Getting started in payroll in Canada Agenda Facts u Business - - PowerPoint PPT Presentation

Getting started in payroll in Canada

Agenda

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Facts

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Business Culture

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Structure of Tax Authority

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Operating Payroll

Facts about Canada

Canada Facts

Facts about Canada

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The Dominion of Canada came into being on July 1, 1867. Dominion indicated Canada was a self-governing colony of the British Empire.

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On the day Canada came into being, New Brunswick, Nova Scotia, Ontario and Quebec became its first provinces.

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Further provinces and territories were added over the years, with the most recent territory – Nunavut – forming in 1999.

Canada Facts

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Canada is the world's second largest country, behind Russia.

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Canada's total area is 9,984,670 km2 (3,855,103 mi2)

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Freshwater lakes account for 8.9% of Canada's size - that's 891,163 km2 (344,080 mi2) of lakes

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Canada’s total land area is 9,093,507 km2 (3,511,023 mi2)

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Canada is federal country. Each of its provinces and territories has its own capital city and government.

Canada Facts

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Basketball was invented by a Canadian – Dr. James Naismith. He was born on November 6, 1861 in Ramsay township, near Almonte, Ontario. His mother and father had immigrated to Canada from Scotland.

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While at school Naismith’s played a game called duck-on-a-rock, trying to knock a “duck” off the top of a large rock by throwing another rock at it. He remembered this when tasked with devising an indoor, winter game for 18 students at the YMCA Training School in Springfield, Massachusetts, USA. He wanted to provide students with an activity that required skill and not

• strength. Basketball was the result.

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On December 21st 1891, James Naismith’s class of secretaries played the first ever game of basketball. The ball was a soccer ball and the goals were two peach baskets. After a somewhat chilly initial reception the new game proved to be a big hit.

Canada Facts

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Canada's thirteen provinces and territories have two capital letter abbreviations which are used by Canada Post to help in the automatic sorting of

• mail. This system has been in place since the 1990's

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The abbreviations are the initials of the province or territory if it consists of two words, otherwise the initials are taken from the first letter of the province or territory and then one other suitable

• letter. The choice of abbreviation has taken into

account the American abbreviations for each of its states, so that there is no duplication

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Other shortened forms of the Canadian provinces and territories names are used for everyday

• purposes. The most common abbreviation for each
• ne is also listed in the table

Business Culture

Business Culture

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Canada is the second largest country in the world (after Russia) but almost 90% of the population live within 200km of the border with the US. This means that vast tracts of Canada are uninhabited wilderness and that, if you are doing business in Canada, you are never likely to be too far geographically from the States

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This close proximity is defining for Canadian business as the largest trade relationship of any two countries in the world is the one between the US and Canada

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You need to bear in mind that although close to the USA geographically, there are definitely differences in general approach to business between the USA and Canada and Canadians are sometimes known to take exception to any assumption being made on this matter

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Canada is a large, vibrant economy with a number of global companies and an extremely successful export industry

Business Culture

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There is no norm in terms of business structure as many organisations are opting for flatter, leaner structures than it’s more traditional hierarchical structures

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Canadian managers are not expected to manage in an authoritarian manner but are expected to be decisive. Management style is informal and friendly with managers preferring to be seen as 'one of the guys' rather than as a superior figure who stands apart from everybody else

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Managers will consult widely for decision-making, however, the final decision remains firmly with them and quick decision-making is respected. Failure to consult widely could lead to a feeling of dissatisfaction amongst team members who will feel that the manger is acting in a dictatorial manner

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The manager is not necessarily expected to be the highly technically skilled; they will be judged on their ability to manage the team — interpersonal and man- management skills are considered of vital importance.

