CRA Payroll Remittances: How to Stay Compliant and Avoid Penalties

If you pay employees, you're required to deduct source deductions from their pay — and then send those amounts to the CRA on time. This is called a payroll remittance. Getting this wrong is one of the most common — and costly — mistakes small business owners make in Canada. The good news: once you understand the system, it's straightforward to manage.

What Are Payroll Remittances?

Every time you run payroll, you're required to withhold three types of source deductions from your employees' gross pay and remit them to the CRA:

• Canada Pension Plan (CPP): The employee pays 5.95% of pensionable earnings (above the basic exemption). You, the employer, must match that amount — so you remit twice the employee's CPP contribution.
• Employment Insurance (EI): The employee pays 1.66% of insurable earnings. You remit 1.4 times the employee's EI premium as the employer share — so your total EI remittance is 2.324% of the employee's insurable earnings (employee share + employer share).
• Income Tax: You deduct federal and provincial income tax based on the employee's TD1 forms, using CRA's T4032 payroll tables or the Payroll Deductions Online Calculator (PDOC).

These three amounts — withheld from the employee plus your employer contributions — must be remitted to the CRA by the applicable deadline. Failing to do so, or remitting less than you owe, triggers penalties.

Who Must Remit?

Any business that pays wages, salaries, or fees to employees must register for a payroll program account with the CRA and remit source deductions. This applies even if you only have one employee, even if they work part-time, and even if the amounts are small.

Note: if you engage self-employed contractors (not employees), different rules apply. Read our article on Employee vs. Contractor in Canada to understand when a worker must be treated as an employee.

Remittance Categories and Deadlines

The CRA assigns you a remittance category based on your Average Monthly Withholding Amount (AMWA) — the average total of CPP, EI, and income tax you remit per month in the second preceding calendar year. Your category determines how often you must remit and by what deadline.

Category	AMWA	Remittance Frequency	Deadline
New Employer	Not yet established	Monthly	15th of the following month
Regular	Less than $25,000	Monthly	15th of the following month
Threshold 1	$25,000 – $99,999	Twice monthly	25th (for pay periods 1–15) and 10th of next month (for pay periods 16–end)
Threshold 2	$100,000 or more	Per pay period	Within 3 business days of the pay period end

New employers always start in the Regular category (monthly remittances, due the 15th of the following month) until the CRA recalculates their AMWA based on actual remittance history.

How to Calculate Source Deductions

For each employee, the calculation follows this sequence:

1. Gross pay: Start with the employee's total earnings for the pay period (salary, wages, taxable benefits, bonuses).
2. CPP deduction: Subtract the per-period basic exemption ($134.61 for bi-weekly pay periods based on the $3,500 annual exemption), then apply 5.95% to the remainder. Stop once the employee hits the annual maximum CPP contribution.
3. EI deduction: Apply 1.66% to insurable earnings. Stop once the employee reaches the annual maximum insurable earnings ($63,200 for 2026).
4. Income tax: Use the CRA Payroll Deductions Online Calculator (PDOC) or the T4032 tables, based on the employee's province of employment and TD1 claims.
5. Net pay: Gross pay minus CPP, EI, and income tax withheld.

Your remittance to CRA = employee CPP + employer CPP + employee EI + employer EI (1.4×) + income tax withheld.

How to Remit to the CRA

There are three main ways to submit your payroll remittance:

• CRA My Business Account: Log in at canada.ca/my-cra-business-account. The fastest and most reliable method — you can see your account balance and remittance history instantly.
• Your bank's online bill payment: Add "CRA Payroll" (or "Receiver General") as a payee. Use your 15-digit Business Number with your RP account number as the reference.
• Canada Post: Pay in person at a Canada Post outlet using the remittance portion of your PD7A form (Statement of Account for Current Source Deductions), which the CRA mails to regular remitters.

Always keep a copy of your payment confirmation. The PD7A form the CRA sends is a statement of account — review it each period to ensure your balance is correct and that previous remittances were applied properly.

Penalties for Late or Missed Remittances

The CRA applies penalties automatically when remittances arrive after the due date. The penalty escalates with the length of the delay:

• 1–3 days late: 3% of the amount due
• 4–5 days late: 5% of the amount due
• 6–7 days late: 7% of the amount due
• 8+ days late: 10% of the amount due
• Second late occurrence in the same calendar year: 20% of the amount due

In addition to the penalty, CRA charges daily interest on the unpaid balance at the prescribed rate (which changes quarterly). These amounts can add up quickly — a $5,000 late remittance that is 10+ days late results in a $500 penalty before any interest.

Common Mistakes to Avoid

Many small business owners encounter the same recurring errors when managing payroll remittances:

• Forgetting the employer's CPP share: You must remit double the CPP amount — once for the employee, once as the employer match. Remitting only the employee's share leaves you with a balance owing.
• Not updating calculations after payroll changes: If you give an employee a raise, add a taxable benefit, or change their TD1 claims, your deduction amounts change. Review calculations at every pay change.
• Missing the first remittance after hiring: New employers are sometimes unaware they must remit after their very first paycheque. Register before you pay, and mark the 15th of the following month in your calendar immediately.
• Paying only the employee's share of EI: The employer EI rate is 1.4 times the employee rate. Many first-time employers remit only the employee EI deduction and discover the shortfall when the CRA runs a payroll audit.
• Using the wrong account number: Always confirm you're remitting to your RP payroll account, not your RC income tax account. Payments applied to the wrong account still trigger late penalties on the payroll account.

Need Help with Payroll Compliance?

Managing payroll remittances accurately requires tracking multiple rates, deadlines, and employee changes simultaneously. Our payroll management service handles source deduction calculations, remittances, T4 slips, and CRA account monitoring — so you never miss a deadline or receive a surprise penalty notice.