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6.4 KiB
ReStructuredText
147 lines
6.4 KiB
ReStructuredText
##################################
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PAYROLL COMPLIANCE
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##################################
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The Canada Revenue Agency
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~~~~~~~~~~~~~~~~~~~~~~~~~~~
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Under the Canada Pension Plan Act and the Employment Insurance Act, the CRA is
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responsible for determining:
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- whether or not an individual's employment is pensionable under the Canada Pension
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Plan Act or insurable under the Employment Insurance Act
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- the types of earnings that are considered pensionable or insurable
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- how many hours an insured person has in insurable employment
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- the recovery of any debts owed as a result of an overpayment of Canada Pension
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Plan, Employment Insurance, or Old Age Security benefits
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The CRA is also responsible for ensuring that CPP contributions and EI premiums are
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deducted, remitted and reported as required by legislation.
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The Canada Revenue Agency (CRA) is a federal government agency that manages the
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following business lines for the federal government: Tax Services and Benefit Programs.
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The Tax Services business line assists over 25 million individuals, businesses, trusts, and
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organizations to meet their obligations under the tax system. Each year, the CRA collects
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approximately $324 billion in gross taxes and excise duties on behalf of the federal and
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provincial governments - the equivalent of about $1.2 billion every working day. The CRA's
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mission is to promote compliance with Canada's tax legislation and regulations through
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communication, quality service, and responsible enforcement, thereby contributing to the
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economic and social well-being of Canadians.
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From this mission comes the CRA's mandate to:
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- collect revenues and administer tax laws for the federal government and for most provinces and territories
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- deliver various social and economic benefit incentive programs to Canadians
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The CRA tracks the success of the first part of its mandate by measuring compliance in the following areas:
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- **Filing:** the CRA's goal is to have over 90% of individual and corporate income tax and registered business' goods and services tax/harmonized sales tax (GST/HST) returns filed on time.
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- **Registration:** the CRA measures its success in this area by ensuring that the majority of all known businesses are registered for various programs including corporate income tax, GST/HST, payroll deductions, and import/export accounts.
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- **Remittance:** the CRA's goal is to have over 90% of individual and corporate tax filers pay their taxes on time.
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- **Reporting:** the CRA measures reporting compliance through the information it receives on tax documents, for example, the T4 and T4A information slips.
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The CRA's program responsibilities that are specifically related to payroll include the administration of:
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- the Canada Pension Plan (CPP) (shared responsibility with Employment and Social Development Canada and Service Canada)
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- Employment Insurance (EI) (shared responsibility with Employment and Social Development Canada and Service Canada)
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- Income Tax
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Each of these programs requires compliance by employers to withhold deductions from their
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employees' pay for CPP contributions, EI premiums and income tax deductions. These
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withholdings are termed statutory deductions as the deductions are required under legislative
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statute. Statutory deductions are the first deductions to be withheld from an employee’s gross
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pay.
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Canada Pension Plan (CPP)
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--------------------------
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The Canada Pension Plan became operational on January 1, 1966. The plan was fully
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effective in 1976 after a ten year transitional period.
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The Canada Pension Plan is a social insurance program, legislated under the federal Canada
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Pension Plan Act, designed to provide protection in the form of benefits to contributors and
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their families against loss of income due to retirement. In addition to retirement pension
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benefits, the plan provides supplementary benefits in the form of:
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- surviving spouse pensions
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- disability benefits
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- benefits for orphans and children of disabled contributors
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- death benefits payable upon the death of a contributor
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All employers are required by law to deduct CPP contributions from pensionable earnings
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paid to their employees, and to remit these deductions, along with the employer’s portion, to
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the CRA. The employer matches the employee’s contributions dollar for dollar.
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*Example:*
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Janet Frank has $45.00 in CPP contributions deducted from her gross pay. Her employer,
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Northern Skies, must match her contribution of $45.00. A total of $90.00 in CPP
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contributions must be remitted to the CRA.
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CPP contributions take priority over all other deductions and are therefore the first statutory
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deduction to be withheld from an employee’s gross pay.
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Employment Insurance (EI)
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--------------------------
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The CRA’s responsibility for the Employment Insurance program is associated with the
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collection of employee and employer premiums. It also makes decisions about which types of
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remuneration are considered insurable and, therefore, subject to EI premiums.
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All employers are required by law to deduct EI premiums from the insurable earnings paid to
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their employees, and remit these deductions, along with the employer’s portion, to the CRA.
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The employer’s portion is 1.4 times the employee’s portion.
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*Example:*
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Janet Frank has $20.00 in EI premiums deducted from her gross pay. Her employer, Northern
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Skies must contribute $28.00 ($20.00 x 1.4). A total of $48.00 in EI premiums must be
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remitted to the CRA.
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EI premiums are the second statutory deduction to be withheld from an employee’s pay.
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Employers are also required to track the employee’s insurable earnings and insurable hours
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by pay period for reporting purposes, such as completing the Record of Employment for a
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terminated or inactive employee.
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Income Tax
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----------
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Non-Compliance Penalties
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~~~~~~~~~~~~~~~~~~~~~~~~~
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Employment and Social Development Canada (ESDC)
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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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Service Canada
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~~~~~~~~~~~~~~~~~
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Social Insurance Number (SIN)
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------------------------------
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Statistics Canada
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~~~~~~~~~~~~~~~~~~~~~
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Personal Privacy
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~~~~~~~~~~~~~~~~~
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The Privacy Principles
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-----------------------
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The Personal Information Protection and Electronic Documents Act (PIPEDA)
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--------------------------------------------------------------------------
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Pension Benefits Standards Act
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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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Canadian Human Rights Act
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~~~~~~~~~~~~~~~~~~~~~~~~~~
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Employment Equity Act
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~~~~~~~~~~~~~~~~~~~~~~~~~~ |