Public consultation on an ePayroll solution – What we learned Report

Executive Summary

The ePayroll project is a Government of Canada (GC) initiative to modernize how employers send payroll, employment, and demographic information to government departments like the Canada Revenue Agency (CRA) and Employment and Social Development Canada (ESDC) using a Tell-Us-Once approach.

Consultation on the development of an ePayroll solution brought 155 business owners, payroll professionals, and payroll software and service providers together, representing businesses of all sizes, Indigenous businesses, and non-profit and community organizations from across the country. The consultations included discussions exploring:

• participants’ current experiences as it relates to reporting payroll and employment data to the government;
• how participants envision ePayroll supporting themselves as employers or business administrators;
• how ePayroll could play a role in building a stronger and more efficient tax and social service system.

Participants were cautiously optimistic about the idea of an ePayroll solution. They did recognize that ePayroll could provide employers some benefits which included:

• reducing some administrative burden when reporting to the Government of Canada, especially in cases where irregularities occur in their payroll or tax reporting processes;
• increasing the efficiency and accessibility of communication with the CRA and ESDC by improving data available to the telephone agents;  
• the ability to use ePayroll to verify and reconcile information, assist in completing complex calculations, and looking forward, to facilitate remittance payments.

However, they viewed the primary benefits as being with their employees or with the broader Canadian public. These perceived benefits included:

• the automated and efficient delivery of benefits and services like Employment Insurance (EI), or future benefits including emergency programs like the Canada Emergency Response Benefit (CERB);
• the opportunity to streamline and simplify Canadians income tax filing process;
• the potential ability to integrate ePayroll data with other digital platforms (like CRA MyAccount) to give individuals more oversight over their tax information, store past T4s and income tax reports, as well as receive additional information and communications relevant to their tax and social services.

Participants highlighted some key concerns including important questions around security, private information, consent, and data storage and protection; and highlighted that these concerns are of paramount importance. They recognize that many questions remain unanswered, as the service remains to be developed, but they implore the project team to work slowly and methodically to build a secure data management and storage program. They also highlighted the importance of proper testing before rolling-out the service. for example about:

• the security risks associated with the transfer and storage of personal information, including questions about archiving, and accessing past records.

Other concerns included:

• The Government of Canada’s experience implementing digital solutions;
• The cost of compliance for businesses, either to onboard to digital payroll programs, or increased costs incurred through their software provider;
• The risk of resistance among businesses that operate manually, or that benefit from providing additional tax-related services that might be eliminated by ePayroll.

Participants believe that the Government of Canada needs to take the time to properly plan, build, and then test an ePayroll solution before it is implemented for all employers. They commend the CRA and ESDC for taking the time to consult with them as employers but encourage the ePayroll Project Team to conduct further consultations with the business community and with the Canadian public. They recognize that ePayroll is an opportunity to lay the foundation for transformational change how Canada administers tax and social services, but this will only be the case if, and when, there is buy-in from Canadians – buy-in that will be easier to build alongside ePayroll, from the ground-up, by working with Canadians to deliver this solution. 

Introduction

The goal of the ePayroll project is to develop a recommendation for the implementation of a solution for the Government of Canada that will increase the speed and accuracy of services and benefits to Canadians. The ePayroll service will reduce the administrative burden and red tape for Canadian employers and streamline the delivery of government benefits and services by providing a solution through which Canadian employers can securely send payroll, employment, and demographic information to a protected Government of Canada repository in near real time when an employer hires, pays or off boards an employee. Authorized government departments, such as the Canadian Revenue Agency (CRA) and Employment and Social Development Canada (ESDC), could then access the required information when they need it to administer programs and services without having to go back to employers or Canadians for more information.

The CRA is leading this project in partnership with ESDC (or Service Canada, used interchangeably throughout the report), and the Office of the Chief Information Officer (OCIO) in the Treasury Board Secretariat. The ePayroll Project Team is consulting with Canadians, businesses and employers of all sizes, other government departments, stakeholder groups and associations, and payroll software service providers to identify challenges and opportunities, and to provide input on the scope of a potential ePayroll solution. In 2024, the ePayroll Project Team will present a business case and a costed implementation plan to the Government of Canada for their consideration.

The current phase of consultations ran from December 2022 until March 2023 and included fourteen consultation sessions. Six sessions occurred virtually and were open to participants from coast-to-coast-to-coast. Three virtual sessions, one in French and two in English, were open to all industries and demographics; one session focused on the experience of Indigenous businesses and employers; one session focused on payroll service providers; and one session focused on specific experiences related to the creation and submission of T4 slips. In-person consultation events brought together employers and business owners, those that process payroll within businesses, or those that offer bookkeeping and accounting services in communities across the country.

This report provides an overview of the feedback received during this phase of consultation. This includes feedback regarding the potential benefits of ePayroll for employers, employees, and Canadians more broadly, some important concerns identified during the discussions, as well as other considerations highlighted by consultation participants. 

Land Acknowledgement

We respectfully acknowledge that the consultations organized in the context of this report occurred on the territories of Indigenous nations and peoples from coast-to-coast-to-coast. 

In-person consultation events occurred on Anishinaabe territory in the Robinson-Huron Treaty; Anishinaabe, Cree, Oji-Cree, Dakota, and Dene territories, and the Métis Homeland in Treaty One; Chief Drygeese Territory and the traditional lands of the Yellowknives Dene First Nation; the shared and unceded traditional territories of the xʷməθkʷəy̓əm (Musqueam), Sḵwx̱wú7mesh (Squamish), and səlilwətaɬ (Tsleil-Waututh) Nations; Kanien’kehà:ka territory (Mohawk) and the territories of the Abenaki Nation; as well as the territories of the Mi’kmaq and Wolastoqiyik Nations in Mi’kmaq’ki. 

Virtual consultation events were facilitated from Kanien’kehà:ka territory; the unceded territory of the Algonquin Anishinaabe; and the territories of the Lək̓ʷəŋən and W̱SÁNEĆ peoples, including Songhees and Esquimalt First Nations. 

The drafting of this report occurred on Lək̓ʷəŋən and W̱SÁNEĆ territories, as well as on the unceded territory of the Algonquin Anishinaabe peoples. 

We are grateful to the individuals who took the time to speak with the engagement team, both virtually and in-person, to share their perspectives that are included in this report. 

Consultation Overview

Engagement Events

This phase of consultations ran from December 2022 to March 2023. It included eight in-person consultation sessions and six virtual sessions that were held with stakeholders from across Canada. The consultation sessions included: 

1. December 6, 2022 – Sudbury, Ontario
2. December 8, 2022 – Winnipeg, Manitoba
3. December 12, 2022 – English Virtual Session 
4. January 10, 2023 – Yellowknife, Northwest Territories 
5. January 12, 2023 – Vancouver, British Columbia 
6. January 16, 2023 – Montréal, Québec 
7. January 17, 2023 – Trois-Rivières, Québec 
8. January 19, 2023 – French Virtual Session 
9. January 20, 2023 – English Virtual Session 
10. January 24, 2023 – Moncton, New Brunswick 
11. January 26, 2023 – Halifax, Nova Scotia 
12. January 31, 2023 – Payroll Service Provider Virtual Session 
13. February 9, 2023 – Indigenous Businesses Virtual Session 
14. March 2, 2023 – English Virtual Session on the topic of T4

The consultation sessions in-person and online followed a similar format, with the exception that in-person events were two hours, while virtual sessions were ninety minutes. There were eight to twelve participants in each session, who were paid an incentive to take part in the discussions. They were also attended by one representative each from the CRA and ESDC in attendance to participate in the presentation and discussions, other observers from the Government of Canada and Revenu Québec, as well as a facilitator and a note-taker from Hill+Knowlton Strategies.

Participants were provided an overview of the ePayroll project, including the goals of the Government of Canada, a general sense of how an ePayroll solution might operate, and an overview of how this phase of consultations will feed into the business case that will be developed by the ePayroll Project Team and then submitted for consideration to the Government of Canada by the end of March 2024.

Participants were asked for their initial reactions to the concept of ePayroll, including if they understood what the Government of Canada was trying to achieve, if they believed it was a worthwhile idea, and to identify any initial concerns that they might have. Following this discussion, participants were then asked about their current experiences, pain points, and suggestions as it relates to calculating, creating, submitting, and distributing T4s and Records of Employment. Finally, participants were invited to reflect on a future state where ePayroll is already implemented to consider what some of the benefits could be, as well as concerns that they might have. 

Participant Profile

Consultation participants included employers, business owners, and payroll or human resource professionals from businesses of all sizes, representatives from Indigenous-owned businesses, and payroll services providers and accountants or bookkeeping services. Throughout the fourteen sessions, the CRA and ESDC engaged with 155 individuals. Nearly three quarters of the participants were payroll professionals, while just over a quarter of participants represented business owners.

