I’ve Made a Payroll Remittance Error. How Do I fix that?

By Randall Orser | Personal Income Tax

Dealing with all this government stuff can be a real pain in the you-know-what at times. Payroll is one of those programs where Canada Revenue Agency (CRA) can get real cranky when it’s not done right, and fine you even for a day late. There are a couple of things that can happen when remitting your payments. You under-remitted, over-remitted, or paid the wrong account. Let’s talk about remittance methods first.

Remittance methods

Before you choose your remittance method, consider the following:

  • If you are a threshold 2 remitter, you must remit payroll deductions electronically or in person at your Canadian financial institution on or before the due date. All payments that we receive at least one full day before the due date will be considered as having been made at a financial institution, so no penalty will be charged. Payments made on the due date but not at a financial institution are assessed a penalty of 3% of the amount due.
  • All payments made after the due date are assessed a penalty calculated at graduated rates.
  • Remittances are considered to have been made on the day they are received by the CRA. Choose the appropriate remittance method to meet your due date.
  • If you have no payroll deductions to make for the current period, see Not making a remittance.
  • If you remit deductions for more than one account, make sure you provide your payroll program account numbers and give a breakdown of the amounts intended for each account. We can then credit the right amounts to the right accounts.
  • Regardless of your remittance method, allow 10 days for your remittance to process.

Generally, for normal remitters the due date is the 15th of the month. For threshold 1 remitters it’s the 25th of the current month and 10th of the following month. Threshold 2 it’s the 3rd working day after 7th, 14th, 21st, last day of the month.

Under-remitted

Under-remitting can happen for many reasons. A paycheque didn’t get entered into the system, or maybe your own paycheque was an afterthought, and you dated it for the last day of the month, rather than the 1st day. You may be doing it all by hand and your addition was off. Whatever the reason, you need to make up that short payment.

Remit any shortage as soon as possible either by electronic payment, with another remittance form or by writing a short letter giving your account number and the pay period the shortage applies to. As long as you catch your under-remitting and pay it by the 15th of the month (or whichever due date applies to you), then you are okay. Otherwise, CRA will consider it late, and may apply a late remitting penalty.

You can also just add this under-remittance to your next payment, though if you do get audited, CRA will adjust your account, and may penalize you.

Over-remitted

Over-remitting can occur when you pay a remittance twice perhaps, or just get your addition wrong if you’re doing payroll by hand. Why are you doing payroll by hand, anyway?

If you over-remitted in 2016, reduce your next remittance by the amount of the overpayment.

If you over-remitted in 2015, you can request for the transfer of the credit or request a refund online using My Business Account, if you are a business owner; or Represent a Client, if you are an authorized representative or employee. You can also attach a detailed note to your T4 summary indicating the reason for the overpayment and whether you want us to transfer this amount to another account or another year, or refund the overpayment to you.

Misapplied payment

Sometimes you make a payment, then realize it was to the wrong account.

If you are a business owner or a representative and your payment was not applied to your account as expected, you can use My Business Account or Represent a Client to transfer payments within your various accounts or call 1-800-959-5525 for help.

After CRA receives your information return, they do a Pensionable and insurable earnings review (PIER) to make sure that you remitted the right amount of CPP and EI.

I find that CRA usually won’t penalize you if you can show you meant to make the payment, however, it just went to the wrong account.

It’s best to ensure that you don’t make the above errors when remitting your payroll each month, or whichever payment method you are required to make. One way to stop errors is to have a payroll service do your payroll for you, as they take care of the remittance too.

About the Author

Bookkeeper Extraordinaire Number Crunchers® Financial Services Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.