Payroll Mistakes in Canada: Six Checks for Small Employers

When payroll looks wrong, first compare the pay-run reports, payment confirmations and CRA account records. Then identify whether the problem is a calculation, a missing remittance, a payment applied to the wrong place or an incorrect filed slip. Each has a different correction route.

Paying employees can feel straightforward: collect the hours, approve the payroll and send the money. The details around that pay run are easier to miss. These six checks help small employers identify errors and decide what to do next. For the underlying rules, see our Canadian payroll fundamentals guide.

1. Assuming every employer has the same remittance deadline

A monthly payroll does not automatically mean a monthly CRA remittance schedule. Regular remitters generally remit by the 15th of the following month, but quarterly and accelerated schedules also exist.

Check your CRA remitter type, the relevant pay dates and the payment confirmations before deciding a payment was on time. Use the CRA’s remittance due-date guidance for the schedule that applies to your account.

2. Trusting a calculation without checking the information behind it

A calculation can look reasonable and still use the wrong pay frequency, province of employment or employee information. A raise, bonus or taxable benefit can also change the result.

Compare the employee setup and source records with the pay-run inputs. The CRA Payroll Deductions Online Calculator can help check applicable deductions, but its accuracy depends on the information entered. It does not calculate Quebec provincial deductions.

3. Forgetting the employer’s share of CPP and EI

The amount withheld from an employee is not necessarily the full amount the employer must send to the CRA. Applicable employer CPP contributions and EI premiums also need to be accounted for.

Review the payroll liability report and the total remittance calculation, not just the employees’ deductions. The CRA employers’ guide to payroll deductions and remittances explains these responsibilities.

4. Leaving reconciliation until a discrepancy notice arrives

Your payroll reports, remittances and year-end information should tell the same story. Compare them periodically so that a missing payment, posting error or unexplained balance does not sit unnoticed.

If the CRA sends a discrepancy notice, compare the periods and amounts in the notice with your records before responding. A credit balance is not automatically a refund. Follow the CRA’s payroll discrepancy-notice instructions.

5. Treating T4 filing and remittances as the same deadline

Remitting payroll deductions and filing T4 information returns are separate obligations. T4 returns are generally due by the last day of February following the calendar year, with the CRA’s weekend and public-holiday rules applying.

Check both the payment record and the filing confirmation. Agree who prepares, approves and files the slips; using a service provider does not remove the employer’s responsibilities. See the CRA’s information-return filing deadlines and our T4, ROE and year-end payroll checklist for the supporting records.

6. Correcting an error without identifying what went wrong

A missed remittance is different from a wrong deduction or a payment credited to another account. Gather the original payroll report, payment proof, CRA account details and any filed slips before choosing a route.

On small screens, scroll the table sideways to read all three columns.

Keep a record of the error, the action taken and the supporting calculations. If the correct treatment is unclear, resolve it before making further adjustments.

A simple payroll review routine

Before each pay run, check changes to hours, pay and employee information. Afterward, retain the reports and payment confirmations. Periodically reconcile payroll liabilities to the CRA account, and check year-end totals before filing. These checks make it easier to trace a difference when one appears.

Toronto Tax & Accounting Solutions Inc. can help review payroll records and agree the work needed. Our physical office is in Scarborough, with remote service available outside Quebec in English, Urdu and Punjabi. We confirm the work and fees before starting; T4 and ROE preparation is additional paid work. View our payroll services.

Running a small business? See our small business accounting packages.