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 medical premiums/taxes o British Columbia Medical Services Plan 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 medical premiums/taxes remittance schedules 6. reconcile provincial medical premiums/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. The Canadian Payroll Association Payroll Fundamentals 2 5-1 Vs 11.0
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... 5-29 Newfoundland and Labrador... 5-32 Ontario... 5-35 Content Review... 5-42 Review Questions... 5-43 Northwest Territories/Nunavut Payroll Tax... 5-45 Content Review... 5-49 Review Questions... 5-50 Chapter Review Questions and Answers... 5-52 The Canadian Payroll Association Payroll Fundamentals 2 5-2
The Canadian Payroll Association Payroll Fundamentals 2 5-3
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 Medical Services plan premiums, if the employer has established a group plan 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. The Canadian Payroll Association Payroll Fundamentals 2 5-4
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/CSST) premiums. All such statutory deductions and contributions must be held in a separate payroll account until the remittance is made to RQ. As of January 1, 2016, the Commission de la santé et de la sécurité du travail (CSST), the Commission des normes du travail (CNT) and the Commission de l équité salariale (CES) merged into one organization, the Commission des normes, de l équité, de la santé et de la sécurité du travail (CNESST). This new organization provides employers and workers with an integrated source of labour related expertise. All CSST, CNT and CES-labelled documents received are considered official CNESST communication documents. All services provided by the three previous organizations will be maintained and employers contribution methods for the former CNT and CSST remain the same. Remitter Type Source deductions of QPP, QPIP and Québec provincial income tax, along with any employer contributions to QPP, QPIP, the health services fund, and CNESST (CSST) 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. The Canadian Payroll Association Payroll Fundamentals 2 5-5
There are five remitter types as shown in the following chart. Exhibit 5-1 REMITTER TYPE Annual Quarterly Monthly Twicemonthly Weekly DEFINITION 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 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 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 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 For employers with an average monthly remittance for the second preceding taxation year of $100,000.00 or more The Canadian Payroll Association Payroll Fundamentals 2 5-6
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 15 th 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 1 st of the month to the end of the month The 15 th of the following month Twice-monthly Weekly 1 st to 15 th of the month 16 th to end of the month 1 st to 7 th of the month 8 th to 14 th of the month 15 th to 21 st of the month 22 nd to the end of month The 25 th of the same month The 10 th of the following 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. The Canadian Payroll Association Payroll Fundamentals 2 5-7
Example: Monthly remitter: The remittance for all payrolls during the month is due no later than the 15 th of the following month Employees are paid semi-monthly with cheques dated the 15 th and the end of the month. The statutory deductions withheld from the pay cheques dated the 15 th and the 31 st of May, along with the employer s share of QPP and QPIP, and the employer s contributions for the health services fund and CNESST (CSST) premiums are due to RQ by June 15 th (presuming June 15 th is not a Saturday, Sunday or statutory holiday). Information on CNESST (CSST) 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 1 st to the 15 th of the month is due on the 25 th of the month The remittance for payrolls dated from the 16 th to the end of the month is due on the 10 th of the following month Employees are paid semi-monthly with cheques dated the 15 th and the end of the month. The statutory deductions withheld from the cheque dated May 15 th, along with the employer s share of QPP and QPIP, and the employer s contributions for the health services fund and CNESST (CSST) premiums are due to RQ by May 25 th (presuming May 25 th is not a Saturday, Sunday or statutory holiday). The statutory deductions withheld from the cheque dated May 31 st, along with the employer s share of QPP and QPIP, and the employer s contributions for the health services fund and CNESST (CSST) premiums, are due to RQ by June 10 th (presuming June 10 th is not a Saturday, Sunday or statutory holiday). Using the current year calendar provided in this material, June 10 th falls on a Sunday. In this situation the remittance would be due on June 11 th, the next working day. The Canadian Payroll Association Payroll Fundamentals 2 5-8
