At a glance
- What is remitted
- Income tax, CPP contributions, and EI premiums withheld from employee pay. Source: Canada Revenue Agency
- Who must remit
- Employers with employees in Canada must remit payroll deductions to the CRA. Source: Canada Revenue Agency
- How often
- Frequency depends on the employer's average monthly withholding amount. Source: Canada Revenue Agency
- Related term
- International remittance means sending money abroad, often through licensed money services businesses. Source: FINTRAC
- Consumer protection
- The FCAC explains how to send money safely from Canada. Source: Financial Consumer Agency of Canada
- Fraud risk
- The Canadian Anti-Fraud Centre warns about remittance scams. Source: Canadian Anti-Fraud Centre
What Payroll Remittance to the CRA Means
Payroll remittance to the CRA is the process of sending employee payroll deductions to the Canada Revenue Agency. Employers withhold income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from each paycheque. They hold these amounts in trust and must remit them to the CRA on a schedule set by the agency.
The remittance covers the employee's tax and social insurance obligations. The CRA credits the amounts to the employee's account. The employer does not keep the money. It is a pass-through of funds that belong to the government. This is why payroll remittance is often called source deductions remittance.
The term 'remittance' comes from the idea of sending back or paying what is owed. In Canadian payroll law, remitting is a legal obligation. Employers must remit even if the business has cash-flow problems. The CRA treats unremitted deductions as a serious matter.
Where the Term Comes From and How It Is Used in Accounting
In accounting, a remittance is a payment sent to a supplier, tax authority, or other party. A remittance advice is a document that explains what the payment covers. It helps the recipient match the payment to an invoice or account.
In payroll accounting, the withheld amounts are a liability on the balance sheet. The employer records the expense and the liability, then records the remittance when the funds leave the bank. This keeps the books accurate. The CRA may require detailed records of each remittance.
The term also appears in invoice remittance. A customer sends payment to a vendor and includes a remittance advice. The meaning is similar: sending money to settle an obligation. Payroll remittance follows the same logic. The difference is that payroll remittance is required by law, not by a commercial contract.
Remittance vs Payment vs Transfer
These terms are often used interchangeably, but they have different meanings. A payment is the act of paying money. A transfer is the movement of funds between accounts. A remittance is the amount sent or the act of sending it, often with a record.
In payroll, you remit to the CRA. You make a payment. You transfer funds from your bank account. The three words can describe the same event from different angles. Context tells you which one fits. For example, a payroll manager might say 'I made the remittance' or 'I sent the payment'.
In international finance, remittance usually means money sent by a worker to family abroad. A transfer is the mechanism. A payment is the settlement. The term 'remittance' often carries a personal or family meaning in that context.
| Term | In payroll | In international finance |
|---|---|---|
| Remittance | Sending withheld deductions to the CRA | Money sent by a migrant worker to family abroad |
| Payment | The act of paying the amount owed | The settlement of a transfer |
| Transfer | Moving funds from the employer's bank account | The electronic movement of money between accounts |
Payroll Remittance to the CRA in Practice
Employers calculate deductions each pay period. They report the amounts to the CRA and remit the total. The remittance frequency depends on the employer's average monthly withholding amount. The CRA assigns a schedule. Some employers remit quarterly, some monthly, and some more often.
Failure to remit on time can lead to penalties and interest. The CRA expects employers to keep accurate records and to remit the full amount withheld. Even a small shortfall can attract attention. Employers should reconcile payroll records regularly.
Employers can remit online, by phone, or through a financial institution. The CRA provides guidance on its website. Many use payroll software that calculates and schedules remittances automatically. This reduces the risk of missed deadlines. The CRA also offers online tools for viewing account balances.
International Remittance from Canada
For individuals sending money abroad, remittance means an international transfer. Licensed money services businesses must register with FINTRAC and follow anti-money-laundering rules. This helps protect the financial system. The rules apply to currency exchange and money transfer services. Consumers can check whether a provider is registered.
The Bank of Canada publishes daily exchange rates that can help you understand the value of a transfer. Fees and rates vary by provider. Consumers can compare the total cost, not just the exchange rate. Some providers charge a fee plus a margin on the rate.
The Financial Consumer Agency of Canada offers tips on sending money safely. The Canadian Anti-Fraud Centre warns about scams that ask you to send money to someone you do not know. If you suspect fraud, report it to the authorities.
Why the Term Matters
For employers, payroll remittance is a legal duty. Mistakes can lead to penalties and interest. Understanding the term helps with compliance and cash-flow planning. It also helps when communicating with accountants and the CRA. Accurate remittance protects the business from unnecessary costs.
For employees, remittance ensures their tax, CPP, and EI obligations are met. It affects their future benefits and tax refunds. If the employer fails to remit, the employee's record may show a shortfall. Employees can check their CRA account to confirm contributions.
For anyone sending money internationally, understanding remittance helps compare services and avoid fraud. The term appears in contracts, receipts, and online forms. Knowing what it means helps you make informed choices. It also helps you understand the difference between the amount sent and the amount received.
Common Confusions
Some people confuse remittance with the employee's net pay. The employer remits deductions, not the employee's take-home pay. The net pay goes to the employee; the deductions go to the CRA. These are separate amounts and separate transactions.
Others think remittance is only for international transfers. In Canadian payroll, it is a domestic tax obligation. The same word describes both contexts, which can cause confusion. The context usually makes the meaning clear. If unsure, ask which type of remittance is meant.
A remittance advice is not a receipt. It is a document that explains a payment. The CRA provides its own confirmation of receipt. Do not confuse the two when keeping records. Employers should keep both for their files. Good records help during audits.
Frequently asked questions
What is payroll remittance to the CRA?
It is the transfer of employee payroll deductions — income tax, CPP contributions, and EI premiums — to the Canada Revenue Agency. Employers withhold these amounts from wages and send them to the CRA on a set schedule.
How often must employers remit payroll deductions to the CRA?
The frequency depends on the employer's average monthly withholding amount. The CRA assigns a remittance schedule, which may be quarterly, monthly, or more frequent. Employers should check their CRA account for their specific schedule.
What is the difference between remittance and payment?
A payment is the act of paying money. A remittance is the amount sent or the act of sending it, often with a record. In payroll, you can use either word to describe sending deductions to the CRA.
Is payroll remittance the same as international remittance?
No. Payroll remittance is a domestic tax obligation. International remittance means sending money abroad, often to family. The same word has different meanings in different contexts.
What happens if an employer misses a payroll remittance?
The CRA may charge penalties and interest. The employer still owes the full amount withheld. It is important to remit on time and to correct any errors quickly.
Where can I find official information about sending money from Canada?
The Financial Consumer Agency of Canada provides tips on sending money. FINTRAC regulates money services businesses. The Bank of Canada publishes exchange rates.
Sources
Every figure or rule on this page should be verified at the official source before you rely on it.
- CRA administers federal tax obligations, including payroll and international tax matters.Canada Revenue Agency
- Money services businesses must register with FINTRAC and follow anti-money-laundering rules.FINTRAC
- The FCAC explains how to send money safely from Canada.Financial Consumer Agency of Canada
- The Bank of Canada publishes daily exchange rates.Bank of Canada
- The Canadian Anti-Fraud Centre warns about remittance scams.Canadian Anti-Fraud Centre