Payroll

The CRA applies a multi-factor test based on the actual working relationship rather than the contract title. Key factors include: control (does the payer dictate how, when, and where the work is done?), tools and equipment (who provides them?), financial risk (does the worker bear profit-or-loss risk?), integration (is the worker's role integrated into the payer's business or operating independently?), and ability to subcontract or hire helpers. Misclassifying an employee as a contractor exposes the business to significant liability: back-payment of CPP, EI, vacation pay, and income tax that should have been withheld, plus penalties and interest. The CRA can also retroactively reclassify the relationship based on Form CPT1 ruling requests.

Remittance frequency is set by your average monthly withholding amount (AMWA) over the prior two years. Regular remitters (AMWA under $25,000) pay monthly, due by the 15th of the following month. Quarterly remitters (newer or very small employers, AMWA under $3,000 with a perfect compliance history) pay four times a year. Accelerated remitter Threshold 1 (AMWA $25,000-$99,999.99) pays twice a month. Accelerated remitter Threshold 2 (AMWA $100,000+) pays four times a month within 3 working days of pay date. Late remittance triggers a 3-10% penalty on the unpaid balance under strict liability. No excuses.

T4 slips must be issued to employees and the T4 Summary filed with the CRA by the last day of February following the calendar year. So 2025 T4s and Summary are due by February 28, 2026. Filing late triggers a per-slip penalty: $10/day to a maximum based on the number of slips, ranging from $100 (1-50 slips, 11+ days late) up to $7,500 for the largest filers. Slips with material errors or that omit required information can attract similar penalties. T4s must be e-filed if you're issuing more than 50 slips. The same Feb 28 deadline applies to T4As, T5s, T5018s, and several other information returns.

Federal obligations (CPP, EI, and federal income tax withholding) are identical everywhere. Provincial differences include: Employer Health Tax (EHT). Ontario charges 0.98%-1.95% of payroll above an exemption amount; Alberta has no equivalent. Workers' Compensation: Ontario uses WSIB with industry-specific rates; Alberta uses WCB with similar but separate rate-setting. Provincial income tax withholding rates differ. Statutory holiday rules, vacation pay minimums, overtime thresholds, and termination notice requirements vary between Ontario's Employment Standards Act and Alberta's Employment Standards Code. Multi-province employers need provincial T1 withholding adjusted to each employee's province of employment, not the head office's.