You work for an organization in Nova Scotia and your manager, Jessica Boyer, has asked you to prepare a memo detailing the remittance responsibilities and legal consequences of non-compliance with statutory remittance requirements.

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Employers are responsible for registering and maintaining a payroll program account with the Canada Revenue Agency. The employer will remit the statutory deductions withheld from the employees remuneration for Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and federal and non-Qubec provincial income taxes, along with the employer portions of CPP and EI to this account. In Trust

Statutory deductions are deemed to be held in trust for the Receiver General for Canada. This means the amounts withheld from employees, along with the employers portion, must be kept separate from the operating funds of the business and cannot be part of an estate in liquidation, assignment, receivership, or bankruptcy. Employers who make their own government remittances, as opposed to having them remitted by a service provider, must separate all CPP contributions, EI premiums and income tax withholdings, along with any employer portion, from the organizations regular bank account. All statutory deductions and contributions must be held in a separate payroll account until the remittance is made to the Receiver General.

Remitter Type

An organizations remittance frequency depends on its average monthly withholding amount for the second preceding calendar year. For example, the withholding amount for 2017 will depend on the employers average monthly withholding amount made in 2015. Employers may apply to the Canada Revenue Agency to have their average monthly withholding amount for the current or previous year used instead of the second preceding year. This would be advantageous if the employers payroll for the previous year was lower than the payroll for the second preceding year.

Remittance Schedule

Once an employer has been advised by the CRA what type of remitter they are, a schedule, based on that type, is used to determine when the remittances are due to the CRA. The payment for the first three types of remitters quarterly, regular, and accelerated threshold 1 is due by a specified date based on the payroll cheque/deposit date. The remittance for accelerated threshold 2 remitters is due three business days after the end of the weekly period, established by the CRA, in which the payroll cheque/deposit date falls. In all cases, the payroll cheque/deposit date is the date when the money is paid to the employee or directly deposited in their bank account. The period end date, the payroll processing date and the date the pay statement is handed to the employee are all irrelevant in determining the remittance date.

Penalties and Interest Charges

The CRA may assess a penalty of up to 10% of the required amount of CPP contributions, EI premiums and income taxes due for late remittances (20% on the second and later occurrences). An employer who withholds the statutory deductions but does not remit them, or fails to deduct the required deductions will be subject to a 10% penalty for the first occurrence on the amount that should have been deducted and remitted (20% on the second and later occurrences). The penalties for late remittances are as follows: 3% if payment is late 3 business days or less 5% if payment is late 4 or 5 business days 7% if payment is late 6 or 7 business days 10% if payment is 8 or more business days late Normally the penalty is only applied to the part of the amount that the employer fails to remit that is more than $500.00, however the CRA may apply the penalty to the total amount if the failure to remit, or the late remittance, was made knowingly or under circumstances of gross negligence. Again, special attention is required at the end of the year if producing any manual cheques after the final pay period for the year has been processed