You work for an organization in Nova Scotia and your manager,Jessica Boyer, has asked you to prepare a memo detailing theremittance responsibilities and legal consequences ofnon-compliance with statutory remittance requirements.
studing material :
Employers are responsible for registering and maintaining apayroll program account with the Canada Revenue Agency. Theemployer will remit the statutory deductions withheld from theemployeesâ remuneration for Canada Pension Plan (CPP)contributions, Employment Insurance (EI) premiums, and federal andnon-Québec provincial income taxes, along with the employerportions of CPP and EI to this account.
In Trust
Statutory deductions are deemed to be held in trust for theReceiver General for Canada. This means the amounts withheld fromemployees, along with the employerâs portion, must be kept separatefrom the operating funds of the business and cannot be part of anestate in liquidation, assignment, receivership, or bankruptcy.Employers who make their own government remittances, as opposed tohaving them remitted by a service provider, must separate all CPPcontributions, EI premiums and income tax withholdings, along withany employer portion, from the organizationâs regular bank account.All statutory deductions and contributions must be held in aseparate payroll account until the remittance is made to theReceiver General.
Remitter Type
An organizationâs remittance frequency depends on its averagemonthly withholding amount for the second preceding calendar year.For example, the withholding amount for 2017 will depend on theemployerâs average monthly withholding amount made in 2015.Employers may apply to the Canada Revenue Agency to have theiraverage monthly withholding amount for the current or previous yearused instead of the second preceding year. This would beadvantageous if the employerâs payroll for the previous year waslower than the payroll for the second preceding year.
Remittance Schedule
Once an employer has been advised by the CRA what type ofremitter they are, a schedule, based on that type, is used todetermine when the remittances are due to the CRA. The payment forthe first three types of remitters â quarterly, regular, andaccelerated threshold 1 â is due by a specified date based on thepayroll cheque/deposit date. The remittance for acceleratedthreshold 2 remitters is due three business days after the end ofthe weekly period, established by the CRA, in which the payrollcheque/deposit date falls. In all cases, the payroll cheque/depositdate is the date when the money is paid to the employee or directlydeposited in their bank account. The period end date, the payrollprocessing date and the date the pay statement is handed to theemployee 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 amountof CPP contributions, EI premiums and income taxes due for lateremittances (20% on the second and later occurrences). An employerwho withholds the statutory deductions but does not remit them, orfails to deduct the required deductions will be subject to a 10%penalty for the first occurrence on the amount that should havebeen deducted and remitted (20% on the second and lateroccurrences). The penalties for late remittances are asfollows:
ï· 3% if payment is late 3 business days or less
ï· 5% if payment is late 4 or 5 business days
ï· 7% if payment is late 6 or 7 business days
ï· 10% if payment is 8 or more business days late Normally thepenalty is only applied to the part of the amount that the employerfails to remit that is more than $500.00, however the CRA may applythe penalty to the total amount if the failure to remit, or thelate remittance, was made knowingly or under circumstances of grossnegligence. Again, special attention is required at the end of theyear if producing any manual cheques after the final pay period forthe year has been processed
