Determine if you need to register

Determine if you need to register

Determine if you are an employer, a trustee or a payer of other amounts related to employment

Employer

The CRA generally considers you to be an employer if you:

  • Pay salaries, wages (including advances), bonuses, vacation pay, or tips to your employees
  • Provide certain taxable benefits to your employees (for example, an automobile or allowances)

An individual is an employee if the worker and the payer have an employer-employee relationship. This relationship is referred to as employment under a contract of service.

Although a written contract might indicate that an individual is self-employed (and therefore working under a contract for services), the CRA cannot consider the individual as self-employed if there is evidence of an employer-employee relationship. The facts of the working relationship as a whole decide the employment status.

Trustee
Employment by a trustee

A trustee includes a liquidator, a receiver, a receiver-manager, a trustee in bankruptcy, an assignee, an executor, an administrator, a sequestrator, or any other person who performs a function similar to the one a trustee performs.

A trustee does both of the following:

  • Authorizes a payment or causes a payment to be made for another person
  • Administers, manages, distributes, winds up, controls, or otherwise deals with another person's property, business, estate, or income

The trustee is jointly and severally, or solidarily, liable for deducting and remitting the income tax, Canada Pension Plan contributions (CPP), and employment insurance (EI) premiums for all payments the trustee makes.

Trustee in bankruptcy

The trustee in bankruptcy is the agent of a bankrupt employer in the event of an employer's liquidation, assignment, or bankruptcy. If a bankrupt employer has deducted CPP contributions, EI premiums, or income tax from amounts employees received before the bankruptcy but has not remitted these amounts to the CRA, the trustee must hold the amounts in trust. These amounts are not part of the estate in bankruptcy and should be kept separate.

If a trustee continues to operate the bankrupt employer's business, the trustee must get a new business number. The trustee has to continue to deduct and remit the necessary CPP contributions, EI premiums, and income tax according to the bankrupt employer's remittance schedule. The trustee should prepare and file T4 information returns (slips) in the usual way.

All other trustees

If a trustee continues to operate the employer's business, the trustee needs a new business number. The trustee has to continue to deduct and remit the necessary CPP contributions, EI premiums, and income tax according to the employer's remittance schedule. Fees paid to executors, liquidators, or administrators are either income from office or employment or business income, depending on whether the executor or administrator acts in this capacity in the regular course of business.

Payer of other amounts related to employment

A payer of other amounts can be an employer, a trustee, an estate executor, a liquidator, an administrator, or a corporate director who pays other types of income related to an employment. This income can include:

Your obligations as an employer, a trustee or a payer of other amounts related to employment

 

You are required to register for a payroll account if you are an employer, a trustee or a payer of other amounts related to employment.

When to register

You have to register for a payroll account before the first remittance due date. Your first remittance due date is the 15th day of the month following the month in which you began withholding deductions from your employee's pay, unless the CRA tells you to remit using a different frequency.

Example 1

You hire an employee on March 11 and you pay them bi-weekly. The first pay is on the 25th, therefore your first remittance due date would be April 15.

Example 2

You hire an employee on March 25 and pay them on April 3. Your first remittance due date would be May 15.

What if you do not register

If you did not open an account before hiring employees, you still need to calculate deductions and remit them by the due date. If you do not, you may be assessed a penalty.

What to do if you have a business in Quebec

If you have a place of business in Quebec, in addition to registering for source deductions with the CRA, you may have to register with Revenu Québec.

Learn more: Registering for source deductions – Revenue Québec.

What if you do not know the employment status of the worker

   

You can ask for a CPP/EI ruling on employment status. If you or a person working for you is not sure of the worker's employment status (employee or self-employed), either one of you can request a CPP/EI ruling to determine the status and whether the employment is pensionable, insurable, or both. The ruling can also determine if the earnings are pensionable, insurable, or both.

Learn more:

References

Legislation

ITA: 153(1)
Requirement to deduct and remit
ITA: 227(9)(a)
Failure to remit/late remitting – 10% penalty
ITA: 227(9)(b)
Failure to remit/late remitting – 20% penalty (gross negligence)
ITA: 227(9.1)
Failure to remit/late remitting – $500 exemption
ITA: 227(9.2)
Failure to remit/late remitting – Interest
ITA: 227(10)
Failure to remit/late remitting – Authority to assess
CPP: 21(1)
Requirement to deduct and remit
CPP: 21(2)
CPP/EI liability for failure to deduct
CPP: 21(6)
Failure to remit/late remitting – Interest
CPP: 21(7)(a)
Failure to remit/late remitting – 10% penalty
CPP: 21(7)(b)
Failure to remit/late remitting – 20% penalty (gross negligence)
CPP: 22(1)
Failure to remit/late remitting – Authority to assess
EIA: 82(1)
Requirement to deduct and remit
EIA: 82(4)
CPP/EI liability for failure to deduct
EIA: 82(8)
Failure to remit/late remitting – Interest
EIA: 82(9)(a)
Failure to remit/late remitting – 10% penalty
EIA: 82(9)(b)
Failure to remit/late remitting – 20% penalty (gross negligence)
EIA: 85(1)
Failure to remit/late remitting – Authority to assess
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