Payroll Remittance Guide: Avoiding CRA Penalties for Alberta Employers

What Is Payroll Remittance?

Payroll remittance is the process of sending CPP, EI, and income tax deductions from employee paychecks to CRA on a regular schedule. Employers act as withholding agents — the deductions are trust funds that must be remitted by specific deadlines. Late or missed remittances trigger penalties and interest. Ahmed handles payroll records and remittance as part of bookkeeping services.

• Trust funds: CPP, EI, and income tax deductions are held in trust for CRA.
• Mandatory remittance: All employers with payroll must remit deductions on schedule.
• PD7A form: CRA's remittance voucher showing your account balance and status.

CPP, EI, and Income Tax Deductions

Employers must deduct Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and federal/provincial income tax from each employee's paycheck. CPP is 5.95% (2024) for both employer and employee. EI is 1.66% (2024) for employees, with the employer paying 1.4 times the employee rate. Income tax is deducted based on TD1 forms and CRA tax tables.

Remittance Frequency

Your remittance frequency is determined by your average monthly withholding amount (AMWA): regular (15th of following month, AMWA under $25,000), accelerated threshold 1 (semi-monthly, $25,000–$100,000), and accelerated threshold 2 (semi-weekly, over $100,000). New employers are regular remitters for the first year.

T4 Filing Requirements

T4 slips must be filed with CRA and distributed to employees by February 28 each year. The T4 summarizes each employee's earnings and deductions for the calendar year. Late T4 filing triggers penalties starting at $25 per day per slip, with a minimum penalty of $100 and maximum of $7,500. Ahmed prepares T4s and the T4 summary as part of payroll services.

• February 28 deadline: T4 slips due to CRA and employees by this date.
• T4 summary: T4 Summary (T4SUM) reconciles all slips with total remittances.
• Late penalty: $25 per day per slip, minimum $100, maximum $7,500.
• RL-1 (Quebec): Separate filing required for Quebec employees via Revenu Québec.

Late Remittance Penalties

CRA charges penalties for late payroll remittances based on frequency of late remittances: 3% for 1-3 days late, 5% for 4-5 days, 7% for 6-7 days, 10% for more than 7 days. If you're a repeat late remitter, the penalty increases to 20%. Interest compounds daily on unpaid amounts.

CRA Payroll Audit Triggers: From a Former Auditor

As a former tax auditor, Ahmed knows the patterns that trigger payroll audits: inconsistent remittances, late T4 filings, misclassifying employees as contractors, not remitting on large bonuses, and discrepancies between T4s and remittances. He structures your payroll records to avoid these triggers.

• Inconsistent remittances: Erratic or late remittance patterns draw CRA attention.
• Contractor misclassification: Treating employees as contractors to avoid CPP/EI — a major audit target.
• Bonus non-remittance: Not remitting source deductions on bonuses or large payments.
• T4 vs remittance mismatch: Discrepancies between T4 totals and amounts remitted.
• Late T4 filing: Repeated late T4 filings flag your account for review.

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