tax deducted from employee pay, as well as the employer portion of CPP and EI. Remittances are due on or before the due date, which depends on the type of remitter. 2) Remitter types include regular, threshold 1, threshold 2, and quarterly, depending on average monthly withholding amounts. Due dates are the 15th, 10th, or 3rd of the month. 3) New employers must register with the CRA and are initially considered regular remitters.
Client training source deductions - 2020
- 1. Client Training: Understanding Source Deduction
- 2. WHO WE ARE CPA4IT BACKGROUND Chartered Accountants for Information Technologists ISO 9001 Registered Specializing in Independent Contractors Since 1984
- 3. WHAT ARE PAYROLL/ SOURCE DEDUCTIONS As an employer, you have to remit the CPP contributions, the EI premiums, and income tax deducted from your employees' income, along with your share of CPP contributions and EI premiums. Remittances are deemed to have been made on the day on which it is received by the Receiver General, and as such, you should choose the appropriate remittance method to meet your due date. These deductions, along with your remittance form, must be received by CRA on or before your remittance due dates. Due dates vary depending on the type of remitter you are.
- 4. DO YOU NEED TO MAKE A REMITTANCE FOR 2020 Do you have income from other sources? • If so how much? Have you already declared income from your corp for the 2020 year? • If so how much?
- 5. CALCULATING YOUR REMITTANCE AMOUNT • How much money have you withdrawn since your last Corporate year end? • How much have you or will you contribute to RRSP’s for 2020? • Do you have a target net income? • Do you have any family members you would like to split income with?
- 6. REMITTER TYPES AND DUE DATES Remittance due dates are always based on when an employee is paid for his or her services (payday) rather than the pay period for which the services are rendered. If your due date is a Saturday, Sunday, or public holiday, your remittance is due on the next business day. If your business goes bankrupt or stops operating, you must remit your deductions to your tax centre within 7 days following the closure/bankruptcy of your business. In order to determine what type of remitter you are CRA look at your average monthly withholding amount (AMWA) of two calendar years ago.
- 7. REMITTER TYPES AND DUE DATES Regular remitter •AMWA of less than $25,000 •Due the 15th Threshold 1 •AMWA of $25,000 to $99,999.99 •Due the 10th. Threshold 2 •AMWA of 100,000 or more •Due the 3rd Quarterly remitter •AMWA of less than $3,000 and you meet the eligibility criteria to use this option. Associated corporations combined AMWA
- 8. NEW REMITTER NEW EMPLOYERS must apply for a business number (BN) and register for a payroll account with CRA, NEW EMPLOYERS are considered REGULAR REMITTERS for remitting frequencies. CRA will send you a remittance form in the mail after you register and after each subsequent remittance.
- 9. REMITTANCE METHODS • Online banking – instructions and links to your financial institution • My Payment – pay now with Visa Debit, Debit MasterCard, or Interac Online • Pre-authorized debit – instructions and links to set up a future-dated payment • Pay by credit card, PayPal, or Interac e-Transfer Credit card, PayPal or Interac e-Transfer • Pay using a service provider Various third-party service providers • Pay without a Canadian bank account Pay without a Canadian bank account - using wire transfer or internationally issued credit card • Pay by cheque Pay by cheque • Pay in person • Financial institution • Canada Post outlet
- 10. REMITTANCE FORMS The remittance forms CRA sends you are personalized to help you in identifying your remittance to your appropriate payroll deduction account. Complete your remittance voucher (the bottom part of the remittance form) correctly so CRA can apply your remittance to your account. If you receive a notice of assessment that states you have an amount owing, use only the remittance form attached to the notice to make that payment. Only use Forms PD7A, PD7A(TM), and PD7A-RB for current remittances of CPP, EI, and income tax.
- 11. NOT MAKING A REMITTANCE Online TeleReply By mail
- 12. HOW TO CORRECT PAYROLL REMITTING ERRORS Under-remitted Misapplied payment Over-remitted
- 13. FAILURE TO DEDUCT CRA can assess a penalty of 10% of the amount of CPP, EI, and income tax you fail to deduct. If you fail to deduct the required amount of income tax more than once in a calendar year, CRA may apply a 20% penalty to the second or later failures if they usre made knowingly or under circumstances of gross negligence.
- 14. Contact your local CA4IT representative, or visit www.CA4IT.com for more information Phone: 1-800-465-7532 Email: CustomerService@CPA4IT.ca FOLLOW UP