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Top 6 Mishaps Companies Make When Processing Canadian Payroll

Posted by Stacey Jones

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Sep 10, 2019 9:00:00 AM

mishaps-companies-make-processing-canadian-payrollProcessing payroll isn’t exactly easy. Although it seems straightforward in theory, there are many nuances and rules to follow. Getting payroll done and ensuring you’re compliant in your home country can sometimes be a task for your team.

What happens when you add processing Canadian payroll to the mix? There’s a good chance your team may stumble, especially on these six common mishaps.

1. Failure to Remit on Time

One of the most challenging aspects about managing payroll, Canadian or otherwise, is submitting it on time. You need to pay your people on a consistent basis, which means conducting payroll on a regular schedule. For some employers, that’s once a month. For others, it might be weekly or biweekly.

It also means you must withhold payroll deductions, like EI and CPP. These funds are then sent to the Canada Revenue Agency.

The CRA will determine the schedule on which you need to pay them. If you send your payments late or not at all, you could be subject to a penalty.

2. A Lack of Record-Keeping

The next most common mistake employers make when processing Canadian payroll is failing to keep good records.

There are rules in Canada about the records you’ll need to keep. If the CRA decides to audit you, these records will be requested.

Not keeping records in line with the letter of the law can actually be a criminal matter in Canada. You could be charged. In most cases, you’ll have to pay a penalty.

The easy solution is, of course, to maintain these records.

3. Confusion about Taxable and Non-Taxable Benefits

The rules around taxable and non-taxable benefits in Canada have shifted in the last few years, which has created some confusion for employers. If you offer health insurance, is it subject to income tax? What about if you offer gift cards or reimbursement for mileage?

Sorting out taxable and non-taxable benefits is important, because these amounts can affect how much you have to withhold and remit to the CRA. If you’re remitting incorrect amounts, you could be assessed a penalty or the CRA may decide to audit your books.

4. Issues with Vacation and Holiday Pay

Do you know your province’s formula for calculating vacation pay? What about the rules regarding holiday pay or other paid leaves?

The rules can be a bit complex, depending on the province, so you’ll want to pay special attention. For example, in Ontario, employees must work all their scheduled shifts for so many days before a holiday. If they call in sick, they could forfeit their holiday pay.

Obviously, you need to keep careful track of when your employees are working and how much leave they’ve earned, as well as how much you’ll need to pay them.

There are also other rules about vacation entitlements and holiday overtime pay, which could make calculating pay for these days trickier.

5. Calculating Overtime Pay

Your employees may also be entitled to overtime pay, depending on how much they work. The number of allowable hours changes between industries, and different provinces have different rules. For example, in Quebec, mill workers will work a longer week at their regular rate of pay than employees in other industries.

You can also opt to give paid time in lieu of overtime, although there are different rules governing time in lieu as well.

6. Overpaying an Employee

Administrative mistakes can sometimes result in an over- or underpayment to your employees. If the former happens, you may need to ask the employee for permission to deduct an overpayment. You’ll also need to adjust your remittances.

Get a Helping Hand with Canadian Payroll

As you can see, processing Canadian payroll comes with many twists and turns. One of the best things you can do is get a helping hand. Talk to the experts and discover how you could make payroll easier for your Canadian operations.

Topics: Manage your payroll, Canadian Payroll Provider

Stacey Jones

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