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Chapter

5

Provincial Remittances and Reconciliations

Learning Objectives: Upon completion of this chapter, you should be able to: 1. apply Québec statutory remittance schedules 2. calculate Québec statutory remittances o Québec Pension Plan o Québec Parental Insurance Plan o Provincial income tax o Health services fund o Commission des normes, de l’équité, de la santé et de la sécurité du travail 3. reconcile Québec statutory remittances 4. calculate provincial taxes o British Columbia Employer Health Tax o Manitoba Health and Post-Secondary Education Tax Levy o Newfoundland Health and Post-Secondary Education Tax o Ontario Employer Health Tax and Ontario Health Premium 5. apply provincial taxes remittance schedules 6. reconcile provincial taxes remittances 7. reconcile Northwest Territories/Nunavut Payroll Tax remittances 8. reconcile total annual provincial health taxes due with total taxes remitted

Communication Objective: Upon completion of this chapter, you should be able to explain the consequences of non-compliance with Employer Health Tax remittance requirements.

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Chapter 5 Provincial Remittances and Reconciliations

Chapter Contents Introduction ........................................................................................................................ 5-4 Revenu Québec Remittance Responsibilities .................................................................... 5-5 In Trust ........................................................................................................................... 5-5 Remitter Type ................................................................................................................ 5-5 Remittance Schedule...................................................................................................... 5-7 Content Review ............................................................................................................ 5-14 Review Questions ........................................................................................................ 5-15 Revenu Québec Remittance Calculation ......................................................................... 5-18 Content Review ............................................................................................................ 5-20 Review Questions ........................................................................................................ 5-21 Reconciling the Revenu Québec Account ....................................................................... 5-22 Content Review ............................................................................................................ 5-25 Review Questions ........................................................................................................ 5-26 Provincial Health Care Remittances ................................................................................ 5-27 British Columbia .......................................................................................................... 5-27 Manitoba ...................................................................................................................... 5-35 Newfoundland and Labrador ....................................................................................... 5-39 Ontario ......................................................................................................................... 5-41 Content Review ............................................................................................................ 5-48 Review Questions ........................................................................................................ 5-49 Northwest Territories/Nunavut Payroll Tax .................................................................... 5-52 Content Review ............................................................................................................ 5-56 Review Questions ........................................................................................................ 5-57 Chapter Review Questions and Answers ......................................................................... 5-58

© The Canadian Payroll Association – Payroll Fundamentals 2

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Chapter 5 Provincial Remittances and Reconciliations

© The Canadian Payroll Association – Payroll Fundamentals 2

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Chapter 5 Provincial Remittances and Reconciliations

Introduction In addition to the statutory deductions remitted to the Canada Revenue Agency (CRA), employers who have payrolls in Québec, British Columbia, Manitoba, Ontario, Newfoundland and Labrador, the Northwest Territories and/or Nunavut must also calculate, remit and report the following to the appropriate provincial authorities: 

Québec Pension Plan contributions (including the employer matching contribution)

  

Québec Parental Insurance Plan premiums (including the employer portion) Québec provincial income tax Québec health services fund contributions

  

Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST/CSST) premiums British Columbia Employer Health Tax Manitoba Health and Post-Secondary Education Tax Levy

  

Ontario Employer Health Tax Newfoundland and Labrador Health and Post-Secondary Education Tax Northwest Territories/Nunavut Payroll Tax

This chapter will cover the calculation and remittance of these amounts as well as details about the fines and penalties that can be applied for non-compliance. Information on annual reporting and remittance requirements is included for non-Québec jurisdictions, where applicable; the annual requirements for Québec are covered in another chapter.

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Chapter 5 Provincial Remittances and Reconciliations

Revenu Québec Remittance Responsibilities Employers must register with Revenu Québec (RQ) if they have an establishment in Québec where at least one employee reports for work, or if they have a Québec employee who is not required to report for work at the employer’s establishment but is paid from that establishment. RQ will assign the employer a Québec enterprise number (NEQ) that is used for all communication with the Québec government.

In Trust Statutory deductions withheld from Québec employees are deemed to be held in trust for the Receiver General for Canada and Revenu Québec. They must be kept separate from the operating funds of the organization, and cannot be part of an estate in liquidation, assignment, receivership, or bankruptcy. Employers who make their own government remittances, as opposed to having them remitted by a service provider, must keep separate from the organization’s regular bank account all amounts to be remitted for: employee and employer portions (where applicable) of Québec Pension Plan (QPP), Québec Parental Insurance Plan (QPIP) and Québec provincial income tax deductions, employer contributions to the health services fund and Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST) premiums. All such statutory deductions and contributions must be held in a separate payroll account until the remittance is made to RQ.