Using Statistics Canada’s definition of business size, of the 155 participants that attended the sessions:

• Fifteen percent (15%) of participants identified themselves as being from micro-businesses (1-5 employees);
• Forty-seven percent (47%) identified as being from small businesses (6-99 employees);
• Twenty-one percent (21%) identified as being from medium-sized businesses (100-499 employees); and,
• Seventeen percent (17%) identified as being from large businesses (500+ employees). 

Participants had a range of experiences, with some participants being new to payroll processing within their business or are new business owners; while other participants brought more experience, some with decades of experience processing payroll for different companies – offering unique perspectives into digital transformations that have already occurred in employment and payroll processing. Participants volunteered information about their previous experiences and their reporting processes during the session introductions. Those participants that did not share this information are not included in the data contained in the graphs in this section.

How many years of experience do you have processing payroll?

Participants shared in their introductions that they used a variety of methods for calculating and submitting payroll information. Some participants noted that they still use manual methods including Excel spreadsheets, paper submissions to the CRA and ESDC or manual submissions through functions like Record of Employment Web (ROE Web), and the distribution of physical T4s to their employees. Other participants, notably from medium and large businesses, operate their payroll entirely through software – from the input of timesheet information from employees, and automated payments to employees, to the submission of tax information to the government through the software directly or through a bulk-file generated by the software. Participants representing bookkeepers and accounting firms spoke to their experience managing payroll for their employees internally (often as small or medium businesses), as well as the services they provide to clients, which ranged from non-profit community organizations with one or two employees to large corporations with over 10,000 employees.

How do you caculate and submit payroll information?

Participants had varied experience regarding the generation and submission of payroll and tax information. Some participants could only speak to how payroll information is generated, calculated, and communicated within their companies; while others had experience as accountants and bookkeepers, assisting clients with more complex tax issues, and participating in the creation and submission of tax and employment information to the CRA and ESDC. In some cases, especially during the virtual session aimed at payroll service providers, participants represented the companies that participate as a contractor in the oversight of payroll processes for large businesses. 

Recruitment Methodology

Hill+Knowlton Strategies worked with an external recruitment firm, Canada Market Research, to identify and recruit participants for the virtual and in-person consultation sessions. Participants that were targeted were individuals who own, manage, or work for a company that has an employee whose income tax, Canadian Pension Plan (CPP), and Employment Insurance (EI) are regularly deducted and reported. Focus was made on individuals who are personally involved in conducting payroll on a regular basis, and those who use software or payroll providers to do their payroll or government reporting. Participants also included individuals representing businesses run by permanent residents or new Canadians, Canadians living with a disability, or members of the 2SLGBTQI+ community.

There were two English language and one French-language virtual sessions that were open to participants of all industries and demographics. One virtual session was organized for Indigenous businesses that recruited Indigenous-owned or operated businesses both on an off-reserve, including those with Indigenous employees. Another virtual session focused on Payroll Service Providers including representatives from small, medium, and large providers.

The in-person sessions recruited business owners and payroll professionals residing in the eight cities visited during this consultation. Recruitment was targeted for each session based on the following criteria:

• Sudbury, Ontario – Any sized business, with a focus on the education sector, seasonal businesses, and resource industries.
• Winnipeg, Manitoba – Small and medium-sized businesses, with a focus on the education sector, and Indigenous businesses.
• Yellowknife, Northwest Territories – Any sized business, with a focus on seasonal businesses. There were also some bookkeepers and accountants that participated.
• Vancouver, British Columbia – Medium and large businesses. There were also some small or single-employee businesses that participated.
• Montréal, Québec – Medium and large businesses that operate in French.
• Trois-Rivières, Québec – Micro, small, or medium businesses that operate in French – including bookkeepers and accountants, non-profit organizations, and various industries.
• Moncton, New Brunswick – Any sized business, with a focus on businesses that operate in French. This session was facilitated bilingually and included both English and French-language businesses. Businesses represented also included seasonal and construction businesses.
• Halifax, Nova Scotia – Small and medium-sized businesses, with a focus on fisheries and other seasonal businesses. 

Evaluation Results

Participants were invited to fill out an evaluation form at the end of the consultation session. The evaluation form was provided in a paper format for in-person sessions, and a link was provided to a survey tool for the virtual sessions.

Participants were asked if the workshop content was relevant and interesting, easy to understand, and if it is useful for their work. They were also asked if they found the term "ePayroll" to be confusing, if they believe an ePayroll solution should be mandatory, and if they were willing to onboard to an ePayroll solution in the future. Of the 90 participants that attended an in-person session, 84 completed the survey, which is a 93% completion rate. Of the 65 participants that participated virtually, 49 completed the survey, which is a 75% completion rate. The total completion rate for the evaluations is 85%. The questions on the evaluation were optional and some participants chose not to answer all the questions. As a result, some of the base numbers will change slightly from question to question.

Overall, the participants enjoyed the consultations, with 93% of participants agreeing that they agreed or strongly agreed with the statement that the event was enjoyable. They commented that the events were well located, well timed, and facilitated well. Participants added that they appreciated that the CRA and ESDC were taking the time to engage with Canadians on this topic and noted that consultations like these demonstrate a commitment from the Government of Canada towards Canadians and demonstrate a commitment to implement the project in the right way.

The event was enjoyable...

Almost all participants (98%) found that the workshop content was relevant and interesting to the work that they do, and that the content presented by the Government of Canada was easy to understand. 

The event content was easy to understand…

The event content was relevant/interesting…

Participants agreed that the right people attended the consultations, that they had an equal opportunity to share their perspectives, and that they believe that the Government of Canada will take their input into consideration when planning and implementing the ePayroll project. 

I feel that the right people attended this event…

I feel that I had an equal opportunity to provide input…

Participants did note that they appreciated the investment in time and effort that the Government of Canada is making to engage with Canadians on an ePayroll solution, and a majority do believe that their input will help the Government of Canada develop the solution. However, approximately one fifth of participants are still unsure if their input will be utilized towards the development of an ePayroll solution. 

I feel that my input will help the Government of Canada in the development of an ePayroll solution…

Participants were split on if the term "ePayroll" or "paie électronique" is clear in its meaning or if it causes confusion. Just less than half (43%) of participants agreed or strongly agreed that the term is confusing; while 41% disagreed or strongly disagreed, believing that the term does not cause confusion.

I feel that the term "ePayroll" is confusing…

Although participants in aggregate did not agree on whether the term "ePayroll" is confusing, the data demonstrated another interesting trend. As this phase of consultations progressed, each consultation session saw the weighted response move slowly from "strongly agree" towards "strongly disagree".

For example, in Sudbury, the first in-person session – 60% participants agreed or strongly agreed that the term "ePayroll" is confusing; while in Halifax, the last in-person session – 60% of participants strongly disagreed that the term "ePayroll" is confusing.

Participants added comments including other suggestions for the title, like using "eReporting of Payroll Information", or changing the order of words in French to better reflect the service: service électronique de renseignements sur la paie".

Participant responses were split on whether the ePayroll solution should be voluntary or mandatory for Canadian businesses. During the in-person sessions, a majority of participants believed that it should be mandatory (57%), but that reduces to 52% when including virtual participants. However, several comments made clear that the respondent believes that ePayroll should be voluntary during a transition period while businesses are onboarding, but that after a certain amount of time, ePayroll should become mandatory. 

Should an eventual ePayroll solution be mandatory or voluntary?

Participants expressed that the ePayroll solution should be mandatory for several reasons:

• They believe that a system used by all Canadians would be more efficient than a system only used by a portion of the population.
• They believe that if all Canadians were required to interact with the system, it would increase trust and transparency and eliminate risks of conspiracy theories about government overreach, as all Canadians would have the opportunity to use and explore the tool on their own.
• They believe that there is a risk that misinformation would be spread about the use of ePayroll data if only some Canadians’ data were to be included in the solution.

After the consultation sessions, in the evaluation forms, over one third (36%) of participants expressed that they still have some concerns around an ePayroll solution. The concerns identified include concerns around security, privacy of personal information, and the cost of running the system to both businesses and the Canadian taxpayer.

Do you have concerns about a digital ePayroll solution?

Despite concerns identified in the previous question, the majority of participants (76%) would still onboard to an ePayroll solution in the coming years. Only 4% of participants expressed that they would not be willing to onboard to an ePayroll solution in the coming years. The remaining 20% of participants were unsure, expressing that they would need more information on security and the implementation process before they would be willing to agree to onboard to an ePayroll solution. 

Would you  be willing to onboard to an ePayroll solution in the next 2-3 years? 

Consultation Results

This phase of consultations provided important feedback and considerations for the ePayroll Project Team. Throughout the sessions we heard that there are broad benefits to employers, employees, and Canadians-at-large. They note some important concerns that they would like to see the project team explore leading into the business case and implementation plan in 2024, and they offered suggestions that will be important to consider as the project moves forward.

Participants believe that employers will see the simplification of their tax and employment information reporting processes, which will result in time saved. They think that ePayroll could modernize how verifications and notifications occur between employers and the government, making communication with the CRA and Service Canada (ESDC) more efficient. They also believe that an ePayroll solution could increase the accuracy and transparency of the Canadian tax and social service systems, increasing Canadians’ trust in their government.

