CRA Payroll Remittance Penalties in Canada: What Incorporated Owners Need to Know

CRA payroll remittance penalties in Canada can turn a small payroll delay into a costly mistake. When your corporation pays you a salary, it must send the income tax and employee deductions it withheld—plus applicable employer CPP and EI contributions—to the Canada Revenue Agency by its assigned deadline.

This obligation applies even if you are the corporation's only employee. The money withheld from salary is not extra corporate cash, so a remittance should be planned at the same time as net pay.

CRA Payroll Remittance Penalties in Canada

CRA's late-remittance penalty is generally based on both the unpaid amount and the number of days late. The published penalty rates are:

• 3% when the remittance is one to three days late
• 5% when it is four or five days late
• 7% when it is six or seven days late
• 10% when it is more than seven days late, or no amount is remitted

A 20% penalty may apply to a second or later failure in the same calendar year when CRA determines that it was made knowingly or under circumstances of gross negligence. CRA can also charge interest on overdue payroll amounts, generally calculated from the due date until payment.

Know Which Amount Your Corporation Must Remit

The payroll remittance is more than the deductions shown as reductions from your take-home pay. It can include:

• Income tax withheld from salary
• Employee CPP contributions
• The corporation's employer CPP contribution
• Employee EI premiums, if the employment is insurable
• The corporation's employer EI premium, if applicable

For an incorporated owner, EI treatment can differ from CPP treatment. Our guide on whether incorporated business owners pay EI explains why controlling ownership matters.

The remittance total should reconcile to your paystub and payroll records. PaystubHero is a free CRA-aware paystub generator for self-incorporated Canadians that separates employee deductions, employer contributions, and net pay.

What to Do If Your Payroll Remittance Is Late

Do not wait for a CRA notice. If you discover a missed or short remittance:

1. Recalculate the correct amount. Review every paystub covered by the remitting period, including any bonus or irregular salary.
2. Pay promptly. A delay can increase interest and may move the payment into a higher penalty bracket.
3. Use the correct payroll account. Make sure the payment goes to the corporation's RP program account and the intended remitting period.
4. Save confirmation. Keep the payment date, amount, confirmation number, and calculation with your payroll records.
5. Check the account afterward. Review CRA My Business Account or the corporation's statement to confirm how the payment and any charges were applied.
6. Contact CRA or your accountant if figures do not reconcile. Do not guess at how to correct a prior-period shortage.

Paying the outstanding amount does not automatically erase a penalty or interest. It does, however, stop the overdue principal from remaining unpaid.

Your Due Date Depends on Remitter Type

Many small corporations are regular remitters, whose deductions are generally due by the 15th day of the month following the month in which salary was paid. Other employers may be quarterly, threshold 1, or threshold 2 remitters with different deadlines.

Do not assume your deadline from another company's schedule. Confirm the remitter type assigned to your payroll account and allow enough time for CRA to receive the payment. Our CRA payroll remittance deadlines guide covers the main schedules and what happens when a due date falls on a weekend or public holiday.

A Simple System to Prevent Late Remittances

Build the remittance into every payroll run rather than treating it as a separate month-end task:

• Calculate deductions before transferring your net salary
• Set aside employee deductions and employer contributions immediately
• Add a calendar reminder several business days before the due date
• Pay electronically using a method that clearly identifies the RP account
• Save the paystub, bank proof, and CRA confirmation in one monthly folder
• Reconcile year-to-date totals each quarter and before preparing the T4

Never solve a corporate cash shortage by spending payroll withholdings. If cash is tight, decide the affordable gross salary before running payroll rather than paying yourself and hoping to fund the remittance later. The complete salary workflow is explained in how to pay yourself a salary as a self-incorporated Canadian.

Can CRA Cancel a Payroll Penalty?

CRA has taxpayer-relief provisions that may cancel or waive penalties and interest in limited circumstances, such as certain events beyond the taxpayer's control. Relief is discretionary, requires a request and supporting facts, and is not a replacement for paying the balance promptly.

Keep records of disruptions, payment attempts, CRA correspondence, and professional advice if you plan to request relief. A busy schedule, forgotten reminder, or lack of corporate cash should not be assumed to qualify.

Key Takeaway

CRA payroll remittance penalties in Canada can begin after only one late day and become more expensive as the delay continues. Confirm your corporation's remitter type, calculate the full employee and employer amount, pay it to the correct RP account on time, and keep proof. If a remittance is missed, calculate the shortage, pay promptly, and verify the account rather than waiting for CRA to contact you.

Not tax or legal advice—confirm current deadlines, penalty rates, and correction steps with CRA or a Canadian payroll professional.