Payroll Deductions / T4’s / Worker’s Compensation

As an employer, you are responsible for deducting, remitting, and reporting payroll deductions. An employer must do the following:

  • Open and maintain a payroll deductions account
  • Obtain the employee’s social insurance number
  • Ensure employees fill out federal TD1 and provincial TD1 forms
  • Deduct CPP contributions, EI premiums, and income tax from the employees’ pay and withhold this in trust for the Receiver General
  • Remit these deductions along with the employer’s share of CPP contributions and EI premiums
  • Report the employees’ income and deductions on the appropriate T4 or T4A slip by the last day of February of the following calendar year
  • Complete and issue Record of Employment Form INS 2106 when an employee leaves
  • Keep all payroll records for a period of six years

The following are some common situations where employment is not insurable and is not subject to EI premiums:

  • Casual employment
  • Employment when the employee and employer do not deal with each other at arm’s length; such as individuals connected by blood relationship, marriage, common-law relationship, or adoption
  • Employment of a person who controls more than 40% of the corporation’s voting shares
  • Employment that is an exchange of work or services

Payroll source deductions for each month are always due by the 15th of the following month. Canada Revenue Agency can assess a penalty of 10% up to 20% for the amount you fail to remit. Should the 15th of the month falls on a Saturday, Sunday, or public holiday, Canada Revenue Agency will consider the payroll remittance due on the next business day.

Contact us if you have any questions or need more information.


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