What is ePayroll: Examining the early stage of Canada’s ePayroll project

In the 2021 Federal Budget, the government set aside $43.9 million over three years for the first phase of the ePayroll project.  

The project aims to revamp how government agencies collect Canadian employers’ payroll, employment and demographic information. Currently, the project is in its nascent stage — the CRA is consulting, researching and prototyping a solution that works for businesses. 

Ultimately, the government wants to ease employers’ administrative burdens and improve access to government benefits and services. But what will ePayroll entail, and what might it mean for businesses across the country? 

What is ePayroll?

In short, the government envisions ePayroll as a service through which employers submit payroll, demographic and employment information to a secure repository. The service will be available to registered employers who must remit payroll deductions to the CRA, such as income tax, Employment Insurance (EI) premiums, and Canada Pension Plan (CPP). 

So, instead of sharing this information only at specific times (like when you issue a T4 or record of employment), employers will report data each time they pay an employee. From there, government agencies could access the information they need without repeatedly asking employers — this forms the “tell-us-once approach.”  

Why is ePayroll important?

Payroll reporting can be a strain for any business. Essentially, employers must take information already stored in their payroll process and translate it to meet government needs (one example is generating a record of employment). 

 In fact, the National Payroll Institute estimates that payroll compliance actions (like remittances) cost Canadian employers approximately $12.5 billion each year. Payroll compliance is time-consuming, too — employers may have to submit the same information to different agencies, such as the CRA and Service Canada. ePayroll intends to eliminate these irritants.   

But the predicted outcomes wouldn’t just impact employers — ePayroll would affect every worker in Canada. The government sees value in the repository of information gathered through ePayroll; with precise and up-to-date employee data, agencies could deliver benefits like employment insurance and wage subsidies faster. Since data will be collected during each pay cycle, government agencies will better understand how employers and employees are faring.  

How might ePayroll impact employers?

While the ePayroll project is in its early stages, its projected purview is tremendous. As stated, the government would collect data from employers each time they pay their employees. A 2021 National Payroll Institute survey found that 63 per cent of employers process their payroll bi-weekly, with 19 per cent semi-monthly, 13 per cent monthly and 13 per cent weekly — all representing an increase in reporting frequency.  

Should the project meet the government’s stated objectives, it will significantly alter the relationship between employers, payroll service providers and government agencies. That said, ePayroll is in early development, and challenges lie ahead. Critically, ePayroll is not a payroll processing service run by the Canadian government; employers can always choose the payroll processing service that fits their business.   

As the project unfolds, we’ll ensure you know exactly how it might impact you and your business.