Participants agree with the government that ePayroll could make the delivery of services to Canadians – like issuing employment insurance, or future emergency benefits like the Canada Emergency Response Benefit (CERB) – more efficient. They also believe that ePayroll could help increase tax literacy among the general population by making processes easier to understand and would encourage individuals to play a more active role in managing and overseeing their tax and payroll affairs. Participants add that even if they, as employers, see an increase in administrative tasks because of ePayroll, the benefits to employees would still likely outweigh those additional costs or burdens.

Throughout the sessions, participants noted several benefits for the Canadian taxpayer and for the Canadian public. They believe that ePayroll could help increase the efficiency of the tax system, including some specific considerations around T4 slips and Records of Employment. They see program delivery being streamlined, and they see ePayroll data being leveraged in aggregate to assist in decision-making. Finally, they reiterate that by streamlining tax reporting, making programs more accessible and efficient, and by simplifying how Canadians access their tax information, ePayroll has the opportunity to increase trust in the Canadian tax system.

The concerns identified by participants include the Government of Canada’s track record of implementing digital platforms, and important considerations around the data security and the protection of private information. They also note important questions around the integration of ePayroll with payroll service providers, including software providers and accounting services, as well as questions around the integration of complex calculations like construction pay or Northern Benefits. Finally, they asked important questions around the cost of the service to both users and to the Canadian taxpayer, as well as questions around user experience and what both employers and Canadians should expect of an ePayroll solution.

The participants added some supplementary suggestions for the ePayroll Project Team to consider, including thoughts around the name "ePayroll" or "paie électronique". Participants also listed other transactions between the government and businesses that they believe ePayroll could include in the future and posed some interesting questions around the long-term storage of ePayroll data. Finally, participants shared their views on what an employer- or an employee-facing ePayroll portal could look like, if it is decided to include an ePayroll Web Portal in the implementation plan. 

Benefits for Employers

Time Savings and Process Simplification

Alleviate Burden

Overall, participants explained that the submission of payroll, employment, and demographic data for T4 reporting or to issue Records of Employment is not a significant burden, when things go as planned. They noted that for most businesses, these processes are repeated each year or in each case that a ROE is issued, and that the standard approach they use tends to work – whether that be a manual process or a process that is either initiated or completed through existing software. However, both T4s and ROEs can become a significant burden whenever processes fail. Usually, this results in frequent communication with the CRA and ESDC. It was added that there is often confusion around which department has what information, leaving some employers to believe that once they share information with the CRA, it is also automatically available to ESDC. The same happens when the CRA or ESDC reaches out to an authorized agent or a payroll service provider for information only accessible to a business owner. 

Participants believe that an ePayroll solution will alleviate some administrative burden in the regular processing of payroll information to the government, but that it will be especially helpful to address, amend, or rectify unforeseen complications. The ability to see and manipulate the same data accessible to a CRA or ESDC representative to get to a particular answer would simplify how those follow-up questions on abnormal cases are resolved. On the evaluation form, participants were asked directly if they believe that an ePayroll solution could relieve some burden associated with producing and transmitting T4s and ROEs.

I think that an ePayroll solution will help relieve some of the burden associated with producing and transmitting the T4 and ROE…

Participants were also asked on the evaluation form if they were hopeful that ePayroll would increase the productivity of their business, and the majority (80%) were largely hopeful that an ePayroll solution will help increase the productivity of their business. Participants representing employers as well as payroll service providers highlighted that if an ePayroll solution could integrate some of the more complex tax calculations – like Northern benefits, other taxable benefits, or pensions – it would represent a significant increase in productivity. This is especially true if year-end adjustments could be uploaded to ePayroll and integrated into the employee’s electronic T4 in real time as those adjustments are made – without requiring the issuance of an amended T4.

I am hopeful that ePayroll will increase the productivity of my business…

Communication with CRA/ESDC

Participants added that a central repository of information could eliminate uncertainty over what department holds information.

Those that attended the in-person session in Halifax highlighted that the lack of communication and information sharing between the CRA and ESDC as a key source of frustration with the Government of Canada.

Participants note that the potential features of an ePayroll service could provide efficiency to help reduce the workload of CRA and Service Canada agents reaching out to employers. It was hoped that this, in turn, could improve service standards for people trying to contact CRA or Service Canada for other matters.

Address Changes

Finally, participants across all in-person and virtual sessions agreed that a significant pain point they experience is when an employee or former employee changes addresses without informing them, making delivering a T4 slip nearly impossible.

It was hoped that an ePayroll service could include a web portal for Canadians to access their T4s, ROEs, and other tax documents without having to go back to their employer for that information. Participants also believed that it may be possible to transition towards employees automatically retrieving T4s from the ePayroll platform, eliminating the responsibility that employers deliver these forms to employees.

Verifications and Notifications

Automated Verifications

Participants expressed an interest in an ability for the ePayroll solution to do automatic verifications in real time, both for employers as they enter the information into their payroll software, or for payroll software providers as that information is being communicated to the Government of Canada.

Payroll service providers agreed that this could be a benefit of an ePayroll solution. They note that the first transaction could be the verification of an employee’s Social Insurance Number (SIN). In this case if an employee’s name and date of birth do not match against their SIN –a notification could be automatically generated from the ePayroll service.

Participants listed other automatic verifications that could be included in an ePayroll solution, namely if deductions or remittances are incorrectly inserted.

Flexibility to Self-Correct

Many consultation participants emphasized that a verification system integrated into ePayroll should not serve to penalize employers if mistakes are made. Some employers choose to reconcile accounts every time they do payroll, others on a quarterly basis, while others yet expressed that they only do it once a year – just prior to issuing T4 slips.

They expressed that if mistakes are made, employers should still have the flexibility to correct those mistakes after ePayroll data has been submitted – and that there is a final verification step at the end of the year prior to the system issuing T4s. They would not want to utilize a system that flags mistakes and penalizes business owners for these mistakes throughout the year, they expressed significant concerns that ePayroll could evolve into a "Big Brother"-type situation.

They do note, however, that potential mistakes that are missed could be flagged to the employer directly through an ePayroll system. For example, if an employer entered a CPP deduction that was not accurate, it might let the employer know – without risk of penalties, up until the employer is asked to verify and submit at the end of the year.

They add that for this system to work – corrections made to payroll within an employer’s payroll software must be communicated and automatically corrected across the ePayroll platform – so that the CRA and ESDC have access to the correct information as it is made available. If an employer corrects a mistake four months later, that mistake should simply be fixed across all CRA and ESDC platforms linked to ePayroll.

Year-End Adjustments

According to many participants, including employers, payroll software providers, and bookkeepers, year-end adjustments are often very complicated. It can take time to receive reports on taxable benefits and pensions from employees and third parties, sometimes even after payroll software have issued initial T4s, to meet the legislated due date. This then requires that amended T4s be created for each employee – which is a significant undertaking.

There are several complicated calculations that need to be included. Highlighted by participants as key frustrations are year-end adjustments for:

• Taxable benefits like housing or vehicle use;
• Private pensions and CPP;
• On-reserve income and honoraria for Indigenous employees; or
• Bonuses and other off-cycle adjustment payments.

Payroll software and service providers, as well as bookkeepers in attendance, noted that these year-end adjustments can be a significant burden, especially when there are adjustments for large clients with hundreds or thousands of employees for which adjustments need to occur. Participants note that there is a huge industry that exists solely to help finalize and file T4s and other year-end tax information for both employers and employees – which may be impacted by an ePayroll solution. However, participants do agree that the ability for ePayroll to integrate some of these complex year-end adjustments would be a significant help for Canadian businesses – and could help employers ensure that these benefits and deductions are properly calculated and reported for each employee.

Payroll software providers add that many year-end adjustments are not part of the core payroll data that they receive from employers – requiring manual intervention to include this information in those cases where the provider is managing payroll administration while also issuing T4s for the client. Participants believe that ePayroll could make it easier for those service providers to integrate the payroll data submitted through their software with the additional data submitted manually by their client into the reports submitted to the Government of Canada.

Finally, participants add that a tool (e.g., an app) to help employers and employees track and calculate non-cash benefits like housing and vehicle use would be beneficial to simplify and integrate that data into T4s through an ePayroll solution.

Accuracy and Transparency

Strengthening Reporting

Participants believe that by simplifying how taxes are reported to the Government of Canada, it will make the process easier for employers, increasing overall tax compliance in Canada.

If employers better understand how to report payroll, employment, and demographic data to the Government of Canada – because that reporting process is integrated into the processes that they already understand and use – it is more likely that the information being transmitted is correct. If all employees know where to access their information – because all employers use the same ePayroll service for government reporting – it is more likely that Canadians will feel confident that their information is being transmitted correctly.

Participants believe that ePayroll will increase awareness and understanding of how tax information is reported, how government uses that information to make decisions and administer services, and what type of information is needed from government to be able to make those decisions or administer those programs. This will, in turn, strengthen tax reporting as all Canadian businesses and employees will be using the same service that is operating from the same information – all collected in the same way.

