Payroll failure to deduct vs late remittance: which CRA penalty are you looking at?

Establish whether the problem is deduction or remittance

Review the payroll calculation and the bank remittance separately. CRA may assess a 10% penalty on required CPP, EI and income tax amounts that were not deducted. The employer guide describes a 20% penalty for a second or later assessed failure in the same calendar year when the failure was knowing or involved gross negligence.

This differs from the graduated late-remittance rates for amounts deducted but sent late. Read the assessment and identify the failure it describes before applying a percentage found in a general article.

Prepare a payroll review package

• Identify the pay dates and periods involved.
• Gather payroll calculations, deduction records and relevant notices.
• Compare the remittance references with the account record.
• List the differences that need a payroll professional's review.
• Keep the agreed correction steps and their confirmations.

Ask the appropriate payroll adviser how to correct a deduction error and deal with any employee or employer amounts. A calendar cannot determine the permitted correction or recalculate the pay history.

Clarify the handoff

Agree who checks payroll calculations, who authorizes the transfer and who verifies the remittance. If a payroll provider handles some of those steps, confirm its scope and obtain the relevant evidence. A completed payroll run should not hide an unresolved CRA payment.

Keep the next remittance visible

Set the actual remitter type in Compliance Calendar. Use the checklist and notes to track review questions and retain the remittance confirmation. The calendar helps with timing and completion records; it does not calculate deductions or decide the penalty.