As a business owner in Canada, you are an employer and need a Canada Revenue Agency (CRA) payroll program account if you pay employees or yourself.
You need that CRA payroll program account to deduct and submit your payroll remittances to the Canada Revenue Agency.
Fortunately, setting up that payroll program account is a simple administrative task. And we’re here to help you get started with the following information:
- Why and when you need a payroll program account
- What is a payroll program account
- How to open a payroll program account and what you need to open it
- Payroll deductions you need to make and remit to CRA with or without a payroll program account
- What is a T4 Summary and T4 Slip
Why and When You Need a CRA Payroll Program Account
In the CRA’s view you’re an employer if you:
- Pay salaries, wages (including advances), bonuses, vacation pay or tips to employees
- Provide certain taxable benefits to employees
You have to register for a payroll program account before your first remittance due date. That’s typically the 15th day of the month after the month you make deductions from your employee’s pay.
You will use that payroll program account number every time you calculate, remit and deduct from employees’ remuneration.
With or without a payroll program account, if you pay employees, you need to calculate deductions and remit them by the due date. If you don’t, you may have to pay a penalty.
What is a CRA Payroll Program Account?
A payroll program account is an account number assigned to an employer, trustee or another individual or organization that pays employees. It is used to identify your business to the CRA.
The 15-character payroll program account number includes:
- the nine-digit Business Number (BN)
- the BN is a unique federal government numbering system that identifies your business and the accounts you maintain
- a two-letter code for the type of program (for a payroll program, the letters are “RP”)
- a four-digit reference number to identify each account in any program your business may have
- depending on the type of business, you may need to register other types of program accounts
- the BN stays the same – CRA will add letters or reference numbers to your BN
As an employer and a business, your company needs a GST/HST, an import/export and potentially require multiple program accounts.
Here’s an example of one company’s different program account numbers:
|Account Type||Account Number|
|Business Number (BN)||12345 6789|
|GST / HST Program Account||12345 6789 RT 0001|
|Import / Export Program Account||12345 6789 RM 0001|
|Payroll Program Account 1||12345 6789 RP 0001|
|Payroll Program Account 2||12345 6789 RP 0002|
How and What You Need to Open a Payroll Program Account
To open your payroll program account, you will need your Business Number (BN) because it identifies your business or organization to the CRA.
Before you can set up your payroll program account, you also need to have the following information:
- the date your employees received their first wages (you can leave the field blank if you don’t know the date)
- months covered for payroll of employees’ wages
- the pay period frequency (e.g. weekly, bi-weekly or monthly)
- number of employees
- payroll service name (if any)
- country in which the parent company or affiliate is headquartered if you have a foreign-owned corporation
- name of franchisor (if any)
- country in which the franchisor’s head office is located (if applicable)
To set up new employees, employers need to:
- obtain your employee’s social insurance number (SIN)
- employees without a SIN must apply for it and provide it to the employer within three days of receiving the Social Insurance Number
- employers must inform Service Canada within six days of the employee not providing a SIN
- an employee who is not a Canadian citizen or permanent resident of Canada will have a SIN that starts with the number 9:
- make sure the person has a valid work permit
- confirm the SIN has not expired
- if the SIN does not have an expiry date – it is not valid
- get a completed (filled out) Form TD1, Personal Tax Credits Return from the employee
- the TD1 Personal Tax Credits Return determines the amount of tax to be deducted from an individual’s employment income, or other income, such as pension income
- as the employer, you keep the completed forms with employees’ records – do NOT send the TD1 forms to the CRA
What is a T4 Summary and a T4 Slip?
Employers have to fill out a separate T4SUM or T4 Summary, Summary of Remuneration Paid, for each of their payroll program accounts. The totals reported on the T4 summary are the sum of the amounts reported on your employee T4 slips and company portions (CPP and EI).
As an employer, you enter your 15-character payroll program account number in the “Employer’s account number” box at the top.
You also need to enter your operating or trade name and address below the payroll program account number.
Always report amounts in Canadian dollars and cents, even if you paid your employees in a different currency. You’ll find the Bank of Canada’s average exchange rates here.
If you file your return electronically, go to Filing Information Returns Electronically (T4/T5 and other types of returns).
If you are filing on paper, use the T4 Summary, Summary of Remuneration Paid, to report the totals of the amounts reported on the related T4 slips.
Employers prepare and issue T4 slips that tell employees and the CRA how much employees earned and what was deducted from their remuneration in a specific year.
Every year, employers have to fill out T4 slips for employees who were paid more than $500 and had CPP/QPP contributions, EI premiums, PPIP/QPIP premiums, or income tax deducted from their remuneration.
Employers must complete T4 slips in a PDF or PDF fillable/saveable format. You can make photocopies of the completed slips to distribute to your employees. These can be XML as well for submission to CRA
Employers that file electronically using Web Forms, the Canada Revenue Agency’s secure Internet filing website, have an advantage. The Web Forms app will automatically prepare T4 slips for employees.
Employers have until the end of February to give employees a copy of their respective T4 slips.
T4 slips should include:
- the employer’s name
- the year in which the income was earned
- the employee’s name, address and Social Insurance Number
- salary, wages (including pay in lieu of termination notice), tips or gratuities, bonuses, vacation pay, employment commissions, gross and insurable earnings of self-employed fishers, and all other remuneration (see Box 14 – Employment income for a detailed list) you paid to employees during the year
- taxable benefits or allowances
- pension adjustment (PA) amounts for employees who accrued a benefit for the year under your registered pension plan (RPP) or deferred profit-sharing plan (DPSP)
- retiring allowances
- the CPP and QPP contributions, EI premiums and income tax deducted from the pay
Income must be reported on a T4 slip for the year in which it was paid – no matter when the employee did the work. For example, if you paid your employee in January 2021, but the work was done in December 2020, that income goes on the employee’s 2021 T4 slip.
CRA also provides these tips on how to fill out T4 slips:
- fill out the slips clearly and accurately
- make sure the employee’s name and SIN are correct (errors may affect the employees’ earnings history and subsequently their Canada Pension Plan or Quebec Pension Plan benefits)
- report, in dollars and cents, all amounts you paid during the year, except pension adjustment amounts, which are reported in dollars only
- report all amounts in Canadian dollars, even if they were paid in another currency. To get the average exchange rates, go to What are the average exchange rates?
- do not enter hyphens or dashes between numbers
- do not enter the dollar sign ($)
- do not show negative dollar amounts on slips; to make changes to previous years, send the CRA amended slips for the years in question. See Amending or cancelling slips over the Internet
- if you do not have to enter an amount in a box, do not enter “nil;” leave the box blank
- do not change the headings of any of the boxes
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