Example: Weekly remitter remittances are due on the third working day after the end of each remitting period: 1 st to 7 th of the month 8 th to 14 th of the month 15 th to 21 st of the month 22 nd to the end of the month Employees are paid bi-weekly with cheques for May dated the 11 th and the 25 th. The statutory deductions withheld from the cheque dated May 11 th, along with the employer s share of QPP and QPIP, and the employer s contributions for the health services fund and CNESST (CSST) premiums are due to RQ by May 17 th (presuming May 15 th, 16 th and/or 17 th are not Saturday, Sunday or a statutory holiday), 3 working days after the end of the remitting period, May 14 th. The statutory deductions withheld from the cheque dated May 25 th, along with the employer s share of QPP and QPIP, and the employer s contributions for the health services fund, and CNESST (CSST) premiums are due to RQ by June 3 rd (presuming June 1 st, 2 nd and/or 3 rd are not Saturday, Sunday or a statutory holiday), 3 working days after the end of the remitting period, May 31 st. Using the current year calendar provided in this material, the third working day after the end of the remitting period, May 31 st, is June 5 th. Statutory deductions withheld from manual cheques 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 cheque is issued and dated for the 12 th of the month and the employer is a twice-monthly remitter type, the remittance due date for the withholdings from the manual cheque is the 25 th of the same month. Special attention is required at year-end when processing any manual cheques issued in the month of December. Remittances to RQ for any withholdings from the manual cheque, including any employer portions and contributions, must be received by RQ by the regular due date for that remittance period. The Canadian Payroll Association Payroll Fundamentals 2 5-9
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 15 th 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 withholdings on the manual cheques 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 and QPIP, their contributions for the health services fund, and CNESST (CSST) premiums for the month of December by the remittance due date of January 15 th. 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 1 st to the 7 th day 11% from the 8 th to the 14 th day 15% as of the 15 th 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. The Canadian Payroll Association Payroll Fundamentals 2 5-10
Remittance forms The Remittance of Source Deductions and Employer Contributions forms for QPP, QPIP, Québec income tax, contributions to the health services fund, and CNESST (CSST) 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 (CSST) premiums should use the form CNESST (CSST) 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. The Canadian Payroll Association Payroll Fundamentals 2 5-11
Weekly remitters... The Canadian Payroll Association Payroll Fundamentals 2 5-12
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 registered for Clic Revenu electronic services. Clic Revenu Employers with a Québec enterprise number (NEQ) can register for electronic services called Clic Revenu. These online services provide employers with the ability to review their yearto-date source deduction remittances and to make current and future payments via a secure internet site. Registration can be made online at the RQ s website. Employers may use the preauthorized debit feature of Clic Revenu provided they meet the following conditions: they are registered for Clic Revenu electronic services they have an account at a participating financial institution they have completed form LMW-2.DP-V, Request for Authorization to Use Preauthorized Debit Further information can be obtained from the RQ s website. Service Provider Employers who have their payroll processed by a service provider have the choice of making the remittance themselves using one of the options above or having the remittance done by the service provider. If the employer chooses to have the service provider do the remittance on their behalf, they must provide the service provider with a copy of the notice from RQ advising of their remittance schedule. The service provider will debit the employer s bank account on a pre-established day and make the remittance on their behalf. The Canadian Payroll Association Payroll Fundamentals 2 5-13
