What are electronic payment options for payroll taxes?

You don’t need to be an accountant to handle your payroll taxes online. Canadian businesses have several electronic payment options for payroll taxes. The first is the CRA’s My Business Account. This is an online portal where you can manage your payroll account and make online payments directly to the CRA. With this tool, you can schedule payments and track payment history. The CRA also offers a web form on their site that allows you to make electronic payments. This is good for one-time payments but might be labour-intensive on an ongoing basis.

If you have a business bank account and online banking set up, you can pay the CRA directly through your bank’s online banking platform. You can do this by setting up the CRA as a payee in your bank’s bill payment system and making payments directly from your bank account. For regular payments that do not change often, you can also set up pre-authorized debits using the same method. Keep in mind that your employees’ income will likely change over time and the government sometimes changes its policy around mandatory deductions and the amount you need to pay, so try not to solely rely on pre-authorized debits.

Finally, many payroll software platforms offer the capability to remit payment for your payroll taxes to the CRA. They use many of the same methods as described above but with the additional benefit of adjusting payment according to salary and regulatory changes, along with easily accessible record keeping.

Is it mandatory for corporations to enroll in electronic payment options for payroll taxes?

Corporations do not need to enroll in electronic payment options for payroll taxes, but its ease and convenience can be advantageous. There are other methods you can use to pay payroll taxes to the CRA, but they can be more involved and uncertain. These methods include mailing your payment, making cash or debit card payments in person at most Canada Post locations, and, if you are a non-resident, paying via wire transfer. These methods may prove more complicated than paying online, and while it is not mandatory for your business to enroll in electronic payment options for payroll taxes, it is mandatory to pay your payroll taxes no matter the method.

How to enroll in electronic payment options for payroll taxes

How you enroll in electronic payment options, like a CRA payroll account, to pay your payroll taxes will depend on the method you use:

• If you pay via online banking, you need to access your bank’s bill payment service and add the government as a payee. The specific name the government uses in this instance will depend on your bank. It usually starts with the word “Federal” and will have descriptions such as “Corporation Tax Payments” or “Payroll Deductions”. Regardless of the specific name your bank uses for the CRA, you will need to enter your 15-digit business number as your account number.
• If you wish to pay with a debit card, you can do so via the My Payment section of the CRA’s website. To access the My Payment section, you’ll need to register for a My Business Account. This will involve inputting some information to the CRA’s web portal and receiving a code in the mail. Once you receive the code and enter it into the CRA’s website, you’ll gain access to your My Business Account. This is where you’ll be able to set up a pre-authorized debit.
• If you wish to pay via credit card, the only way to do this is through a third-party service provider such as payroll software. It costs money to accept credit card payments, so the CRA does not offer this as a payment method directly through their website.

If you want to be even more certain that your online payment method has been set up properly, or that the CRA is properly receiving your payments, contact the CRA using one of the contact methods listed on their website. You can also mail the CRA but response times can be longer.

Which payroll taxes can you pay via electronic payment options?

Businesses in every province and territory across Canada are required to deduct federal and provincial/territorial income taxes, Employment Insurance (EI) premiums, and Canada Pension Plan (CPP) contributions from their employees’ wages. Employers also contribute their share to EI and CPP. In Quebec, employers and employees contribute to the Quebec Pension Plan (QPP) and the Quebec Parental Insurance Plan (QPIP) instead of the CPP and standard EI premiums. Additionally, employers need to make contributions to their province’s or territory’s Workers’ Compensation Board, which are not remitted to the Canada Revenue Agency. If you want to ensure that your deductions are done properly and promptly, consider hiring a tax preparer or using a payroll service.

Utilizing electronic payment options for payroll taxes provides Canadian businesses with a convenient and efficient way to meet their CRA obligations. While not mandatory, these methods simplify the payment process, reduce uncertainties, and help ensure timely compliance with tax regulations. By enrolling in electronic systems and possibly leveraging payroll software or professional services, businesses can streamline their operations and focus more on growth and less on administrative tasks.