Every time you pay an employee in Canada, you also take on a job for the government. You hold back part of the paycheque, add a matching share of your own, and send the total to the Canada Revenue Agency (CRA) on a fixed schedule. Those payments are your payroll remittances, and getting them right matters more than most new employers expect. This guide covers the payroll remittances small business owners in Canada must handle: what you withhold, which due date applies to you, how to pay and report, and what a late payment costs. It’s written for employers outside Quebec. Quebec employers send federal income tax and EI to the CRA but remit QPP, QPIP and Quebec income tax to Revenu Québec (Workzoom).
What you withhold and what you pay on top
Each remittance bundles three separate obligations into one payment, although the CRA tracks every component on its own (Workzoom). Knowing which piece is which makes your payroll reports far easier to read.
- Canada Pension Plan (CPP) contributions. You withhold the employee's share and then match it dollar for dollar.
- Employment Insurance (EI) premiums. The employee pays a share, and you pay a larger multiple of it.
- Income tax. Federal and provincial tax, based on the employee's source-deduction forms and province of employment. This is usually the biggest piece of the payment.
On top of gross wages, your matching CPP and EI are the extra cost of having staff, and they belong in your books as a payroll expense. Gross wages are an expense too, but the portions you withhold from them are money you hold for the CRA. Until you remit that money, it sits in a liability account such as payroll remittances payable instead of being a separate cost.
Rates and annual maximums change every year, so don't lean on last year's numbers. As one example, Workzoom lists a 2026 employee EI premium of 1.63% of insurable earnings, capped at $1,123.07, with an employer cost of up to $1,572.30 per employee, which works out to roughly 1.4 times the employee's premium (Workzoom). Check the CRA's current CPP and EI tables each January before you update your payroll settings.
Setting up before the first payday
You remit through a payroll account with the CRA, which uses your business number with an RP extension (Workzoom). Register for it before you run your first pay, because that account number is how every payment gets matched to your business.
Collect each employee's tax-credit form (the CRA's TD1) when they start. Your payroll calculations depend on it, and a missing form is a common cause of under-withholding.
The other setup decision is easy to skip: confirm that the person you are paying is really an employee. If the CRA later decides a worker you treated as a contractor was an employee, you can owe the deductions you never withheld, plus your own share (Gondaliya CPA). When the working relationship is unclear, ask your accountant before the first payment, not after a notice arrives.
Payroll remittances in Canada: how often a small business pays
The CRA assigns your minimum remitter type from your average monthly withholding amount (AMWA), using the figure from two calendar years back, and it moves you between types automatically (Gondaliya CPA). You can't choose a less frequent schedule than the one assigned, though you can generally pay more often if you want to. New employers generally start on the monthly schedule until the CRA reassigns them.
As of 2026, these are the bands and due dates, based on Gondaliya CPA and cross-checked against Workzoom:
| Remitter type | Average monthly withholding | Due date |
|---|---|---|
| Quarterly | Under $3,000, with a perfect compliance record | 15th of the month after each quarter ends |
| Regular (monthly) | Under $25,000 | 15th of the following month |
| Accelerated, Threshold 1 | $25,000 to $99,999.99 | 25th of the same month for pay in the 1st to 15th; 10th of next month for the rest |
| Accelerated, Threshold 2 | $100,000 or more | Within three working days after the 7th, 14th, 21st and last day of the month |
Workzoom advises confirming the current figures with the CRA before you build a calendar around them, and that is sound advice.
Many small employers land in the regular monthly group, and very small payrolls may qualify for quarterly remitting. If your payroll is in the monthly group, the rule is simple: deductions for everything you paid in March are due on April 15. When the 15th falls on a weekend or holiday, the due date moves to the next business day.
Growth is where owners get caught. A business that hires quickly can cross into an accelerated schedule, and because the CRA looks back two years, the change can feel sudden. The first remittance under a new schedule is one of the most common ways late penalties begin (Gondaliya CPA). Check the remitting frequency shown in your CRA account each year and after any big hiring stretch.