Responsive Information  

Participants hoped that the information collected and stored through an ePayroll solution could be leveraged to provide more responsive services to Canadians. In Yellowknife, participants expressed frustrations that despite living and working in the Northwest Territories for many years, they still receive letters from the CRA asking for proof of residency in the North.

Participants hoped that ePayroll data could be leveraged to automatically enroll participants for benefits that they are eligible to receive, while also ensuring that ineligible Canadians are not able to wrongfully receive benefits. It is hoped that the data collected could be used to verify claims, like Northern benefits, without the need for the CRA or Service Canada to reach out to employees or employers to confirm that the data is correct.

Participants in Trois-Rivières and Moncton reiterated that this efficient delivery of services could benefit low-income Canadians and those who require assistance from various social programs by ensuring that eligible Canadians receive those services without the additional burden of proving eligibility. They also note that ineligible Canadians would no longer be able to fraudulently claim eligibility for those social programs.

Building Trust

Participants believe that, if designed correctly, ePayroll will create an opportunity to demonstrate transparency and collaboration between employers and the Government of Canada – helping to foster trust in the government. They also note that the focus on alleviating burden, while ensuring minimal new costs for employers, is a sign of support from the Government of Canada towards Canadian businesses.

Participants believe that ePayroll could create more direct interactions between government and business, increasing collaboration, increasing trust, and ensuring that communications are efficient and effective for both parties. Participants also view the ability to correct information already uploaded, without flagging mistakes to the CRA, as another important trust exercise – that the government is willing to accept the information as you currently have it, trusting that by the end of the year you will have done your reconciliation to ensure that all data is accurate.

Finally, participants note that the commitment to engage Canadian employers and businesses on their experiences and their ideas for an ePayroll solution is a strong demonstration of a willingness to collaborate and to be open to feedback. They add that being able to engage with the ePayroll Project Team – to meet the Canadians behind the initiative – goes a long way to alleviating concerns and building trust in a future ePayroll system. 

Benefits for Employees

Efficient Service Delivery

Streamlined Delivery

Across all consultation events, participants agreed that the implementation of an ePayroll solution could simplify reporting and reduce red tape so that services can be delivered to employees more efficiently. They note that the ROE process is often difficult for employers, who have challenges integrating their payroll data into the ROE form in a format that is acceptable to ESDC. This creates challenges for employees, who are forced to wait for employment insurance or other services while their employer works with Service Canada to rectify the issue.

Participants also noted cases where parental benefits were delayed because an individual was waiting on a ROE from a second, part-time employer. These cases would be addressed by the creation of an ePayroll solution.

They add that tax calculations and refunds could be made much simpler for many Canadians. Participants expressed a keen interest in the idea that ePayroll could eventually lead to an automatic tax filing service that would calculate and either inform Canadians of the amount due on their income tax, or automatically process a tax refund without the individual ever needing to interact with the CRA.

Efficient Emergency Benefits

Participants highlighted that an ePayroll solution could be leveraged to administer future emergency response benefits – like CERB – by automatically determining eligibility, without the need for Canadians to self-identify for such benefits.

This could also decrease the ability for ineligible Canadians to access programs or benefits for which they are not entitled to receive.

Other cases noted by participants include the calculation of income on reserve and off reserve for employees or board members who conduct portions of their work in both areas. They note, however, that most existing payroll software does not have the option to include which time – and which income – is conducted on- or off-reserve. Participants added that an ability to track and integrate this information from payroll data into the correct boxes on a T4 could be a benefit to employers with Indigenous employees.

Transparency and Tax Literacy

System Simplification

Participants believe that ePayroll can make tax information more transparent and understandable for Canadians, increasing their understanding of the overall tax system in Canada. If an ePayroll solution included a web portal that Canadians could access – it might be possible for Canadians to see how their tax deductions are calculated, understand what information is included in their EI claim, or be able to better respond to potential mistakes on their payroll with their employer. Participants believe that this portal could be used in several ways to help Canadians better understand their taxes.

Participants believe that if ePayroll were to be leveraged to integrate payroll information into a T4, and that T4 could be integrated into end-of-year tax filing automatically, it could make the tax filing process much simpler, easier to understand, and easier to navigate.

Equal Experiences

Although there were diverging perspectives whether an ePayroll solution should be made mandatory or voluntary, most participants agreed that – after a transition and onboarding period – the service should eventually be made mandatory. Participants felt that if there were businesses not using ePayroll, there might be space for misinformation or conspiracy theories to spread about how this data is being used by the Government of Canada among those Canadians who are not using the service – decreasing overall trust in the ePayroll project and the CRA.

However, participants express that if all Canadians were required to interact with ePayroll in some capacity – whether that be through an employee-facing portal, or simply by nature of their information being transmitted to the system – misinformation can be quelled quite simply because every Canadian would have the opportunity to verify their information for themselves.

Participants note that Canadians might only believe that ePayroll is safe, effective, and providing them benefits when they can experience it for themselves. Mandatory ePayroll would ensure that all Canadians have a similar experience with ePayroll, and that people will be able to discuss and share their experiences with the service among themselves.

Individual Oversight of Taxes and Payroll

Employee-Centred Model

Throughout the sessions, there was a strong belief that the ability of individual employees to access tax information without the need to contact their employer would be a significant benefit to both employees and employers. Employees would be able to access previous T4s, even if they have changed employers, or they have changed addresses; and employers would not be approached by existing or former employees to have additional copies of their tax documents – it would all be available to the employee directly.

Participants add that an employee-centred model where employees are accustomed to retrieving T4s and other tax documents directly from a CRA website would immediately rectify one of their biggest challenges – transmitting T4s to employees who have changed addresses, especially if they relocated outside of Canada.

Employer Responsibilities

There was a sense among participants that an ePayroll model could incorporate several tools that would streamline how employees engage with the tax system, including by giving employees a portal to access tax documents, or by automatically integrating tax information from their employers into their tax submission. However, participants recognize that there will remain a responsibility on the part of the employer to ensure that the data transmitted to ePayroll is accurate – and that they will ultimately be accountable for the information submitted through that system.

It will be important to communicate to employees that any discrepancies are still the responsibility of the employer to address, and that employers remain aware of their responsibilities to report information accurately and in a timely manner.

Central Point-of-Access

Participants broadly recognize that a single point-of-access for Canadians to oversee their tax information, receive notifications, verify information currently included on T4s and ROEs, and to file their taxes would be an incredible benefit for all Canadians.

Participants note that it will be important to ensure that all Canadians are aware of this portal, and that there are guidance and support in place to help Canadians learn how to navigate this portal.

Participants add that the CRA "My Account" is a strong foundation for what this web portal could include – seeing that existing T4s, the ability to file your taxes, and to receive communications from the CRA are all available in a single portal. However, a handful participants noted that "My Account" as it currently exists is not very user friendly. Any future web portals should be made easier to navigate – especially for older Canadians who may be less comfortable with the transition to ePayroll.

Addressing Multiple T4s

Another benefit identified by participants is the ability to automatically integrate multiple T4s into a tax submission without the individual needing to collect and include all those T4s manually. There are several cases where an employee might receive multiple T4s, these might include:

• Seasonal employees, including those in construction, agriculture or fisheries, or tourism sectors, like ski-hill operators;
• Employees who take a leave of absence and then works elsewhere during that period;
• Students who work while studying, or workers who hold multiple jobs, either simultaneously or in succession;  
• Someone who has transitioned from a temporary resident series-900 SIN to a permanent SIN;
• Employees of companies that file bonuses or other benefits on a separate T4.

Participants believe that a key function of an ePayroll solution would be to consolidate all relevant tax information from various employers to ensure that all deductions and benefits are properly calculated across employers, and so that employees can access their tax information from all sources seamlessly. They also believe that year-end adjustments from all employers have the potential to be automatically integrated, before the individual has the chance to file their taxes – eliminating issues where adjustments need to be made to T4s or to tax submissions that have already been filed. 

Benefits for Canadians

Efficient Tax Administration

Communication Challenges

Participants noted that when it comes to reporting tax and employment information to the government, they perceive the CRA as being the primary agency responsible for both T4s and ROEs. Participants believe that Service Canada is the contact arm of the whole Government of Canada, including the CRA – and that communications with Service Canada are also transmitted to the CRA. This causes significant frustrations when information believed to have been shared is once again asked for by another government agency.

A small number of participants did not recognize that ESDC is responsible for the administration of Employment Insurance (EI) benefits. At times, participants did not know what ESDC was, nor that ESDC and Service Canada are the same department.

Participants hope that ePayroll will streamline communications between government agencies, ensure that data is accessible to all departments without needing to contact employers, and that this will reduce the number of times the CRA or Service Canada reach out to employers or their accounting services for additional information. It is also hoped that this will, in turn, alleviate some of the workload of agents at the CRA and Service Canada, making them more accessible to Canadians who are reaching out with questions or concerns – decreasing wait times to reach an agent by phone, and resolving issues more efficiently.

