Compliance Checklist and Best Practices

Use this checklist to structure your payroll compliance program across four-time horizons: 

Before Your First Hire

 Register for a Business Number and Payroll Deductions Account (RP) with the CRA allow two to three weeks before your first pay date Confirm your expected remitter type based on projected monthly withholding Register with your provincial workers’ compensation board Register for provincial employer health tax if operating in Ontario, BC, Manitoba, or Newfoundland and Labrador Select payroll software or a payroll service provider Develop a written policy for determining employee vs. contractor status 

Every Pay Period

 Calculate gross pay accurately, including taxable benefits and allowances Deduct income tax using current federal and provincial tax tables Apply CPP contributions with the $3,500 basic exemption prorated per pay period Calculate CPP2 contributions for employees whose year-to-date earnings exceed YMPE Deduct EI premiums and track year-to-date insurable earnings against $65,700 MIE Issue itemized pay stubs showing all deductions Track vacation accruals, sick time, and overtime according to provincial standards 

Monthly (or Per Remittance Schedule)

 Remit source deductions by your CRA-assigned deadline Include both the employee and employer portions of CPP/CPP2 and EI Reconcile remitted amounts against your payroll register Retain all remittance confirmations and receipts 

Year-End and Ongoing

 Reconcile total annual payroll against T4 summary amounts before filing Prepare and issue T4 slips by February 28 (or the next business day) File T4 Summary and ensure remittances match reported deductions Reconcile all CRA PD7A statements received throughout the year Update payroll systems with new CPP, EI, and tax rates for the upcoming year Retain all payroll records including registers, TD1 forms, remittance receipts, T4 copies, and ROEs for a minimum of six years Review employee vs. contractor classifications annually Monitor CRA bulletins for mid-year rate changes or regulatory updates 

Special Quebec Considerations

If you operate in Quebec, add the following to your year-end checklist: file RL-1 slips by the last day of February; remit QPP, QPIP, and Health Services Fund contributions to Revenu Quebec; and file the annual Quebec employer health tax reconciliation by the required deadline.