Payroll & Remittance Services in Mississauga & Toronto

Employers can recover wage advances or loans through payroll deductions, but only with the employee’s written consent. The deduction must not reduce the employee’s wages below the minimum wage.

It’s essential to clearly document the repayment terms, including the amount and duration of deductions. Employers should also be aware that deductions for damages, equipment loss, or other expenses unrelated to wage advances are prohibited under the ESA without explicit consent.

Staying compliant requires employers to understand and adhere to federal and provincial regulations, including:

• •Regularly reviewing changes to the Employment Standards Act and CRA rules.
• •Using payroll software that automates calculations, tracks hours, and generates tax forms.
• •Conducting internal audits to verify the accuracy of payroll records and remittances.

Employers struggling with compliance may benefit from outsourcing payroll management to a professional service. Providers like ADP or Payworks ensure adherence to laws, manage tax filings, and minimize the risk of penalties or disputes. Regular training for HR and payroll staff also helps maintain compliance.

In Ontario, employees are entitled to at least two weeks of paid vacation per year after 12 months of employment, increasing to three weeks after five years. Vacation pay must be at least 4% of the employee’s gross wages (6% after five years).

Employers can either pay vacation pay with each paycheck or provide it as a lump sum when the employee takes their vacation. Payroll systems should track vacation pay accruals and payments to ensure compliance with the ESA and avoid disputes.

Misclassifying employees as contractors can lead to fines and back payments for missed benefits. The CRA uses a series of tests to determine the relationship, focusing on:

• •Control: Who decides how, when, and where work is performed?
• •Ownership of Tools: Does the worker use their own equipment?
• •Financial Risk: Is the worker responsible for their own expenses?
• •Opportunity for Profit: Can the worker profit or suffer a loss based on their work?

Employees are subject to payroll deductions for CPP, EI, and taxes, while independent contractors manage their own contributions. Clear contracts and regular reviews can help employers avoid misclassification issues.

Employers in Ontario must keep detailed payroll records for at least six years, as required by the CRA and the Employment Standards Act (ESA). These records should include:

• •Employee personal details (name, address, SIN).
• •Dates of employment, hours worked, and wages paid.
• •Deductions for CPP, EI, and income tax.
• •Records of vacation pay, overtime, and statutory holiday pay.

Accurate records are crucial for audits, employee disputes, or legal compliance. Using payroll software can simplify record-keeping by storing and organizing employee data and payment history in one secure system.

Late remittances can result in significant penalties. The CRA imposes a 3% penalty if the payment is one to three days late, 5% for four to five days, and 7% for six to seven days late. Payments more than seven days late incur a 10% penalty. Repeat late remittances within a calendar year may result in additional penalties.

Interest is also charged on unpaid amounts, compounding daily at a prescribed rate. Employers can avoid these penalties by using automated payroll systems to calculate and remit on time or by working with a payroll provider that guarantees compliance.

Statutory holiday pay compensates employees for public holidays. In Ontario, employees are entitled to nine public holidays, including New Year’s Day, Canada Day, and Christmas Day. To calculate statutory holiday pay, divide the employee’s regular wages earned in the four weeks prior to the holiday by the total days worked.

Employees must meet eligibility criteria, including working their scheduled shift before and after the holiday, unless they have a valid reason. If an employee works on a statutory holiday, they are entitled to premium pay (1.5 times their regular rate) plus an alternative day off with holiday pay.

As of October 1, 2024, the general minimum wage in Ontario is $16.55 per hour. Special minimum wage rates apply for certain groups, including students under 18 ($15.60/hour) and liquor servers ($15.50/hour). Employers must ensure that employees are paid at least the applicable minimum wage for all hours worked.

Failure to comply with minimum wage laws can result in penalties under the Employment Standards Act (ESA). Employers must also calculate and pay statutory holiday pay and overtime pay correctly, which are often overlooked when calculating payroll.

Payroll remittance deadlines depend on the size of your payroll:

• •Regular Remitters: Employers with an average monthly withholding amount (AMWA) of less than $25,000 must remit payroll deductions by the 15th of the following month.
• •Accelerated Remitters: Employers with an AMWA of $25,000 to $99,999 must remit semi-monthly. For employers with an AMWA exceeding $100,000, remittance is required within three business days of the pay date.

T4 slips summarizing employees’ income and deductions for the year must be issued to employees and submitted to the CRA by the last day of February following the calendar year.

Employers in Ontario are required to deduct three main items from employee paychecks:

•Canada Pension Plan (CPP): Contributions to the CPP provide income during retirement or if the employee becomes disabled. For 2024, the rate is 5.95% of the employee’s income up to a maximum yearly contribution.

•Employment Insurance (EI): EI provides temporary income support for employees who are unemployed or on parental leave. The employee EI rate for 2024 is 1.63% of insurable earnings.

•Income Tax: This is deducted based on federal and provincial tax rates and depends on the employee’s total earnings and personal tax credits.

Employers must remit these deductions, along with their own CPP and EI contributions, to the Canada Revenue Agency (CRA) on a monthly or quarterly basis.