Note on Medium Businesses

Participants noted that existing T4 and ROE reporting is likely easiest for the smallest and the largest of businesses – while medium-sized businesses experience the largest burden. Smaller businesses, especially those with low employee turnover, might not have to spend more than a few hours per year working on T4s and ROEs; while the largest corporations will have integrated software that automates most of these processes already. It is businesses in the middle, that have several T4s and ROEs to file but are still largely trying to figure them out on their own, that will benefit the most from the development of an ePayroll solution.

Middle sized businesses will likely be the most receptive to an ePayroll solution – as the potential benefits of a new service to submit tax information more simply will outweigh the costs and effort required to transition to ePayroll. The smallest and the largest of businesses, those that are more likely to be comfortable with their existing reporting processes, will be the most resistant to transition to an ePayroll solution – as they will perceive the costs and effort required to transition as a significant burden.

Specific Ideas or Concerns Regarding T4s

Accessing and Retaining Information

Participants highlighted that one of their biggest challenges regarding T4s is transmitting T4 slips to employees, as well as retaining previous T4s in case employees reach out for another copy at a later date.

Some employers offer their employees the ability to log into their existing software to access previous T4s even after their employment has been terminated, while others note that they store physical copies in employee files in their offices for an indefinite period after the employee has left. It can be a burden for employers to be asked by employees to retrieve previous T4s, especially when those documents might have been created and submitted by an external service, like an accounting firm.

Participants noted that the ability for Canadians to access their T4s for the current year, as well as from previous years, would be seen as a significant benefit for everyone.

Review T4 Information Before Submission

Participants noted concerns around a T4 being automatically created by the ePayroll solution before an employer has the chance to correct any mistakes, make any final year-end adjustments, or otherwise ensure that the information is accurate before submission.

Participants would like the opportunity to review T4 information before it is finalized at the end of the year. They agreed that they would accept a sort of "I have reviewed my information and accept the submission" button on the platform that is used as a final signal that the T4 is complete.

Participants added that creation of T4s at the end of the year is a large business, as year-end adjustments and other complications can make it challenging for business owners to calculate and finalize each slip. They noted that there might be pushback from those businesses, like bookkeepers and accounting firms, that charge clients to assist them with their T4 submissions.

Box 71 – Exempt Income

Participants noted that Box 71 – Exempt Income for on reserve income made by status employees – can be difficult to calculate, and often results in manual intervention. Many payroll software providers do not include an option to calculate Box 71, or to have it filled out by the service when it generates T4s.

Participants in Vancouver also highlighted that Box 71 might include honoraria, or other compensation for board members that do some work on reserve and other work off reserve as part of their roles.

Participants added that they sometimes feel uncomfortable sending T4s by mail to employees who reside in rural or remote communities, especially in some Indigenous communities, where general delivery mailboxes are used. There is a sense that important tax documents containing information like SIN data should not be mailed to a general delivery mailbox, making transmitting T4s to those employees more difficult.

Missing Boxes on Payroll Software

Participants noted other T4 boxes that are not often included in payroll software that either need to be included manually, or where the business requests that their software provider develop an update to fix that issue for them. Participants in Trois-Rivières and Halifax noted that they have issues including Box 46 – Charitable Donations on the T4s generated by their software.

Benefit and Pension Calculations

Several participants expressed frustrations with their year-end calculations for benefits and pension deductions. Employers have a legislated obligation to provide T4s to employees by a certain date each year. Sometimes, in order to meet that date, employers find it necessary to issue an interim T4, and then amend it later.

It sometimes occurs where employers are waiting on additional information to submit an amended T4 with the accurate information, but by the time the amended T4 has been submitted, the employee has already filed their taxes – requiring that they go back in and re-file their taxes. Participants noted that some of the data required to do their year-end calculations might not actually arrive until mid- or late-February, which is risking that both the T4 submission – and the employees’ taxes be filed late.

Participants noted that a tool to help employers track some of their employees’ non-cash benefits that can be automatically integrated into ePayroll would alleviate significant burdens.

Verifications and Corrections

Participants expressed frustrations over verifications or corrections received from the CRA some time after the T4 has been filed. They noted receiving letters requesting additional information to verify details on an employee’s T4 some months or even years later, in which case the employer no longer has that information readily available. This sometimes necessitates that the employer contacts the CRA with the correct information at a later date, at which time they might experience extended wait times to contact an agent with the requested information.

Amendments

Finally, participants expressed frustrations around the process to amend T4s. The process to amend a T4 is involved and complicated and represents a large investment in time for employers when they occur. It is hoped that the ePayroll solution could help alleviate the need for amending T4s by ensuring that as mistakes are corrected the data is transmitted automatically, and by ensuring that employers have the opportunity to complete a final sign-off on their payroll information before a T4 is generated.

Specific Ideas or Concerns Regarding ROEs

ROE Formatting Issues

Participants expressed several frustrations with the existing layout of the ROE form. They find that the record is not flexible enough for employers to communicate all the relevant information in the document, or they find that their arrangements with employees are not reflected in the way the record is constructed.

Participants highlighted several specific issues with the existing ROE form, including pay periods that do not match the required Sunday-Saturday week, the manual calculation of insurable hours, or salaried employees who do not work a set number of hours.

Questions from Service Canada around insurable hours represent a significant burden for employers and for accounting service providers. Often accountants will be contacted by Service Canada for specific questions relating to insurable hours, but they might only have access to the sum of their pay, not the specific details from their timesheets. In these cases, accountants either have to reach out to the employer to gather that information, or have the employer reach out to Service Canada to provide a response.

ROE and Payroll Data

Participants noted some important data included on a ROE that might not be captured by existing payroll software, like an employees’ first day worked and last day paid. There were questions around how much additional effort would be required to input this additional data to the ePayroll solution, or if payroll software providers will update their programs to include this information.

They note that several existing software providers are not able to automatically generate ROEs, and that employers often have to process these create and submit documents manually. Participants representing payroll software providers also noted cases where the program can generate an ROE, but the employer may have incorrectly entered some information, causing issues in each ROE created. In cases where the employer is processing several ROEs, like a ski hill at the end of the season, it can result in an extended conversation between the employer and Service Canada to rectify each individual case.

Seasonal or Irregular Work Arrangements

Records of Employment (ROE) can be particularly challenging for seasonal businesses, or those businesses that have irregular work arrangements with their employees. In these cases, employers are filing several ROEs every year, often multiple at a time. Some employees boomerang, meaning they take an extended leave without pay – sometimes more than 30 days – but want to return to work. Employers note that the lack of a re-hire date complicates the creation of a ROE when the employee finally decides to terminate their working arrangement with the employer. Participants in Sudbury, Yellowknife, Trois-Rivières, and Moncton emphasized this as being an important issue.

Some sectors and industries identified by participants that have employees with irregular work arrangements, or are submitting several ROEs annually include:

• Seasonal businesses, including seasonal tourism operators;
• Students seeking summer employment continuing as casual staff into the school year;
• Teachers and school staff;
• Agricultural employees;
• Fishing industry;
• Construction workers;
• Healthcare workers, who can sometimes take extended leaves with the intention of returning to the same employer.

Participants believe that an ePayroll solution could help simplify the tracking and reporting of employees in seasonal or other irregular work arrangements, ensuring that their benefits, deductions, and other tax calculations are reflective of the actual work completed by the employee.

ROE Web is a Strength

Finally, participants noted that the ROE Web platform is a well-liked tool that is easy to navigate and use. They added that ROE Web should serve as a model for a future ePayroll interface.

However, participants did add that there is sometimes confusion between ROE Web and ROE Secure Automated Transfer (ROE SAT). ROEs submitted through ROE SAT are not visible to an employer through ROE Web. Some participants suggested that this resulted in some employers believing that they have successfully submitted data to ESDC, which may not be the case. This has resulted in some employers being charged fines for delayed ROE reporting. Participants expect that, as ePayroll integrates payroll data to replace the ROE, these issues will no longer occur.

Data-Driven Decision Making

Service Implementation

Participants in Halifax identified other potential uses for ePayroll data that could be beneficial for all Canadians. They noted that ePayroll data could be used to better understand employment trends in various regions and would be able to tailor federal program implementation to respond to the needs of businesses and communities. For example, participants thought that ePayroll data could be used to identify where gaps in employment exist, and better orient foreign workers towards opportunities in regions across the country.

Regional Assessments

Participants in Halifax also discussed using ePayroll data to better understand regional trends such as comparing average incomes in two different cities for similar jobs. They noted that anonymized data sets could be made available to academics and the public for research and information purposes.

Acceptable Use

Participants in Halifax were asked if they would feel comfortable with their payroll, tax, employment, and demographic data collected through an ePayroll solution being used to identify regional trends. Participants expressed that so long as security and privacy protection policies were in place, and the data that was made public was anonymized and presented in an aggregate form, similar to Statistics Canada Census data, they would feel comfortable with the data being published and used in that way.