Remitter Type Source deductions of QPP contributions, QPIP premiums and Québec provincial income tax, along with any employer contributions to QPP, QPIP, the health services fund, and CNESST premiums, must be remitted to RQ periodically, using a remittance schedule that is determined by the employer’s remitter type. At the end of each year, Revenu Québec estimates an employer’s remittance frequency for the following year. There are five remitter types as shown in the following chart.

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Chapter 5 Provincial Remittances and Reconciliations Exhibit 5-1

REMITTER TYPE

DEFINITION

Annual

For employers whose total annual remittances did not exceed $2,400.00 in the previous year, or are not expected to exceed $2,400.00 in the current year

Quarterly

For employers whose average monthly remittance for either of the two years prior to the current year did not exceed $3,000.00 and, in the last 12 months, have fulfilled all their fiscal obligations with respect to the remittance of source deductions, employer contributions, and any consumption taxes collected For new employers who have a monthly remittance of less than $1,000.00 and perfect compliance history for all their fiscal obligations with respect to the remittance of source deductions, employer contributions, and any consumption taxes collected

Monthly

For employers who do not meet the above criteria and whose average monthly remittance for the second preceding taxation year was less than $25,000.00, and for new employers who do not meet the quarterly remitter qualifications

Twicemonthly

For employers with an average monthly remittance for the second preceding taxation year of at least $25,000.00 but less than $100,000.00

Weekly

For employers with an average monthly remittance for the second preceding taxation year of $100,000.00 or more

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Chapter 5 Provincial Remittances and Reconciliations

Remittance Schedule The remittance schedule for RQ is basically the same as the federal remittance schedule, with slightly different terminology and the inclusion of a fifth category for annual remitters. Exhibit 5-2

REMITTANCE FREQUENCY

ACTUAL PAYROLL CHEQUE OR DIRECT DEPOSIT DATE

REMITTANCE IS DUE NO LATER THAN….

Annually

Pay dates during reference year

The 15th of the month following the last month of the year in which remuneration was paid (January 15 in most cases)

Quarterly

January 1 – March 31 April 1 – June 30 July 1 – September 30 October 1 – December 31

April 15 July 15 October 15 January 15 of the following year

Monthly

1st of the month to the end of the month The 15th of the following month

Twice-monthly

1st to 15th of the month 16th to end of the month

The 25th of the same month The 10th of the following month

Weekly

1st to 7th of the month 8th to 14th of the month 15th to 21st of the month 22nd to the end of month

The third working day after the last day in each period

Note: Regardless of the remittance frequency, if a remittance falls due on a Saturday, Sunday or statutory holiday, the due date is extended to the next business day. The date of receipt of a remittance is the date on which it is received by RQ or at a financial institution. Special care has to be made where financial institutions stay open late on a weeknight, but may not be able to post the payment until the next business day. For remittances sent by the mail, the date of the postmark is not taken into account. For a postdated cheque, the date of receipt is the date on which the cheque can be cashed. If no monies are due for a particular reporting period, RQ still requires that the remittance form is completed and filed by the due date, with 0.00 entered in the “Amounts payable” box.

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Chapter 5 Provincial Remittances and Reconciliations Example: Monthly remitter:  The remittance for all payrolls during the month is due no later than the 15th of the following month Employees are paid semi-monthly with payments dated the 15th and the end of the month. The statutory deductions withheld from the payments dated the 15th and the 31st of May, along with the employer’s share of QPP contributions and QPIP premiums, and the employer’s contributions for the health services fund and CNESST premiums are due to RQ by June 15th (presuming June 15th is not a Saturday, Sunday or statutory holiday).

Information on CNESST premium remittance due dates for twice-monthly and weekly remitters is provided in the chapter on Workers Compensation remittances. Example: Twice-monthly remitter: The remittance for payrolls dated from the 1st to the 15th of the month is due on the 25th of the month  The remittance for payrolls dated from the 16th to the end of the month is due on the 10th of the following month



Employees are paid semi-monthly with payments dated the 15th and the end of the month. The statutory deductions withheld from the payments dated May 15th, along with the employer’s share of QPP contributions and QPIP premiums, and the employer’s contributions for the health services fund and CNESST (CSST) premiums are due to RQ by May 25th (presuming May 25th is not a Saturday, Sunday or statutory holiday). The statutory deductions withheld from the payments dated May 31st, along with the employer’s share of QPP contributions and QPIP premiums, and the employer’s contributions for the health services fund and CNESST premiums, are due to RQ by June 10th (presuming June 10th is not a Saturday, Sunday or statutory holiday). Using the ‘current’ year calendar provided in this material, June 10th falls on a Sunday. In this situation the remittance would be due on June 11th, the next working day.