Content Review Statutory deductions withheld from Québec employees are deemed to be held in trust for the Receiver General for Canada and Revenu Québec. 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/CSST) premiums. There are five remitter types: annual, quarterly, monthly, twice-monthly and weekly. Statutory deductions withheld from manual cheques issued outside of the normal payroll cycle must also be taken into consideration in determining the remittance amount for the due date. 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. Penalties for failure to pay or remit source deductions within the specified time period range from 7% to 15% of the amount due. The penalty for failing to file remittance slips is $25.00 per day up to a maximum of $2,500.00. Remittances to Revenu Québec may be made by mail, at an RQ office, at a financial institution, over the Internet, by preauthorized debit or by a service provider. The Canadian Payroll Association Payroll Fundamentals 2 5-14
Review Questions 1. Complete the following charts for Revenu Québec responsibilities. REMITTER TYPE DEFINITION 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 employers with an average monthly remittance for the second preceding taxation year of $100,000.00 or more For employers whose average monthly remittance for the second preceding taxation year was less than $25,000.00 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 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 For new employers who have a monthly remittance of less than $1,000.00 and perfect compliance history The Canadian Payroll Association Payroll Fundamentals 2 5-15
REMITTANCE FREQUENCY Monthly Weekly Quarterly ACTUAL PAYROLL CHEQUE OR DIRECT DEPOSIT DATE 1 st of the month to the end of the month 1 st to 7 th of the month 8 th to 14 th of the month 15 th to 21 st of the month 22 nd to the end of month January 1 March 31 April 1 June 30 July 1 September 30 October 1 December 31 REMITTANCE IS DUE NO LATER THAN. REMITTANCE FORM USED Twice-monthly 1 st to 15 th of the month 16 th to end of the month Annually Pay dates during reference year 2. Which of the following amounts is not remitted to Revenu Québec? a. Québec Pension Plan contributions b. Employment Insurance premiums c. Québec Parental Insurance Plan premiums d. Health services fund contributions The Canadian Payroll Association Payroll Fundamentals 2 5-16
3. Complete the following chart with the Revenu Québec remittance due date using the current year calendar provided at the beginning of the chapter. PAY PERIOD ENDING DATE PAY DATE REMITTER TYPE January 12 January 19 Twice-monthly February 23 March 2 Weekly March 15 March 15 Quarterly May 18 May 25 Twice-monthly June 29 June 29 Annually July 13 July 20 Weekly August 31 September 7 Monthly October 31 October 31 Quarterly November 16 November 23 Weekly November 16 November 23 Twice-monthly REMITTANCE DUE DATE The Canadian Payroll Association Payroll Fundamentals 2 5-17
Revenu Québec Remittance Calculation In addition to deducting, remitting and reporting Employment Insurance premiums and federal income tax to the Canada Revenue Agency (CRA), Québec employers are responsible for remitting the following amounts to Revenu Québec (RQ) according to their established schedule: employee Québec Pension Plan (QPP) contributions, calculated at a rate of 5.325% (2016) of the employee s gross pensionable/taxable income, withheld in the remitting period and the matching employer portion; employer QPP contributions are a dollarfor-dollar match of employee contributions employee Québec Parental Insurance Plan (QPIP) premiums, calculated at a rate of 0.548% (2016) of the employee s QPIP insurable earnings, withheld in the remitting period and the employer s premium, calculated at a rate of 0.767% (2016) of the employee s QPIP insurable earnings employee Québec provincial income tax deductions withheld in the remitting period employer contributions to the health services fund; the contribution rate, from 2.7% - 4.26% (2016) is based on the employer s total worldwide payroll employer CNESST (CSST) premiums based on assessable earnings during the remitting period and the premium rate To calculate the amount to be remitted, add the accumulated totals for QPP, QPIP, Québec provincial income tax, the health services fund, and CNESST (CSST) for each pay period in the remitting period. Note: The amounts shown in the examples in this material are for illustration purposes only; they may not reflect the current rates. The Canadian Payroll Association Payroll Fundamentals 2 5-18