What a remittance looks like in practice
A worked example makes the mechanics concrete. The numbers below are invented and rounded for illustration, so don't use them as real rates.
Say you run a small trades business and pay one employee $4,000 gross in a month. Suppose your payroll calculation shows $200 of CPP, $65 of EI and $600 of income tax withheld from the employee. You owe your own matching $200 of CPP and about $91 of EI, using the 1.4 multiple. The remittance is the sum of all five amounts.
- Run payroll and record the gross wages as an expense.
- Record the withheld CPP, EI and income tax as payroll liabilities.
- Add your employer CPP and EI, and book those as a business cost.
- Pay the combined total, $1,156 in this example, by your due date.
That is $865 withheld from the employee plus $291 of your own share. The $865 was never your money, and the $291 is a real expense that belongs in your monthly profit picture. A bookkeeper who reconciles payroll as each run happens will see the liability account climb through the month and drop back toward zero when you remit.
How to pay, and why the date received is what counts
Common ways to pay payroll remittances include online from your CRA My Business Account, through your bank's online bill payment with the CRA as the payee, or in person at a Canadian financial institution (Workzoom). Other methods may exist, so check the CRA's current list of payment options before you settle on a routine. Whichever you use, speed differs and it matters: online banking payments typically take a business day or two to clear, and the CRA counts the day it receives the money, not the day you sent it (Workzoom).
Build in a cushion by paying at least two business days before the deadline.
A cheque posted on the due date is late, and so is an online payment made after banking hours that processes the next business day (Gondaliya CPA).
Keep every confirmation number, bank receipt and My Business Account record. The CRA requires you to keep payroll records for six years from the end of the last tax year they relate to, unless it has given permission to destroy them sooner (Workzoom).
Reporting: statements of account and year-end slips
Reporting has two layers: a statement of account during the year, and slips at year-end.
During the year, the CRA issues a payroll statement of account called the PD7A, and you can treat it as a reconciliation report. It shows what the CRA has recorded against what it has received, so a mismatch is a prompt to investigate (Workzoom). The usual causes are mundane. A payment was applied to the wrong payroll account number, an online payment left off the reference number, or a retroactive pay change never reached the remittance. Taxable benefits added to a T4 at year-end but never remitted during the year are another common source.
At year-end, you file a T4 slip for each employee and a T4 Summary. Both are due by the last day of February following the calendar year they cover, and if that date lands on a weekend or holiday, the next business day applies (Workzoom).
The figures on your T4s need to reconcile with what you remitted. Add the employee CPP deductions to your matching share, do the same for EI, add income tax withheld, then compare that combined liability with the payments credited to your account. A shortfall leads to an assessment, so it is far cheaper to find a gap in January than to have the CRA find it later.
What late or missing remittances cost
As of 2026, the CRA charges a penalty when more than $500 of payroll deductions is remitted late or not at all. The percentage rises in steps based on how many days late the payment is (Workzoom).
| How late | Penalty on the amount owing |
|---|---|
| 1 to 3 days | 3% |
| 4 or 5 days | 5% |
| 6 or 7 days | 7% |
| More than 7 days, or never remitted | 10% |
On top of the penalty, interest accrues at the CRA's prescribed rate, compounded daily from the day after the due date until you pay (Gondaliya CPA). Using the invented $1,156 remittance above, a payment six days late would draw a 7% penalty, about $81, before interest. The penalty is a percentage of the whole remittance, so it grows with your payroll even though the rules look small. Someone remitting $20,000 a month who pays six or seven days late faces a $1,400 penalty on that one payment.
A higher rate of 20% exists, but a second late payment alone doesn't trigger it. It applies when this is a second or later failure in the same calendar year and the failure was made knowingly or through gross negligence (Gondaliya CPA).
