Christopher Clifford: Manager, D+H Group LLP Chartered Accountants
As employers, small businesses are responsible for deducting and remitting income tax, Canada Pension Plan contributions (CPP) and Employment Insurance premiums (EI) to Canada Revenue Agency (CRA). Payroll remittances are generally due weekly, bimonthly or monthly.
Making payroll remittances on time is important for employers because CRA will assess penalties on late payments. Further, the amounts remitted must be accurate to ensure the annual T4 slip delivered to each employee reflects the correct amount of income tax, CPP and EI withheld.
The CRA website provides a tool called the "Payroll Deductions Online Calculator" to assist small businesses to calculate the various amounts they are required to withhold and remit each pay period. Historically this calculator has worked well to help small businesses that want to manage their own payroll by providing a means to accurately calculate each remittance.
While the CRA calculator works well for its intended purpose, in the past small businesses have found communication with CRA to be difficult should they have any questions or concerns with their payroll account.
In recent years, CRA introduced an online "My Business Account" service that allows small businesses to access their payroll and other tax information on a secure website. The website will, among other things, allow businesses to view payroll remittances made – including the period in which they were applied – to ensure payments have been posted correctly. Any discrepancies can then be resolved through electronic communication with CRA.
We have found the My Business Account service to be an effective means for small businesses to manage many types of transactions with CRA, particularly when payments are out of the ordinary course.
Lindalee Broughman: Founder, LL Brougham Inc. Chartered Accountants
In the past few years, the Canada Revenue Agency (CRA) has worked hard to improve its online presence for taxpayers and businesses by allowing them to take care of business more efficiently and effectively. Options that we find most helpful are:
Online requests: Once you have set yourself up for "My account" you can change your tax return, change your address, apply for child benefits, arrange direct deposit and print out copies of T-slips. These items are completed immediately and give you control of your account.
If a payment has been posted to the wrong account you are also able to make the correction and know immediately what your outstanding balance is.
Online filing of T4, T5, and T5018 slips: Although in place for many years not all businesses take advantage of it. By using this service you prevent errors and ensure things are coded to the correct accounts. The recipients' files are updated almost immediately, allowing them easy access to their information.
You can save time and money as it only takes moments to complete once you have prepared the slips.
Submission of documents for an audit: The CRA recently implemented a system where you can upload any documents required for an audit. Once documents are received, the auditor is notified via email. This cuts down the length of time it takes to complete an audit as you are not relying on the mail.
This has been proven very helpful in audits as the auditor can receive documents while you are on the phone.
The CRA is constantly working to improve services and make things easier for the taxpayer. It will continue down the electronic route, and I expect we will see many more improvements in the future.
Mark Hoag: Incorporated partner, KNV Chartered Accountants LLP
Employer payroll responsibilities are not inherently difficult, once you understand the process; it is usually a matter of knowing what to do. However, getting the process started can be a challenge. The Canada Revenue Agency's (CRA) current system of online payroll transactions is generally set up well but this is not communicated effectively to small business. If one does not already know to go to the CRA website for information, arriving there can be challenging. The information is not effectively linked through other government resources, including the provincial government's own small-business websites. Mailings and other promotional materials have yet to effectively communicate the ease of use of this service.
The government expects small business to use the online payroll service, yet many businesses do not have the ability or time to learn and implement proper online filing. The amount of payroll information available online can be overwhelming, especially to small business operators who often do not have a staff member with the financial acumen and experience to navigate this. Better tutorials that focus on the needs of small business would be an improvement.
For payroll, there is also a presumption that businesses know what and how to remit. There are numerous penalties to navigate around, including those for a failure to file remittances on or before the strict deadlines and those for a failure to obtain specific information from employees. These penalties, although reasonable for experienced filers and large business, are not in line with the realities of overworked, inexperienced staff that have many other non-payroll responsibilities, common to small business. The ability to fix legitimate mistakes without incurring penalties is also limited and costly. As such, a more forgiving adjustment process for new payroll users would be very beneficial.