Example: The payroll register for the first pay of the year shows the following totals. PAY PERIOD EMPLOYEE QPP EMPLOYER QPP EMPLOYEE QPIP EMPLOYER QPIP PROVINCIAL TAX HEALTH SERVICES FUND CNESST TOTAL 1 12,000.00 12,000.00 1,000.05 1,399.00 30,000.00 10,000.00 1,580.00 67,979.05 The remittance to RQ for this pay is calculated by totaling the employee and employer QPP and QPIP, the employee income tax, the employer health services fund contributions and CNESST (CSST) premiums. Employee QPP $12,000.00 Employer QPP 12,000.00 Employee QPIP 1,000.05 Employer QPIP 1,399.00 Employee Provincial Income Tax 30,000.00 Employer health services fund contributions 10,000.00 Employer CNESST (CSST) premiums 1,580.00 Total $67,979.05 If there is more than one pay in the remitting period, a spreadsheet can be used to calculate the total remittance owing to RQ. Example: The totals of the payroll registers for the pays dated October 1 and 15 are: PAY PERIOD EMPLOYEE QPP EMPLOYER QPP EMPLOYEE QPIP EMPLOYER QPIP PROVINCIAL TAX HEALTH SERVICES FUND CNESST TOTAL 22 250.00 250.00 20.99 29.36 15,000.00 5,000.00 33.20 20,583.55 23 220.00 220.00 18.49 25.87 13,000.00 4,000.00 29.20 17,513.56 Total 470.00 470.00 39.48 55.23 28,000.00 9,000.00 62.40 38,097.11 The employer is a twice-monthly remitter; the remittance for these two payrolls is due on October 25, and the remittance is calculated as follows: Employee QPP $ 470.00 Employer QPP 470.00 Employee QPIP 39.48 Employer QPIP 55.23 Employee Provincial Income Tax 28,000.00 Employer health services fund contributions 9,000.00 Employer CNESST (CSST) premiums 62.40 Total $ 38,097.11 The Canadian Payroll Association Payroll Fundamentals 2 5-19
Content Review Québec employers are responsible for remitting the following amounts to Revenu Québec according to their established schedule: o Québec Pension Plan contributions (employee and employer) o Québec Parental Insurance Plan premiums (employee and employer) o Québec provincial income tax (employee) o Health services fund contributions (employer) o Commission de la santé et de la sécurité du travail premiums (employer) To calculate the amount to be remitted to Revenu Québec, add the accumulated totals for Québec Pension Plan, Québec Parental Insurance Plan, Québec provincial income tax, the health services fund and Commission des normes, de l équité, de la santé et de la sécurité du travail (CNESST/CSST) for each pay period in the remitting period. The Canadian Payroll Association Payroll Fundamentals 2 5-20
Review Questions 4. The employer portion of Québec Parental Insurance Plan premiums is calculated at a rate of: a. 1.4 times the employee s premium b. 0.767% of the employee s insurable earnings c. 0.767% of the employee s premium d. 1 times the employee s premium 5. True or False. All income tax deductions withheld from Québec employees are remitted to Revenu Québec. 6. What amount is an employer s contribution rate for the health services fund based on? The Canadian Payroll Association Payroll Fundamentals 2 5-21
Reconciling the Revenu Québec Account RQ s remittance forms provide the total year-to-date payments that have been received, excluding any CNESST (CSST) premiums. Any discrepancies between RQ s total and the employer s total should be reported to RQ immediately. Note: Employers registered for Clic Revenu can also confirm their year-to-date remittances to Revenu Québec on an ongoing basis throughout the year. The total dollar amount reported by RQ as being received by the date on the form should be the accumulated amounts for QPP, QPIP and provincial income tax withheld from the employees as well as the employer s share for QPP, QPIP and health services fund contributions, that have been remitted to date for the calendar year according to payroll register details or summary total reports. It will not include any CNESST (CSST) premiums remitted. Spreadsheets are useful in verifying that all deductions at source for QPP, QPIP and Québec provincial income tax have been correctly deducted and remitted under the correct Québec enterprise number and by the scheduled due dates. Example: Enterprise XYZ remits to Revenu Québec under two separate Québec enterprise numbers, NEQ1234567 and NEQ1234568. At the end of June, the year to date account balances shown on Clic Revenu for each enterprise number (excluding the CNESST) were as follows: NEQ1234567 $1,000,231.37 and NEQ1234568 $4,587,662.38 These amounts agreed with the amounts shown on the organization s spreadsheet for the month of June. The organization s payroll summaries for the month of July for each account number are below. The Canadian Payroll Association Payroll Fundamentals 2 5-22
Reviewing the account balances on Clic Revenu at the end of July, the year to date amounts were: NEQ1234567 $1,287,961.25 and NEQ1234568 $5,041,391.40 However, the organization s spreadsheet showed the following year to date remittances at the end of July (excluding the CNESST/CSST): NEQ1234567 $1,149,629.23 and NEQ1234568 $5,179,723.42 On reviewing the records, it was determined that the $138,332.02 from pay period 1 for NEQ1234568 was remitted together with the $66,399.05 from pay period 1 for NEQ1234567, for a total remittance of $204,731.07 (excluding the CNESST/CSST) to NEQ1234567 for pay period 1. If left uncorrected, the organization would have an under-remittance of $138,332.02 in NEQ1234568, and an over-remittance of the same amount in the NEQ1234567 account. Revenu Québec should be contacted immediately, in writing, to report the error and request that the monies are transferred to the correct account. The organization s CNESST (CSST) remittances should also be reconciled against the account balances on file with that agency. The Canadian Payroll Association Payroll Fundamentals 2 5-23