Business Culture

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Meetings in Canada are relatively formal

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Punctuality is expected and meetings often start with some type of polite small talk

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Body language tends to be quite reserved with few visible shows of emotion or anger

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Etiquette for meetings follows the Anglo-Saxon approach of one at a time speaking and interruptions are generally frowned upon and considered to be rude

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Meetings are democratic, with everyone being able to have their say and for

• pinions to be respected, regardless of their position or seniority

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Aggressive or heated meetings are rare, they are usually calm and civil, carried

• ut with courtesy and politeness

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Attendees are expected to be well prepared as decisions tend to be taken on the basis of empirical facts rather than on gut reactions. Inability to provide the relevant level of detail could be viewed as suspicious and evasive behaviour

Business Culture

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People expect to be valued as team members, with the skills they bring to the team and the leader or manager needs to reflect this in their approach

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Teams need to have a clear idea of its vision and objectives, each member needs to understand what contribution they will be making

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Members prefer to be given outline guides and general instructions rather than to be micro-managed. Micro-managing might be seen as interference or a lack of trust

Business Culture

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Canada is officially bilingual and this needs to be recognised in your dealings with the country

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Canadian communication patterns are usually low key. Reserve, understatement, diplomacy and tact are the key attributes of communication, however Canadians are still direct and say what they mean

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Canadians do not use overtly coded language. 'Yes' means 'yes' and 'no' means 'no'. Canadians see evasive/coded language as suspicious and prefer problems to be put on the table for discussion

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Technological improvements have resulted in much of the intra-company communication is email based with phones used 'in an emergency'

Structure of Tax Authority

Tax Authority

u The Canada Revenue Agency (CRA) is responsible for

administration of certain tax programmes at federal level, and some provincial/territory taxes

u They sometimes also undertake tax collection of non

harmonised taxes for provinces/territories on a cost recovery basis

u CRA administers benefits and related programmes u Promotes compliance with all relevant Canadian tax legislation u Website at www.cra-arc.gc.ca

CRA Structure

The Minister responsible for the CRA is the Minister of National Revenue

u The Honourable Diane Lebouthillier is the Minister of National

Revenue (Gaspésie–Les Îles-de-la-Madeleine). She is accountable to Parliament for all Canada Revenue Agency (CRA) activities, including administering the Income Tax Act, the Excise Tax Act, and 16 other acts. She makes sure that the CRA upholds the highest standards of fairness and integrity when dealing with taxpayers and benefit recipients.

CRA Structure

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The CRA is one of the largest federal government departments, with:

u 51 tax services offices and tax centres across the country; u 43,000 employees nationally; and u a $4.3 billion budget.

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Under Ms. Lebouthillier’s leadership, the CRA has continued to cut red tape for small-business owners. Businesses are now able to receive their mail

• nline from the CRA, submit documents, and ask specific questions about

their accounts through My Business Account, the CRA’s online portal for business owners.

CRA Structure

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The leadership of the CRA is made up of a Board of Management

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The Board of Management consists of 15 members appointed by the Governor in Council. Eleven of these members are nominated by the provinces and

• territories. The Board has the responsibility of overseeing the organization

and management of the CRA, including the development of the Corporate Business Plan, and the management of policies related to resources, services, property and personnel

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The CRA's Board of Management is not involved in all the CRA's business

• activities. It does not have the authority to administer and enforce legislation
• r to access confidential client information

CRA Structure

The Commissioner

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As the CRA's chief executive officer, the Commissioner is responsible for the day-to-day administration and enforcement of program legislation that falls under the Minister's delegated authority. The Commissioner is accountable to the Board of Management for the daily management of the CRA, supervision

• f employees, and implementation of policies and budgets.

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The Commissioner must assist and advise the Minister with respect to legislated authorities, duties, functions, and Cabinet responsibilities.

CRA Structure

u The CRA is divided into 5 regions: Atlantic, Quebec,

Ontario, Prairie and Pacific

u Within each region there are several Tax Service Offices

(TSO) for audit and collection work

u There are 7 Taxation Centres (TC) used for processing and

reviewing filed tax returns

Revenue Quebec

Agence du Revenue Quebec

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Collects income tax and consumption taxes and ensures that each person pays a fair share of the financing of public services

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Administers the support-payment collection program (PAPA) in order to ensure that the support to which children and custodial parents are entitled is received on a regular basis

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Administers taxation-related social programs, as well as any other tax-collection and redistribution program entrusted to it by the government

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Ensures provisional administration of unclaimed property and liquidation of that property in

• rder pay out the value to assigns (persons in whom a property right is vested), or, failing

that, to the Minister of Finance

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Keeps a public register of the businesses that carry on activities in Québec and administers the system governing the existence of legal persons in Québec in order to protect the public and businesses

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Makes recommendations to the government concerning fiscal policy and programs

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Website at www.revenuquebec.ca/en

Employer obligations in Quebec

Employers with an establishment in Quebec must:

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If you pay or plan to pay a salary, wages or remuneration to an employee or beneficiary who meets at least

• ne of the basic conditions for making source deductions and paying contributions, you must register for

source deductions and obtain an employer identification number.