Trust and Accountability

Big Brother

Participants were often initially uneasy about the idea that the Government of Canada would have regular and more frequent updates on their employment affairs, or that they would now be responsible for the long-term storage of personal data including tax, payroll, employment, and personal information. Despite these concerns, participants acknowledged that the information ePayroll would collect is already being collected by GC in some way, even if summarized. Participants also admitted that they currently accept some risk by entrusting third-party payroll service providers with their payroll data, and that ePayroll would assumingly not incur any additional risk.

As participants learned more about ePayroll – they became more receptive. As the CRA representatives spoke about the prioritization of security and the protection of personal data, as well as the legislative limitations on how government departments will access the information, participants became less concerned about the idea of government overreach.

Participants did stress that their concerns about security and the protection of private information remain, but that they do trust that the intention of ePayroll is for that data to be secure. They added that these concerns will likely be shared by many Canadians and that thoughtful education, awareness, and change management campaigns will be needed to help guide Canadians through the transition towards ePayroll.

Tax Transparency

Participants anticipate that an ePayroll solution, with an employee-facing web portal, could provide Canadians with an interactive education on tax processes – using their tax information as an example.

Participants encouraged the ePayroll Project Team to consider a notification function that would let Canadians know when an agency accessed what information and for what reason, giving individuals a better sense of what agencies are accessing their information.

They note that this additional information and oversight over their own tax information will help Canadians feel more at ease with the idea of ePayroll, and will increase Canadians’ trust in the CRA and the Government of Canada. They believe that by better understanding what the government is doing, when, and why, Canadians will feel more comfortable in knowing their information is being used to serve them better.

Interjurisdictional Collaboration

Participants in the French-language sessions, especially those in Montréal and Trois-Rivières, encouraged the integration of ePayroll with payroll reporting for tax purposes in Québec (including distributing and reporting RL1). Participants were very receptive to the idea that ePayroll could integrate both CRA and RQ reporting. They did note their interest in having an option to review before final submission at the end of the year and were open to the idea of having separate buttons to confirm final submission to both the CRA and RQ.

Participants in other provinces and territories noted that there are other calculations and remittances that could be integrated into ePayroll, as the service is further developed. Participants in Yellowknife noted that if the ePayroll were to incorporate a function for calculating and paying remittances, they would encourage integrating that with the Government of the Northwest Territories tax remittances.

International Examples

Participants appreciated that Canada is following the example of other countries like Australia, New Zealand, and the United Kingdom. They noted that use cases from those countries and examples of the experiences of businesses and individuals in countries like Australia can help Canadians better understand how ePayroll will function. They encourage using examples from other countries as part of education and change management campaigns.

Benefits for Bookkeepers

Several participants represented accounting firms or were themselves bookkeepers providing payroll services for a wide range of business types. These participants were able to share some interesting and relevant feedback from the perspective of service providers who either support or oversee payroll processing or tax reporting for their clients.

Participants note that ePayroll could make it easier for companies to identify authorized agents on their accounts, and for employers, bookkeepers, and the Government of Canada to operate from the same data. This makes it easier for employers and bookkeepers to share relevant information, and to retrieve information when requested by the CRA or Service Canada.

Participants added that, if the Chartered Professional Accountants of Canada (CPAC) is involved in developing some of those learning resources, professional accountants would be able to assist their clients with navigating ePayroll platforms. They encouraged the ePayroll Project Team to partner with the CPAC to ensure that accountant training on ePayroll software and other information needed to aid clients is included as part of their professional development hours.

Concerns

Security

Single Target

The biggest concern shared by participants across all consultation sessions is that of security and the privacy of personal information. Participants emphasized the importance of secure data transfer and storage. Concerns centred on data breaches, nefarious actors trying to access the database, and the everyday risks that are part of the realities of working in a hybrid virtual work environment (e.g., a government employee leaving their laptop open in a public place). 

Participants note that a single database that collects and stores tax, employment, and demographic data could be a lucrative target for potential attackers. Participants add that the creation of an ePayroll solution will require investment in the construction of a dedicated data storage centre with secure servers to manage and store that information. 

Access Points 

Participants added that expanding access to ePayroll (e.g., for another government department or program) comes with inherent risk. 

There must be clear policies and procedures to access and use ePayroll data. It must be clear, in legislation as well as clearly communicated to the public, which departments can use which data for which purposes; and limits must be in place to ensure that data cannot be accessed or used in any other context. 

Distrust in Government

An interesting trend in the discussions was a sense that some business owners and members of the Canadian public tend to put more trust in private corporations to properly manage and secure their private information than they do the Government of Canada. In some sessions, participants noted that private corporations are required to protect your private information as a result of privacy legislation in Canada, but do not have the same sense that the government itself is required to follow these regulations. 

This distrust in the government collecting and protecting private information was stronger in larger urban centres, like Montréal, but was less pronounced in the smaller cities. In Moncton, participants unanimously agreed that this information is already shared with and protected by the Government of Canada, and that they trust existing platforms like CRA’s My Account. Participants in that session had no concerns about their information being collected and stored by the Government of Canada on a more regular basis – so long as the policies and procedures around accessing and using that information continues to be respected. 

Government of Canada’s Experience 

Previous Implementation Challenges 

One of the other recurring concerns heard across several consultation sessions was that the Government of Canada has a varied track record when it comes to implementing electronic payment systems. Without prompt, concerns around the troubled Phoenix pay system were identified in each of the workshops. 

Participants recognized that the approach led by the CRA and ESDC, including thorough consultations with business owners and community members, working with payroll software providers, and taking the time to build a business case and a costed implementation plan before moving forward is a strong sign that the government is drawing lessons from the Phoenix experience to ensure that ePayroll is a success. 

 

They note that further consultations with more businesses, payroll professionals, and community members will only further strengthen the business case and implementation plan – and should continue as implementation occurs. They add that consultation, in conjunction with user testing, will ensure that bugs or other problems are addressed before the service is rolled out. 

Emphasis on Testing 

Participants put emphasis on the importance of thoroughly testing the service before launch. This might include user experience testing for employers and employees, integration tests with payroll software providers, and trial periods with ongoing evaluation from the employer, employee, software provider, and Government of Canada perspectives to identify and rectify issues prior to a nationwide launch. 

Several participants expressed a strong interest in participating in ongoing user testing for ePayroll and would be willing to onboard to the service during pre-launch phase to assist with those tests. 

Integration

Payment Service Provider Integration 

Participants in several consultation sessions, even those that were not themselves representatives of payroll software or service providers (PSSP), expressed concerns that those PSSP might not be receptive to the idea of ePayroll. They note that there will be costs associated with integration to ePayroll that will likely be passed on to the business owner as a client of that provider. Some providers, especially smaller accounting firms that do a lot of business supporting clients with their complex T4s or ROEs may not be receptive to the idea of a platform that could make their businesses obsolete. 

However, participants representing the payroll software providers – including some of the largest software providers in the industry – were quite receptive to and overall excited about the idea of ePayroll. They see an opportunity for an ePayroll solution to alleviate some of the burden that they experience assisting their clients with complex year-end issues, and envision a world in which an ePayroll platform provides Canadians with additional tax information that would actually be complimentary to the information available on their employee-facing platforms. They think that there is a space where ePayroll can add to the employee experience, and not conflict or compete with services provided by those companies. 

System Development Questions 

Payroll software providers had some specific questions around how their platforms might be able to integrate to an ePayroll solution. They did note that there are some functions that their software may not currently be able to do, in which manual intervention is often required – including year-end adjustments for T4s and reporting earnings for EI when earned versus when paid. Software providers envision ePayroll being able to help them better integrate these into their software. 

Other key system development questions posed by participants for considerations by the ePayroll Project Team include: 

• Whether ePayroll data will be sent from payroll software to an ePayroll controlled by the CRA, or whether the ePayroll service will be built to allow ongoing access to the PSSP’s database – without storing any data; 
• The formatting of data (e.g., XML file, ROE SAT, etc.) to ensure compatibility with ePayroll; 
• The formatting of payroll, employment and demographic data required to replace ROE and T4, or to ensure that information is placed in the correct box. 

Payroll software providers add that while they might have control over the formatting of files they send towards an ePayroll platform, they have little control over how employers input data into their programs. Some employers follow the formatting recommended by the software provider, while others use the software in unique and innovative ways to reflect how their businesses operate. This may complicate how that data is transmitted to and interpreted by ePayroll. There will need to be some coordination between the Government of Canada and payroll service providers to standardize how payroll data is inputted into payroll systems. 

Complex Calculations 

Payroll software providers and business owners believe that it will be challenging to integrate some of the more complex calculations included in payroll processing, but that the ability of ePayroll to do so would simplify tax filing and reduce red tape for both businesses and employees. Currently, several of these complex calculations are not possible using existing payroll software – this requires either manual intervention on the part of the employer or the service provider, or requires the employer use their software in unintended ways to incorporate that data. 

