End-of-February deadline with CRA's payment-on-filing initiative
With the new payment-on-filing (POF) initiative, the deadline for the last payroll remittance of the year is now the end of February.
Announced in the fall, Canada Revenue Agency’s new policy allows eligible employers to remit a reconciliation payment later without being subject to a penalty or interest.
Employers are eligible to use PoF if they meet all three of these requirements:
- The reconciliation payment is less than one per cent of their total annual remittances.
- They have perfect payroll compliance:
- no late or outstanding remittances
- no assessments in the year they are filing
- all T4 information filed on or before the due date.
- They must have one or more of the following circumstances:
- employees who are paid stock-based salaries or wages
- third-party information they rely on for insurance, health benefits, broker information, taxable benefits or automobile fleet mileage.
- employees who live in other tax jurisdictions.
The new approach is a win for Canadian employers, says Peter Tzanetakis, president of the Canadian Payroll Association (CPA), which advocated for the change.
“It will enable organizations to manage their year-end process in an effective and efficient manner while saving millions of dollars in interest, penalties, salaries, and other administrative costs.”
The POF is a welcome relief for payroll professionals in enterprise-level organizations, says Deirdre Joachim, a member of the CPA’s Federal Government Relations Advisory Council representing Canadian banks and a senior payroll professional at TD Bank Group.
“In years prior, we were required to make the year’s final remittance within three days of the last payroll — which was almost always right after New Year’s Eve.”