CRA Payroll Remittances

CRA Payroll Remittances: The Most Common CRA Payroll Remittance Errors

1. Missing the Due Date

This often happens when a business schedules payment for the due date, forgets bank processing time, uses the wrong remittance frequency, or assumes a payroll provider has already transmitted the funds. CRA’s late-remitting penalty generally increases with the delay: 3% for one to three days, 5% for four or five days, 7% for six or seven days, and 10% when more than seven days late or when no amount is remitted. A 20% penalty may apply to certain repeated failures made knowingly or under circumstances of gross negligence.

Correction: calculate the amount still due, remit it immediately using the correct payroll program account, keep the confirmation, and review the CRA account after processing. Do not wait for a notice before paying an identified shortage.

2. Using the Wrong Payroll Account or Business Number

A group may have several payroll program accounts, or a bookkeeper may accidentally select a GST/HST or corporate income tax account. The cash leaves the bank, but the intended payroll account can still show a balance.

Correction: First, confirm where the payment posted. CRA allows many business payments to be transferred within a program account or between program accounts under the same nine-digit business number through “View and pay account balance.” An authorized representative may also request the transfer. If the payment is still processing through a financial institution, contact the institution first.

3. Applying the Payment to the Wrong Remitting Period

The account number can be correct while the period is wrong. This is common around year-end, after a payroll migration, or when several payments are scheduled together. It can create an apparent arrears balance for one period and a credit for another.

Correction: compare the payment date, amount, payroll register, remitting period, and CRA transaction history. Request a transfer to the correct period and retain the reference number and supporting reconciliation.

4. Remitting the Employee Deductions but Forgetting Employer CPP or EI

The amount withheld from employees is only part of the liability. Employers normally match employee CPP and CPP2 contributions and pay employer EI at 1.4 times the employee premium unless an approved reduced rate applies. A spreadsheet that captures employee deductions but omits employer portions will understate the remittance.

Correction: recalculate the affected payroll using current CRA tables or the Payroll Deductions Online Calculator, quantify the employer shortfall, remit it immediately, and update the payroll journal and liability account.

5. Reporting Incorrect Gross Payroll or Employee Count

The PD7A information includes more than the payment. Gross payroll should reflect remuneration before deductions for the applicable remitting period, including relevant wages, commissions, overtime, taxable benefits, and special payments. Employee count and gross payroll should agree with the underlying register.

Correction: reconcile the remittance submission with the payroll register and the general ledger. If the payment amount is correct but the reporting details are not, document the difference and contact CRA or your authorized representative for the appropriate account correction.

6. Filing a Nil Remittance When Deductions Were Made

A nil remittance is appropriate when no source deductions were made for the period, such as during a genuine seasonal pause. CRA specifically says not to report nil when source deductions were made. Failing to report a valid nil period can also cause CRA to expect a payment and issue follow-up correspondence.

Correction: if deductions exist, remit them. If the period is truly nil, report the nil remittance by the assigned deadline and provide the expected date when deductions will resume.

7. Failing to Reconcile Payroll Before T4 Filing

At year-end, CRA compares remittances with amounts reported on T4-type slips. Missing, extra, or incorrect remittances may trigger a PD4R discrepancy notice. A credit is not automatic proof that CRA owes a refund; the T4 slips themselves may be wrong.

Correction: reconcile gross pay, employee deductions, employer contributions, remittances, the payroll liability account, and the T4 Summary before filing. If CRA issues a PD4R, explain the variance and correct the slips or payment as the facts require.

How to Correct a CRA Payroll Remittance Step by Step

  1. Pause and define the error. Identify the legal employer, payroll program account, remitting period, employees affected, and whether the issue is a payment error, a deduction-calculation error, or both.
  2. Rebuild the correct amount. Use payroll registers, current CRA calculation tools, bank records, provider reports, and year-to-date balances. Keep employee and employer portions separate.
  3. Check the CRA posting. Allow normal processing time, then review the business account to confirm the amount, account, and period. A bank debit alone does not prove correct allocation.
  4. Correct the cash position. Under-remitted amounts should be paid immediately. Current-year over-remittances may generally be used against a future payroll period or refunded. Misallocated payments may be transferred.
  5. Correct payroll records. Update the payroll register, journal entry, liability account, employee record, and year-to-date totals. If employee deductions were wrong, notify the employee and follow CRA’s before- or after-filing correction process.
  6. Save an audit trail. Retain calculations, CRA confirmations, transfer reference numbers, correspondence, amended reports, and approval notes. Recheck the CRA account after the correction posts.

Controls That Prevent Repeat Errors

  • Maintain a payroll calendar showing pay dates, remitting periods, due dates, holidays, payment lead time, and owner.
  • Use a two-person review for the payroll register, remittance total, program account, and remitting period.
  • Reconcile the payroll liability after every remittance and compare CRA activity monthly.
  • Download payroll provider reports and remittance confirmations before changing systems or access rights.
  • Track employee and employer CPP, CPP2, and EI separately in the general ledger.
  • Complete a pre-T4 reconciliation early enough to correct discrepancies before the filing deadline.
  • Document responsibilities across offices and languages. Bilingual support improves communication, but the control owner and evidence should remain unambiguous.

 

How RGB Accounting Can Help

Payroll errors often cross accounting, cash flow, employee records, and CRA reporting. RGB Accounting supports small and medium-sized businesses with payroll setup, remittance monitoring, reconciliations, provider transitions, T4 preparation, bookkeeping integration, and bilingual guidance. Our multicultural approach helps owners and finance teams communicate clearly across Canada.

Call to action: If your payroll account shows an unexpected balance, credit, penalty, or misapplied payment, book a consultation with RGB Accounting before the issue reaches year-end reporting.

Sources and Professional Note

Disclaimer. This article is general educational information, not accounting, tax, payroll, employment-law, or legal advice. Obligations depend on the employer, employees, province of employment, payroll account, remitter type, timing, and records.

 

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