This discrepancy would have been more difficult to identify had the payroll summaries and year-to-date amounts had been left unreconciled over a number of months. A reconciliation of government remittances should be processed on a monthly basis or at the end of each remitting period. Remitting Error If you discover that you made an error when remitting your source deductions, you should remit any underpayment as soon as possible using another remittance form, or by sending a short letter with the payment to Revenu Québec, stating your Québec enterprise number and the pay period for which the payment applies. If your remittance is late, Revenu Québec may apply a penalty. If you have over-remitted, reduce your next remittance by the amount of the overpayment. The Canadian Payroll Association Payroll Fundamentals 2 5-24
Content Review RQ s remittance forms provide the total year-to-date payments that have been received, excluding any CNESST (CSST) payments. The total dollar amount reported by RQ as being received by the date on the form should be the accumulated amounts for QPP, QPIP and provincial income tax withheld from the employees as well as the employer s share for QPP, QPIP, and health services fund contributions that has been remitted to date for the calendar year according to payroll register details or summary total reports. The Canadian Payroll Association Payroll Fundamentals 2 5-25
Review Questions 7. What amounts are included in the year-to-date figure reported on the RQ remittance form? The Canadian Payroll Association Payroll Fundamentals 2 5-26
Provincial Health Care Remittances Each province and territory provides health care coverage for its residents. An employee s coverage under the plan is determined by their province of residence, not their province of employment. Not all plans are funded in the same manner. Manitoba, Newfoundland and Labrador, Ontario and Québec help finance their provincial health care plans through employer taxes and levies. British Columbia supplements its provincial health care plan through monthly premiums paid by residents of the province. Other provinces and territories support their health care plans through general tax revenues. Details on the various provincial health care regimes were discussed in Payroll Compliance Legislation. Earlier in this chapter, the reporting and remitting requirements for the contributions to the Québec health services fund were reviewed. In this section of the chapter, the reporting and remitting requirements of the following premiums, levies and taxes will be looked at: British Columbia Medical Services Plan Manitoba Health and Post-Secondary Education Tax Levy Newfoundland and Labrador Health and Post-Secondary Education Tax Ontario Employer Health Tax British Columbia The Medical Services Plan (MSP) insures medically-required services provided by physicians and supplementary health care practitioners, laboratory services and diagnostic procedures. In British Columbia, employers, unions and pension plans may administer Medical Services Plan (MSP) benefits on behalf of their members and members' dependants; however, it is not mandatory to do so. An employer who wishes to administer MSP benefits for their employees must complete a Third Party Registration form to enroll two or more employees, have each employee complete an Application for Group Enrollment and submit the documents to MSP for approval. If the organization chooses to pay part or all of the premiums for its employees, the premiums paid on their behalf must be included in their income as a non-cash taxable benefit. MSP Direct is an online business service that allows an employer s group plan administrator to make changes to their members' accounts. Administrators are able to add and remove employees and their dependants from MSP group accounts online. Administrators can also quickly retrieve and update addresses of employees, confirm the Personal Health Number of an employee or dependant, and update names and birthdates. Further information is available on the website. The Canadian Payroll Association Payroll Fundamentals 2 5-27
