Canadian Payroll Services

Whether you are using outsourced Canadian Payroll Services or processing your payroll in-house, you must follow these basic steps in order process a payroll that is compliant with Canada Law.

According to the Canada Revenue Agency, you will need to:

1. Determine your status. The Canada Revenue Agency recognizes three basic statuses: Employer, Trustee or Payer.

  • Employer:
    1. you pay your workers a salary, bonus, vacation pay, or tips; or
    2. you provide certain benefits that are taxable like board and lodging to the people who work for you.

    It is not going to matter to the Canada Revenue Agency if you have a written contract which might indicate that an individual is self-employed or working under a contract for services, if there is evidence of an employer-employee relationship.

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  • Payer: A payer can be an employer, Trustee, estate executor, liquidator, administrator, or a corporate director that pays any of the following types of income:
  1. pension or superannuation
  2. lump-sum payments
  3. self-employed commissions
  4. annuities
  5. retiring allowances
  6. RESP accumulated income payments
  7. RESP educational assistance payments
  8. group term life insurance taxable benefit for former employees or retirees
  9. fees or other amounts for services; or other income such as research grants, certain payments under a wage-loss replacement plan, death benefits, and certain benefits paid to partnerships or shareholders.

If you determine that you are a payer, but the total amount you paid to an individual in a calendar year is less than $500 and you did not have to deduct any income tax, then you don't have any payroll to do (as long as you are not also an employer or a trustee).

  • Trustee:A trustee includes a liquidator, receiver, receiver manager, trustee in bankruptcy, assignee, executor, administrator, sequestrator, or any other person who performs a function similar to the one a trustee performs. You are a trustee if you: a) authorize a payment to another person; and b) administer, manage, distribute, control, or otherwise deal with another person's property, business, estate, or income.

After you have determined your status, you then:

  1. Open a Payroll Account:You must first apply for a Business Number (BN) with the Canada Revenue Agency. The BN is a 9-digit business identifier used in Canada to which businesses can register program accounts with the Canada Revenue Agency. Once the BN has been established, or if you already have a BN, you only need to add a payroll account to your existing BN.
  2. Calculate Canadian Payroll Deductions
  3. Remit Canadian Payroll Deductions: You must remit the Canada Pension Plan (CPP) contributions, the Employment Insurance (EI) premiums, and income tax you deducted, along with your share of CPP contributions and EI premiums. There are a variety of filing information returns, they include:T4 Statement of Remuneration PaidT4A Statement of Pension, Retirement, Annuity and Other IncomeT4A-RCA Statement of Distributions from a Retirement Compensation Arrangement (RCA)T4A-NR Statement of Fees, Commissions or Other Amounts Paid to Non-Residents for Services Rendered in CanadaNR4 Statement of Amounts Paid or Credited to Non-Residents of Canada

Get more information on Remitting Canada Payroll Deductions

Whether you are opting for outsourced Canadian Payroll Services or processing your payroll in-house, following these steps will help ensure a smooth start to your payroll processing.

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