Complex calculations that should be integrated into ePayroll, but that are not often included in existing payroll software include: 

• Construction and trucking pay; 
• Northern benefits; 
• Vehicle and housing benefits; 
• Private pensions and CPP; 
• Exempt Income for Status employees. 

Participants noted that these calculations are not only complicated for employers, but are often complex, time consuming, and expensive calculations for payroll software or service providers to complete. This is especially the case for providers with large businesses as clients, where creating T4s might be an automated process, but that these final calculations are done manually for thousands of individual employees. 

Bookkeeper Concerns 

Participants who were themselves bookkeepers or accountants, or who represented small accounting firms, shared some important concerns and considerations from their perspectives – often supporting small and medium-sized businesses, or non-profit community organizations, with their payroll and tax submissions. 

In Moncton, participants shared that the capacity of local accounting services is completely maxed out. New or expanding businesses in New Brunswick are having a hard time finding bookkeepers or accountants that are willing to take on new work, and most existing service providers are experiencing frustrations trying to keep up with their existing client load. 

There are concerns that if ePayroll requires any additional steps, even if small, this might impact the workload of independent bookkeepers and accountants exponentially – inadvertently decreasing accounting capacity in Atlantic Canada. 

Participants also noted that the automation of T4 creation and the integration of some of the complex calculations mentioned previously – despite simplifying tax reporting and filing – may also have an impact on those accounting services that do most of their business supporting clients with those year-end calculations. 

However, participants representing bookkeepers and accountants noted that with a strong partnership, they can play a role in supporting the transition toward ePayroll. They believe that an ePayroll solution could make it easier for clients to identify them as authorized agents and make it easier for them to manage and manipulate payroll data to support their work. Initiatives could include partnering with the CPAC to facilitate training around ePayroll, including how to support their clients with ePayroll, as part of the CPAC professional development hours. 

User Experience and Cost of Service 

;Cost of ePayroll to Businesses

Participants do believe that there will be some additional cost associated with the implementation of ePayroll, either through an increase in actual cost for the payroll software that they use, or through an increase in effort to ensure regular reporting – even if that increased effort is small. 

<p>Participants believe that payroll software and service providers will increase their fees in response to the development costs that will be associated with updating and integrating their software with ePayroll. Some also expressed doubt that payroll software providers would create a free or "lite" version of their program for small businesses that do not currently use software. Rather they note that it will likely be the Government of Canada that will need to build a free version of a payroll reporting interface for smaller employers without software to submit their payroll information. </p> <p>However, participants express that the potential benefits of an ePayroll solution would be worth a slight increase in cost, or a menial increase in effort on their behalf. They add that there are limits to that willingness, but they believe that most businesses will see the benefits to their employees and to themselves as Canadians as worth the additional cost or effort. Participants note that an acceptable "menial increase in effort" could be, for example, they use their payroll software normally but receive a pop-up in January asking them to verify and confirm if the information is correct before finalizing; or perhaps an additional button that sends information to ePayroll as the employer is inputting that information into their software. </p> <h4>Cost of ePayroll to Canada </h4> <p>Participants did share some concerns around the cost of implementing an ePayroll solution to the Government of Canada and to the Canadian taxpayer. They encourage the government to consider the cost of implementation compared to the benefits in time and cost savings because of efficiency, and to use those examples in how they communicate the service’s success to Canadians. </p> <h4>Integrating Manual Business Practices </h4> <p>There were several participants that shared stories of their clients that are smaller businesses, in which all of their payroll and other business affairs are still entirely done by hand, without the use of any electronic records. They expressed that there will be several small businesses that will be resistant to ePayroll, because it will require restructuring their business and payroll processes. They add that many of these businesses have not transitioned towards using payroll software because their owners are not familiar or comfortable with electronic tools, or because the cost of licensing that software is prohibitive. However, for those businesses whose owners are simply tech-averse, no incentive will be enough to encourage them to make the transition. </p> <p>Participants added that some employees, especially older employees, still expect to receive their T4s and other tax information in a paper format. They note that it might be hard to get the Canadian public to start expecting to receive their T4s through an ePayroll platform. 

 

However, they do note that this is only really the case for older Canadians – younger Canadians will expect a level of service from which they can receive their tax information electronically, at their convenience. They also note that there was resistance when Canadian businesses transitioned from using cheques to paying employees by way of direct deposit – but that today, it is largely accepted that is the primary way by which Canadians receive their pay. 

They also note that creating T4s and ROEs can also often be extremely complicated for those employers who often employ a single employee – like nannies, caretakers, and other personal service providers – who may be unfamiliar with the processes required to file payroll or tax information.

Alternative Use of Payroll Software

In Moncton, participants shared a particular concern that will be important to consider when working with payroll software providers to update services in order to integrate data with ePayroll. Even if payroll software providers work closely with the ePayroll Project Team to integrate their platforms – several employers are using unlicensed or outdated versions of payroll software that will not receive any updates from the software provider. 

This often happens when an employer downloads a free or trial version of the software, but never fully upgrades to the current software. This is a particular legacy of how software has evolved over the last two decades, as today most providers operate from a subscription model which would ensure updates are possible. However, there will still exist several employers using unauthorized versions of software that will not receive the updates required to transmit data to ePayroll. 

Education and Change Management

Participants emphasized the importance of integrating education and change management into the implementation plan. They encourage investing in outreach and education campaigns aimed at familiarizing Canadians with ePayroll, and the benefits that they might experience as a result. They encourage organizing workshops across the country during the transition phase to help employers and employees navigate the platform, and to answer any questions or concerns that individuals might have about ePayroll. 

They also note that an ePayroll Web Portal should include videos, how-to guides, or other information bubbles aimed at helping Canadians better understand how to navigate and use the ePayroll platform, and how ePayroll integrates with the broader tax and social service systems to better serve Canadians. 

Employee Consent

Questions around employee consent, and if employees will have the ability to opt-in or opt-out of participating in an ePayroll solution were posed during several of the consultation sessions. Participants did express a desire that employees have the ability to consent to the use of their private information to provide services, facilitate tax filing, or to better support the federal program implementation. However, they also noted that ePayroll may not be successful if only some employees were using the system while others were not. 

Participants did not come to an agreed sense around employee consent, rather they recognize that there is an ongoing need for further conversations with employees and with the Canadian public on this question.

Transition Support

Participants noted that, depending on a businesses’ size and location, different incentives to support the transition to ePayroll could be required, and support could evolve over time.

There was a consensus among participants that grants, tax offsets, or other support to help reduce the costs associated with onboarding to ePayroll would be helpful for businesses, especially smaller businesses for which the costs of existing software might be prohibitive. They note that the government might have to create their own "lite" version of a payroll software for Canada’s smallest businesses to use for free.

Participants also agreed that support in the form of education and guidance will be critical. There should be a transitional period where businesses are not required to onboard but are encouraged to do so. This could include educational workshops across the country to help guide business owners and payroll processors – if the ePayroll platform includes an employer-facing portal. These workshops will also be important for employees if ePayroll includes an employee-facing portal.

Participants did generally agree that ePayroll should, in time, become mandatory as this will ensure that all Canadians understand and are able to benefit from the service. When ePayroll does become mandatory, participants believe it would be appropriate for the incentives to evolve and become a deterrent for those not onboarded to ePayroll. This could take the form of fines or additional fees required to file information outside of ePayroll.

Suggestions and Other Considerations

ePayroll Title

Payroll Processor

Some participants shared that before attending the session, they believed that "ePayroll" referred to a program that would replace employers’ existing payroll software. Several note in their evaluation forms that "ePayroll" might be confusing for some, as it does not fully communicate the intention of the service – efficient communication of tax information for the efficient delivery of services.

In English, participants suggested leaning towards the filing or reporting function, noting potential examples could be eFile, eReport, or eReporting. In French, participants included examples like service électronique de renseignements sur la paie, or outil de renseignements sur la paie.  

Looking Past T4s and ROEs

Remittances

Several employers mentioned that the ability for ePayroll to better integrate calculating, communicating, validating, and even collecting remittances would be seen as a significant benefit for employers. They see ePayroll as being able to have the capacity to ensure that remittances are calculated correctly, and that businesses receive enough notice to ensure remittances are paid on time. They do note, however, that automatic withdrawals of remittances calculated by an ePayroll service could be seen as going too far.

Provincial Integration

There is a strong desire for ePayroll to integrate with provincial and territorial tax reporting requirements, as well as any potential future transactions facilitated by ePayroll, like remittance calculations. Participants encouraged the federal government to work collaboratively with Quebec to build an integrated system – rather than duplicating efforts, investments, and forcing business owners in Québec to operate using two programs.

Participants in Québec were receptive to the idea of two submission functions integrated in their payroll software to independently confirm submissions to RQ and to the CRA or ESDC. They would like to have the opportunity to confirm information separately, to make sure both are done correctly, especially around the end-of-year submission.

