Commentary

8.2 Failure to meet employer payroll obligations

Canada
Canada | Commentary

8.2 Failure to meet employer payroll obligations

Canada | Commentary

8.2     Failure to meet employer payroll obligations

If employers do not pay an amount that is due, the CRA may apply interest from the day payment was due. The CRA sets the interest rate every three months, based on prescribed interest rates. Interest is compounded daily. The CRA also applies interest to unpaid penalties.

Penalties can be levied for various types of failures by employers as detailed in the table below.

FailureConsequencePenalty
Inaccurate CPP, EI or income tax deductions and/or failure to deductThe employer is held liable for both the employer's and employee's share amounts owing.Penalty levied of 10% of the amount of CPP, EI and income tax not deducted
If the employer is assessed to this penalty more than once in a calendar year, a 20% penalty to the second or later failures may be levied if the failure were made knowingly or due to gross negligence.
Daily interest charge will be levied on the amount due (Employment Insurance Act, s 82.9)
Late or non-payment of amounts withheldA penalty is assessed when:
• employer deducts amounts over CAN 500, but does not remit at all, or
• employer

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