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To do so, you can use the Registering for Revenu Québec Files online service; file the Application for Registration (form LM-1-V) with us.

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Note: Even if you have no employer identification number when you must remit source deductions and

pay your employer contributions for the first time, you must make your remittance by the deadline. We will open an account in your name and send you the form to use for the following remittance.

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Deduct Quebec Income Tax, Quebec Pension Plan Contributions and Quebec Parental Insurance Plan premiums from salaries

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Calculate employer contributions for Pension, Parental Insurance, Health Services fund, Work Skills fund and Commission des normes du travail

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Remit the deductions to Revenue Quebec

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Also meet federal income tax obligations to CRA.

Operating Payroll

Basic conditions for making source deductions

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You must make source deductions and pay employer contributions on any amounts you pay to an employee or beneficiary, provided one of the following basic conditions is met:

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The amount is paid to an employee who reports for work at one of your establishments in Québec.

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The amount is paid to an employee who is not required to report for work at any of your establishments (in Québec or elsewhere), but is paid from one of your establishments in Québec.

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The amount is paid to a beneficiary who is resident in Québec at the time of payment.

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If one of the above conditions is met and the amount paid is subject to at least one source deduction or one contribution, you must register for source deductions and obtain an employer identification number.

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Note: As a rule, the above obligations do not apply to you if you have no establishment in Québec. This means you do not have to register as an employer for source deduction purposes – see http://www.revenuquebec.ca/en/entreprises/ras/determination/default.aspx for more details

Employer Obligations

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As an employer, trustee, or payer, you are responsible for deducting Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and income tax from remuneration or other types of income you pay, remitting them to the CRA and reporting them on the applicable slips

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Step 1 - determine if you are an employer, trustee or payer

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Step 2 - open a payroll account for your business

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Step 3 - hire your employees

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Step 4 - calculating the employee and employer deductions

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Step 5 – remitting deductions

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Step 6 – completing and filing returns

What is a Payroll Program Account

A payroll program account is an account number assigned to either an employer, a trustee or a payer to identify themselves when dealing with the Canada Revenue Agency This 15-character account number contains the 9-digit business number (BN). This is a unique federal government number that identifies your business and the accounts you maintain. The payroll account number consists of:

u the 9-digit BN; u 2 letters for the type of account (for payroll program the letters are "RP"); and u 4 numbers for the specific account reference.

Depending on the type of business you have, you may need to register other types of accounts. The 9-digit registration number will not change, but letters will be added to the BN. For example: A company requires a GST/HST , an import/export and a payroll program accounts: Account type Account number Business Number (BN) 12345 6789 GST/HST program account 12345 6789 RT 0001 Import/Export program account 12345 6789 RM 0001 Payroll program account 1 12345 6789 RP 0001

When to open an account

u You have to register for a payroll program account before

the first remittance, which is the 15th day of the month following the month in which you began withholding deductions from your employee's pay.

u If you don’t create a program account you still need to

calculate deductions and pay your remittance by deadline

u Penalties of $1,000 to $25,000 for missing the deadline

and there is a potential prison sentence for a term of up to 12 months

How to open an account

If you already have a business number (BN), you need to add a payroll program account to your existing BN. If you do not have a BN, you will need to register for a BN and a payroll program account.

u By Internet with Business Registration Online: You can register for a

Business Number (BN) and one or more of the Canada Revenue Agency (CRA) program accounts at the same time using the Business Registration Online (BRO) service. You can also register for some provincial program accounts. Businesses that do not have complex registration requirements can use this service. Register on-line http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/rgstr/menu-eng.html

u By hardcopy form: Complete Form RC1. Once you complete the form,

mail or fax it to the nearest tax service office (TSO) or tax centre (TC). To determine where to submit your completed RC1 form, go to Tax services offices and tax centres

How to open an account

u By phone, call the toll-free Business enquiries line at 1-800-959-5525.

