Remittance Definition: What a Remittance Means in Canada

What does remittance mean?

A remittance is a sum of money sent from one person or organisation to another, usually to settle an obligation. The word describes both the act of sending and the amount sent. In everyday Canadian use it most often refers to money sent abroad to family, a payment sent to a supplier, or withheld payroll deductions forwarded to the Canada Revenue Agency.

The term is deliberately broad. It does not describe a particular payment method, speed, or fee. A remittance can move through a bank, a licensed money services business, a money order, or another channel. What makes a payment a remittance is that the money is being directed to someone who is owed it or expecting it.

Where the word comes from and how it is used

Remittance comes from the verb remit, which entered English from Latin remittere, meaning to send back or let go. Older senses included forgiving a debt or cancelling a penalty, which is why the phrase remit a fine still appears. The money sense grew from the idea of sending funds to settle what is owed.

In accounting and payroll, remittance is the standard word for forwarding money you have collected or withheld on someone else's behalf. An employer withholds income tax, Canada Pension Plan contributions, and Employment Insurance premiums from pay, then remits them to the CRA on a schedule set by its remitter type.

In personal finance the word is narrower: money sent to another country, usually to support family. International bodies and central banks track these flows as remittances. Which meaning applies usually depends on who is speaking, whether that is an accountant, a payroll officer, or someone sending money home.

Remittance vs payment vs transfer

The three words overlap but are not identical. Payment is the broadest term: any transfer of value that settles a debt or a purchase. Transfer describes the movement of money between accounts without saying why. Remittance names the purpose, namely money sent to fulfil an obligation or to reach a recipient who expects it.

A remittance therefore implies a recipient's expectation. Paying a parking ticket is a payment, and the municipality expects it. Sending money to a parent overseas is a remittance because it is a recurring sum the recipient relies on. Moving money between your own accounts is neither, because no third party is owed anything.

Remittances in Canadian contexts

Payroll remittance. Employers deduct source deductions from each paycheque and forward them to the Canada Revenue Agency. The money was never the employer's; it was held in trust and passed along. The remitting schedule depends on the employer's remitter type, and late or incomplete remittances can attract interest and penalties.

Invoice remittance. A business paying a supplier often sends a remittance advice: a short note listing invoice numbers, amounts, and any deductions covered by the payment. It answers the supplier's question of what the money is for, without making the supplier match the deposit by guesswork.

International remittance. An individual in Canada sends money to a recipient in another country. This is the sense most people mean when they look up the term. The sender typically uses a bank or a licensed money services business, and the recipient is paid in the local currency.

International remittances from Canada

An international remittance involves at least two currencies, so the exchange rate matters as much as the fee. The Bank of Canada publishes daily exchange rates that you can use as a neutral reference when comparing what a provider offers. The gap between the published rate and the rate you are given is a real cost.

Providers of these services in Canada must register with FINTRAC as money services businesses and meet anti-money-laundering obligations. In practice you will usually be asked for identification and, for a large transfer, an explanation of its purpose. The Financial Consumer Agency of Canada publishes guidance on sending money abroad and what to check first.

Costs generally come from three places: a transfer fee, a markup built into the exchange rate, and charges applied by the receiving bank. Ask for the total amount the recipient will get in their currency before you confirm, because that single number makes competing offers comparable.

Why the term matters

Precision helps in three settings. In payroll and tax, remittance is the recognised term for forwarding withheld amounts, and deadlines attach to it. In business accounting, labelling a payment a remittance tells the bookkeeper that a liability is being cleared rather than a new expense being recorded.

In personal finance, knowing the term helps you find the right rules and protections. Consumer guidance on remittances covers disclosure of fees and exchange rates, complaint routes, and warnings about fraud. The Canadian Anti-Fraud Centre publishes common schemes, including urgent requests to send money to someone overseas.

It also matters for record-keeping. Keep confirmations, receipts, and remittance advices. They are useful if a recipient says money never arrived, if a provider disputes the rate applied, or if you later need to show that a payment was made and when.

Common confusions

A remittance advice is not the money. It is the document that explains a payment. Suppliers sometimes receive a deposit with no advice and cannot tell which invoices it covers, which delays reconciliation. Sending the advice on the same day as the payment avoids most of these queries.

A remittance is not necessarily a foreign transfer. Domestic payments to the CRA, a landlord, or a supplier are also remittances. Equally, not every international transfer is a remittance: moving your own savings between accounts you hold in two countries lacks the third-party element that the word implies.

People also confuse the remittance with the fee. The remittance is the money sent; the fee is what the provider charges for sending it. A money order bought at a post office is only a payment instrument. It becomes a remittance when it is sent to someone who is owed those funds.