Participants in other regions added other provincial integrations that could be possible, including Worker’s Compensation Boards, or other provincial calculations and remittances. Participants in Yellowknife noted that there are territorial remittances and benefit calculations in both the Northwest Territories and in Nunavut that often require manual intervention, as existing software does not include options to calculate these.

PIER-Reviews

Participants encouraged integrating Pensionable and Insurable Earnings Review (PIER) assessments into the ePayroll service, either by utilizing some of the data submitted to conduct the review automatically, or to utilize the notification function to let employers know when these reviews will occur.

Several participants expressed frustrations with the PIER process and added that some additional time to prepare could help make the process easier but would rather see ePayroll data being used to eliminate these reviews entirely.

Statistics Canada Survey

Participants were supportive of integrating the Statistics Canada surveys for businesses into the ePayroll service, either by using the data submitted as a part of their statistical analyses, or by utilizing the employer-facing ePayroll portal to facilitate those surveys.

T4As

Several participants, especially participants in Moncton, Halifax, Yellowknife, and Trois Rivières who identified as bookkeepers or represented accounting services, expressed a keen interest in including T4A forms for self-employed individuals in an ePayroll solution.

Assessments and Reassessments

Participants added that the current method used to receive notifications around assessments and reassessments – either by mail, or through the mailbox function on CRA’s My Account or My Business Account – is not user friendly and can result in some notices being missed by business owners or by employees.

It is hoped that the notice of assessment and reassessment functions can be integrated into ePayroll, with employers and employees alike being notified as soon as possible that a notice is coming to give them time to better prepare.

Data Storage Considerations

Data in Motion, Data in Storage

Participants wondered if ePayroll would be a single data storage centre owned, managed, and facilitated by the CRA and ESDC that would download and store data from payroll providers; or if the service is a mechanism by which the CRA and ESDC can access data that is owned, managed, and stored by the payroll processors themselves.

Payroll software providers noted a key difference between these two options that will have profound impacts on how their programs operate, and how they envision designing and developing upgrades going forward. They look forward to working collaboratively with the CRA and other government departments to work out how best to build a service that meets the needs of Canadians while being compatible with their businesses.

Packaged Data Sharing

Another question highlighted by payroll service providers is that, in the case data is being sent to a storage centre operated by the Government of Canada – would the data be shared automatically through an open-door mechanism that would allow ePayroll to see changes as they occur in real time on the payroll software provider’s platforms; or would the software provider be required to prepare packages of updated data to be sent off a fixed schedule, without the government being able to see into the processor’s platforms. They note that, once again, there are important considerations around how the ePayroll service is going to integrate to existing software and add that, in the case packages need to be prepared and sent, this might represent and additional burden for those payroll software providers.

Single Source of Data

Participants added other considerations around ePayroll being a single data centre containing all tax, payroll, employment, and demographic data of all Canadians, in addition to the security concerns previously mentioned.

Participants note that a single source of payroll and tax data will necessarily be an immersive data storage operation, and that without backups, that data will be at enormous risk. It will be important to ensure that data is properly backed up in various formats, including the possibility of creating a service that can both download data, and is able to access data stored by payment processors in real time.

They add that, especially as ePayroll integrates itself into tax administration, program management, and service delivery, it will be critical that ePayroll can never go offline. Redundancy will need to be considered as part of the service’s internal design, and in the physical infrastructure supporting this service.

Data Archiving

Several participants asked important questions around the intention of ePayroll to archive payroll and tax information, and if so, for how long. One participant asked that if, for example, it was the year 2042 and for some reason they needed their T4 from 2027, would it be possible to retrieve that information from the ePayroll portal?

Participants are hopeful that ePayroll could spark a shift in how tax information is collected and stored, noting that young people are more likely to expect access to previous tax information from a government database. It could be seen as a huge benefit to not have to keep one’s tax information at home – trusting that those documents are accessible online when needed.

However, participants do note that some Canadians might not feel comfortable with ePayroll holding onto specific data in perpetuity. There is a need for further conversations with Canadians around what the ePayroll archiving function should look like and how it might best be able to serve Canadians. They also note that transferring historical T4 data into an ePayroll solution might be a daunting, if not, impossible task.

ePayroll Web Portal

Single Tax Portal

Across most consultation sessions, participants encouraged the ePayroll Project Team to consider the creation of an ePayroll Web Portal with an employer- and employee-facing interface. For employers, this portal could serve as an overview of their payroll reporting, it could track how benefits, deduction, and remittance amounts are changing throughout the year, and could serve as a gateway to interact with the CRA and ESDC on any issues or mistakes that might occur. For employees, this portal could serve as an overview of their individual taxes, a place to store and access previous tax documents, easily file their taxes, and receive communications and notifications from the CRA and ESDC on particular cases.

Participants do recognize that the intention of the ePayroll project – that of creating a mechanism to retrieve information from payroll processors without disrupting existing business practices – and the creation of a web portal to simplify individual and business tax administration – are two different things, but they do believe that there is an opportunity to do both in conjunction with one another to provide a breadth of new tax and social services to Canadians.

Participants hope that the portal would serve as a single point-of-contact for businesses and individuals, including affairs related to the CRA, ESDC, and other government departments drawing information from your payroll, tax, or employment information. They believe that this portal could evolve from and replace existing portals, like CRA My Account.

Learning and Education

Participants believe that these web portals could be used to provide additional information to Canadians around how our tax and social systems works, what each calculation represents and how it is done, as well as how that information is used by the government to provide better services. They encourage including an "information and e-learning" section with interactive T4s and ROEs (or other future formats compatible with ePayroll), information bubbles explaining various terms and functions, and how-to guides and videos to guide users through the interface.

It was expressed that integrating these learning tools into an ePayroll platform would only better equip Canadians to properly calculate and file their taxes and to better understand our tax system. This, in turn, can only increase Canadian’s willingness to engage with our tax system, and further develop trust that our tax system is working to serve us better. 

Conclusion

The public consultations on an ePayroll solution brought together 155 business owners, payroll professionals, and payroll software and service providers; together representing businesses of all sizes, Indigenous businesses, and non-profit and community organizations from across the country. We heard their reactions and concerns around a potential ePayroll solution, explored their challenges and pain points around distributing and reporting T4 slips and Records of Employment, and invited them to imagine a future state with an ePayroll system to envision what the future of their business – and of the Canadian tax and social services system – would look like in an ideal world.

Those who participated in the consultation sessions were cautiously optimistic about the idea of an ePayroll solution. They recognized that there are several potential benefits for themselves as employers or payroll service providers, to their employees as individual Canadians, and to the wider Canadian tax system. They see ePayroll as a way to make the tax system easier to understand, easier to interact with, and easier to report information too. They hope that reducing red tape will alleviate some of their existing frustrations around communicating with the Government of Canada and the process of rectifying unexpected situations.  

They did highlight several key concerns, including questions around security, privacy, and the Government of Canada’s track record of implementing complex digital programs. Security emerged as a top priority for participants, and they expect that the Government of Canada will take its time to properly build and test the service before implementation. They also raise important questions around employee consent to have their data stored, but also important considerations around the advisability of having that tax data stored in a secure and accessible location online. They encourage the project team to organize further consultations with the Canadian public on these questions.

They also shared several important considerations for the project team to explore while developing the implementation plan, including important questions around how exactly the service will be built, and some ideas on how to make it more accessible to Canadians. They emphasize that ePayroll will need to be built and launched correctly, otherwise resistance to the service is likely to increase.

Participants see the benefits of ePayroll as primarily for employees, or for the broader Canadian public, including better individual oversight over taxes, efficient and automatic delivery of services, and the ability to automatically integrate T4s and ROEs from multiple employers. They do think that there is a chance of a marginal increase in cost or effort required for employers to adhere to ePayroll reporting requirements, but they also believe that the benefits to their employees will offset those marginal increases.

Overall, participants believe that ePayroll is an opportunity to lay the foundation for a more simplified, streamlined, and easy-to-navigate tax system in Canada. They believe that this will increase tax compliance among Canadians and increase the likelihood of tax information being submitted correctly.

Participants believe that, if ePayroll is designed and built properly, it has the chance of strengthening trust in government institutions and will provide Canadians with a stronger sense of government accountability. However, they encourage the ePayroll Project Team to engage in further consultations with individual Canadians, businesses, and payroll software providers to ensure that this project is co-developed in such a way that reflects the needs and experiences of all Canadians. Participants stressed that the current tax system can be simple when it works, but excruciatingly frustrating when something unexpected happens – for example, an employer entered correct information into the wrong box on their payroll software, causing an incorrect ROE or T4 to be created – which can happen more often than not.

Participants expressed an appreciation that the Canada Revenue Agency and Employment and Social Development Canada took the time to meet with Canadian businesses across the country and noted feeling heard and understood by those on the project team. They shared that this made them feel better about the project, seeing the faces of the public servants working hard and showing a genuine desire to build something that will benefit them as business owners. It was highlighted that, by working in collaboration between the business community and the Government of Canada, participants believe that there is an opportunity for ePayroll to create positive transformational change in how Canadians think about and interact with their taxes and social services.