Before calling, be ready to answer all the questions in Part A of Form RC1, Request for a Business Number (BN), and any other questions in the form that relate to the program accounts you want to open (for example, GST/HST , Payroll)

u If you operate your business in Quebec, you will have to register your

GST account with Revenu Québec (RQ). To register your payroll, import/export, or corporation income tax accounts, you must still contact the CRA. For more information on registering your business in Quebec, visit Revenu Québec, or call toll-free at 1-800-567-4692

u The company can appoint business account contacts to transact

business with CRA, which includes outsource companies – use form RC59 to arrange this.

New Hires

When you hire an employee, you have to obtain:

u the employee's social insurance number (SIN); and u your employees completed Form TD1, Personal Tax Credits

Return

u For Quebec a Federal TD1 is required, but for the Provincial

deductions its form TP-1015.3-V. If the employee works for you and you can’t get the SIN or Form TD1, you are still responsible to start calculating and withholding payroll deductions.

Social Insurance Numbers

Key piece of employee identification

u Employee will provide a SIN card or letter u Employers must inform Service Canada within 6 days of commencement

• f employment if the employee fails to present a SIN and must commence

deductions whether they have received one or not

u The SIN is a 9 digit number u Numbers commencing with a “9” have been issued to non Canadians or

permanent residents of Canada. They should be checked in conjunction with the relevant immigration document as they expire at the end of the individual’s legitimate time in Canada.

Personal Tax Credits Return

A TD1 Must be submitted for individuals who:

u have a new employer or payer; u want to change amounts from previous claimed; u want to claim the deduction for living in a prescribed zone; or u want to voluntarily increase the amount of tax deducted at source

(because they have income untaxed at source)

u Form should be submitted to employer no later than 7 days of the

relevant change occurring

u There is no need to re-submit a TD1 each year where employment is on-

going and no changes occur

u Forms are retained by employer –not sent to the CRA

Canadian Tax Returns

Canadian Tax year runs for a calendar year, 1st January to 31st December

u All Canadians must submit an annual tax return u This is completed for individuals on form T1 u It can be done by paper or on-line using Netfile – software only

available through tax professionals or purchased from software providers - get your web access code at: https://apps.cra- arc.gc.ca/ebci/leb0/wacretrieve/pub/entry-e.do

u Returns must be filed by the last day in February for the

previous tax year – this must be done electronically if you have more than 50 employees

Remittances in Quebec

u Remittances should be accompanied by form TPZ-

1015.R.14- version 1,2,3 or 4 depending on the remittance cycle

u File “Zero” returns where required u Pay electronically, by pre-authorised debit

instruction, by mail or in person at a financial institution or by Automated Banking Machine

u Be sure to enclose the remittance form

Leavers

When someone leaves you should:

u Prepare a T4 and give it to the employee

summarising earnings and deductions for the Year To Date

u Send the T4 to CRA electronically with the others

for your business at year end

u Complete a RoE and give it to the employee

within 5 days of leaving

Additional Quebec Returns

Other returns required by Quebec All the above are also reflected on the ER’s RLZ-1.S-v

RL-2 Reporting retirement and annuity income RL-17 reporting each period spent working

• utside of Canada

RL-25 reporting income paid by Trustees of a profit sharing scheme

Record Keeping Requirements

The following must be kept by employers:

u Form TD1 and TP1015.3-v u Record of hours worked and CPP/EI insurable earnings u Pay, tax, CPP and EI calculations u Letters of Authority from CRA u Records must be kept in Canada available for inspection unless CRA gives

written permission to store them elsewhere

u businesses would have to pay CRA travel costs for inspections where records are stored

somewhere outside Canada u Records have to be kept for six years after the end of the tax year they

refer to

Thank you for watching

Please contact the Global Payroll Association with questions or to leave feedback, which is always welcome 0203 751 1510