If your employer goes out of business without submitting your payroll deductions, the Canada Revenue Agency (CRA) will attempt to force the employer’s compliance. If this fails, there are steps you can take to ensure the CRA credits you for the withheld income. Keeping good records during the time you’re employed makes this easier to accomplish.
Employer Penalties for Failure to Remit
The CRA assesses penalties against employers for late remittance and failure to remit. The penalties are:
- 3 percent of the withheld amount if the remittance is one to three days late;
- 5 percent if the remittance is four or five days late;
- 7 percent if the remittance is six or seven days late, and
- 10 percent if more than seven days late or not remitted at all.
Although the CRA generally doesn’t apply these penalties for amounts of $500 or less, if the failure was deliberate or due to gross negligence, the agency applies the penalty on the entire amount. Employers assessed a penalty two or more times in a calendar year are assessed a 20-percent penalty on the later failures if they were deliberate or due to gross negligence.
What You Can Do to Help
Keeping good pay records during your time of employment makes the process of getting credited for money withheld for tax payments quicker and easier if for any reason your employer fails to remit the money to the CRA and the agency can’t collect. These include your pay stubs, T4 slips and copies of the Form TD1 Personal Tax Credits Return that your employer is obligated to have you complete.
If you work in the province of Quebec, you should also keep a copy of your completed Form TP1015.3-V, the Source Deductions Return form supplied by Revenu Québec. You should also keep records of any deductible expenses.
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