If you do miss a date, pay first. The CRA can cancel penalties and interest at its discretion when circumstances were beyond your control, using Form RC4288, but interest keeps running while it reviews the request. Serious illness, a natural disaster or a CRA error can support relief, and financial hardship can sometimes support relief too, mainly for interest. Ordinary cash flow strain, a bookkeeper's mistake or simply forgetting are harder to support, and a pattern of repeated late remittances weakens a request (Gondaliya CPA). Explain your circumstances plainly and ask your accountant for help.
Why unremitted payroll is treated differently from other debts
Money you withhold from an employee is held in trust for the Crown from the moment you deduct it. That has real consequences for how the CRA treats a shortfall. The amount can rank ahead of secured lenders in many situations, and the CRA moves faster on source deductions than on most other balances (Gondaliya CPA).
If you run a corporation, directors can be personally liable for withheld amounts that weren't remitted, along with the related interest and penalties. The main defence is due diligence, meaning the care a reasonably prudent person would have taken in comparable circumstances. Resigning does not erase liability for amounts that arose while you were a director (Gondaliya CPA).
When money is short, source deductions generally deserve priority over suppliers, because unremitted deductions can reach you personally. Talk to your accountant or a licensed insolvency professional before deciding who gets paid first.
Building a routine that keeps remittances on time
Repeated late remittances often come down to the same root cause: nobody owns the date (Gondaliya CPA). A routine fixes that more reliably than good intentions, and it doesn't need to be elaborate.
Put a reminder in the calendar two business days before each due date, and put the actual deadline in too. Gondaliya CPA also suggests holding withheld amounts in a separate bank account so that the money isn't spent on operating costs in the meantime (Gondaliya CPA). On the bookkeeping side, record each pay run as it happens, so the payroll remittances payable balance always shows what you owe right now.
That last habit is where weekly bookkeeping earns its keep. When books are reconciled weekly instead of once a month, the payable balance can be compared with the next remittance while the pay run is still fresh. A mismatch shows up in days instead of at month-end, long after the due date, and nobody has to rebuild a month of payroll from bank statements. Agile Bookkeeping's weekly rhythm, with CPA review of reconciliations, is built around that kind of early catch.
Choosing how to handle payroll: three realistic options
Your decision isn't whether to remit, since that is mandatory. It is who calculates, pays and reconciles. Each approach has tradeoffs worth weighing against your headcount, your time and your comfort with the rules.
Run it yourself with accounting or payroll software. This costs the least and works for one or two employees on a regular schedule. The risk is that you are the calendar, the calculator and the reconciler at once.
Use a payroll service that calculates and remits for you. Automatic remittance removes most date risk, and the cost is per employee per month. You still own the accuracy of your inputs, such as hours, new hires and benefits, and you still need your books to reflect what the service paid on your behalf, so the liability account clears the way it should.
Hand the books to a bookkeeper or accountant who checks the numbers. This does not replace a payroll tool. It adds a second set of eyes on whether the liability account, the remittances and the T4 totals agree. For many small employers the best setup combines a payroll tool or service with someone who reconciles it regularly.
Whichever route you take, settle four questions up front:
- Who confirms your remitter type every year?
- Who owns each due date?
- Where do confirmation numbers get filed?
- Who reconciles payroll liabilities against the CRA statement?
Where to start this month
If you are new to payroll, work through these steps in order:
- Confirm your payroll account and your assigned remitter type.
- Put every due date for the coming year into a calendar, adjusted for weekends and holidays.
- Set up the liability account that tracks what you owe the CRA.
- Decide who reconciles that account and how often.
If you already run payroll, test your routine against a bad month instead of a good one. Imagine a new hire, a retroactive pay change and a long weekend landing in the same week. If your process would still produce an on-time payment and a clean reconciliation, it works. If not, tighten it now, while a late penalty is still hypothetical.
Rates, bands and thresholds change, and your own facts may differ from the examples here. Confirm current figures with the CRA or your accountant before you rely on a date or a dollar amount.