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Chapter 5 Provincial Remittances and Reconciliations Example: Weekly remitter – remittances are due on the third working day after the end of each remitting period:    

1st to 7th of the month 8th to 14th of the month 15th to 21st of the month 22nd to the end of the month

Employees are paid bi-weekly with payments for May dated the 11th and the 25th. The statutory deductions withheld from the payments dated May 11th, along with the employer’s share of QPP contributions and QPIP premiums, and the employer’s contributions for the health services fund and CNESST premiums are due to RQ by May 17th (presuming May 15th, 16th and/or 17th are not Saturday, Sunday or a statutory holiday), three working days after the end of the remitting period, May 14th. The statutory deductions withheld from the payments dated May 25th, along with the employer’s share of QPP contributions and QPIP premiums, and the employer’s contributions for the health services fund, and CNESST premiums are due to RQ by June 3rd (presuming June 1st, 2nd and/or 3rd are not Saturday, Sunday or a statutory holiday), three working days after the end of the remitting period, May 31st. Using the ‘current’ year calendar provided in this material, the third working day after the end of the remitting period, May 31st, is June 5th.

Statutory deductions withheld from manual payments issued outside of the normal payroll cycle must also be taken into consideration when determining the remittance amount for the due date as defined above. In other words, if a manual payment is issued and dated for the 12th of the month and the employer is a twice-monthly remitter type, the remittance due date for the withholdings from the manual payment is the 25th of the same month. Special attention is required at year-end when processing any manual payments issued in the month of December. Remittances to RQ for any withholdings from the manual payment, including any employer portions and contributions, must be received by RQ by the regular due date for that remittance period.

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Chapter 5 Provincial Remittances and Reconciliations Example: MDC is paying commissions by manual cheque to their sales staff after the last bi-weekly payroll for December has been processed. MDC is a monthly remitter whose payroll remittances are made by their payroll service provider; their December remittance is due by the 15th of January. The payroll service provider will make the remittance for the December payrolls processed through their system. However, the payroll service provider will not remit the statutory withholdings on the manual payments issued after the last payroll for the year has been processed. MDC is responsible for remitting the statutory deductions withheld on the commission payments, along with their portions of QPP contributions and QPIP premiums, their contributions for the health services fund, and CNESST premiums for the month of December by the remittance due date of January 15th.

Penalties and Interest Charges Failure to Withhold Employers who fail to deduct source deductions from their employees’ pays will be subject to a penalty of up to 15% of the total amount that should have been withheld. Employers are also liable to be penalized if they fail to pay or remit within the time period specified by their remittance frequency. The penalty rates, which vary according to the number of days late, are:  

7% from the 1st to the 7th day 11% from the 8th to the 14th day



15% as of the 15th day

Failure to File A penalty of $25.00 per day up to a maximum of $2,500.00 may be imposed on any employer who fails to file their remittance slip. These penalties may be assessed in addition to daily interest on the amount owing. An employer who fails to comply with their obligation to withhold, remit or file may also be liable for interest charges in addition to any penalties imposed. Interest is calculated daily on amounts due under Québec tax laws. The interest rate is determined on the basis of the base rate for bank loans to organizations published by the Bank of Canada.

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Chapter 5 Provincial Remittances and Reconciliations

Remittance forms The Remittance of Source Deductions and Employer Contributions forms for QPP contributions, QPIP premiums, Québec income tax, contributions to the health services fund, and CNESST premiums are as follows: 

TPZ-1015.R.14.1-V (for monthly and annual remitters)

  

TPZ-1015.R.14.2-V (for twice-monthly remitters) TPZ-1015.R.14.3-V (for weekly remitters) TPZ-1015.R.14.4-V (for quarterly remitters)

Employers who are only remitting CNESST premiums should use the form CNESST Payment – TPZ-1015.R.14.5-V. A sample of form TPZ-1015.R.14.3-V (for weekly remitters) appears on the next page.

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Chapter 5 Provincial Remittances and Reconciliations

Weekly remitters …………………….…..

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Chapter 5 Provincial Remittances and Reconciliations

Remittance Methods Payment by mail, at the RQ office or at a financial institution Cheques or money orders made payable to Revenu Québec (RQ) can be mailed directly to RQ, along with the completed remittance form. Payments and remittance forms can also be processed at the RQ office or at a financial institution. The date of receipt of a payment is the date on which it is received at an office of Revenu Québec, or at a financial institution. The postmark date of a mailed remittance is not taken into account. For a postdated cheque, the date of receipt is the date on which the cheque can be cashed. Payment by Internet As with the Canada Revenue Agency (CRA), RQ can accept payroll deduction remittances through Electronic Data Interchange/Electronic Funds Transfer (EDI/EFT). Employers who wish to remit using this method must contact their financial institution and must also be regis...