Revenue Services of British Columbia issues MSP premium invoices, processes premium payments and collects overdue accounts. Each month, employers receive an invoice detailing current premiums and retroactive adjustments for their employees. Group invoices are generally mailed during the last week of the month. Premium Rates Effective January 1, 2017, the monthly rates for individuals and families are: $75.00 for one adult $150.00 for two adults in a family As of 2017, there are no premiums for children under the age of 19; the premium rates are determined by the number of adults on the MSP account (the individual account holder and, if applicable, a spouse.) Payment Options Monthly payments may be made: by telephone or electronic banking at most Canadian financial institutions at a Government Agent/Service BC Centre by mail by pre-authorized debit payments The payment due date is always the last business day of a month and is indicated on the bottom of the invoice. Annual Reporting There is no annual reporting or reconciliation required for MSP premium remittances as the remittances are based on the number of employees and their dependent status each month, not on remunerations paid to the employees. Penalties Section 32 of the Medicare Protection Act states that where there is an arrangement to pay all or part of another person s premiums or to collect premiums from another person, those premiums must be paid at the time specified. Such premiums are considered a lien in favour of MSP and that lien may be enforced under the Court Order Enforcement Act. If full payment is not received, the account will be referred for debt collection. The Canadian Payroll Association Payroll Fundamentals 2 5-28
Arrears are subject to interest charges at a rate prescribed by the provincial Treasury Board. If the employer fails to pay or to collect and remit the premiums owing, a penalty, of not greater than 10 times the amount that was not paid or collected and remitted, may be assessed. Manitoba The Health and Post-Secondary Education Tax Levy is paid by all employers with employees that: report to work at a permanent establishment of the employer in Manitoba: or do not report to a permanent establishment of the employer but are paid from or through a permanent establishment of the employer in Manitoba The tax levy is applied to the current year s total annual Manitoba remuneration paid to employees, including any payment, benefit or allowance, such as salary, wages, bonuses, commissions, taxable benefits and allowances. Amounts excluded from this tax are retiring allowances, pensions, annuities or superannuation s paid to a former employee after retirement. Tax Rates There are three annual remuneration thresholds used to determine the employer s tax rate: $1,250,000 or less over $1,250,000 up to $2,500,000 over $2,500,000 The exemption under this levy is $1,250,000 of total annual payroll. The employer pays a rate of 4.3% on the amount exceeding $1,250,000 up to $2,500,000. Employers with a payroll greater than $2,500,000 pay a rate of 2.15% on the entire payroll. The tax rates, and calculations, based on the total annual remuneration (TAR), are: Exhibit 5-3 TOTAL ANNUAL REMUNERATION (TAR) $1,250,000 or less Exempt TAX PAYABLE CALCULATION $1,250,001 up to $2,500,000 (TAR less $1,250,000) x 4.3% Over $2,500,000 TAR x 2.15% (the first $1,250,000 is not deducted) The Canadian Payroll Association Payroll Fundamentals 2 5-29
Example: Total Annual Remuneration (TAR) $1,750,000.00 $1,750,000.00 Less exemption - 1,250,000.00 $ 500,000.00 x 0.043 Tax due $ 21,500.00 Example: Total Annual Remuneration (TAR) $2,600,000.00 x 0.0215 Tax due $ 55,900.00 Note: Payrolls of $2,500,000.00 and $2,500,000.01 would both have a tax liability of $53,750.00, which is where the thresholds meet. Monthly Reporting and Remitting Requirements There are two monthly returns; the total annual remuneration paid to employees determines which form is completed by the employer. Associated corporations and certain partnerships are, as a group, deemed to be a single employer. Consequently, the total annual remuneration for each is combined to determine which of the tax rates apply. Payroll Tax Return for Annual Remuneration Between $1,250,000 and $2,500,000 Employers (including corporations of an associated group) with remuneration in the year between $1,250,000 and $2,500,000 must submit a return each month showing the amount of remuneration paid. Employers only begin to pay the tax when the cumulative remuneration for the year exceeds $1,250,000. Once that threshold is reached, the payroll tax is payable on the remuneration exceeding $1,250,000, and is calculated using the tax rate of 4.3% of the remuneration paid each month for the remainder of the year. Payroll Tax Return for Annual Remuneration Exceeding $2,500,000 Employers (including corporations of an associated group) with remuneration exceeding $2,500,000 in the year pay tax on their total remuneration paid. They must submit a return and remit the tax each month, using the basic tax rate of 2.15% times the remuneration paid in the month. The Canadian Payroll Association Payroll Fundamentals 2 5-30
Note: Employers with annual remuneration of $1,250,000 or less are not required to submit returns. Each employer who pays remuneration of more than $1,250,000 in the year must submit a monthly return to report the total monthly remuneration paid and to remit the applicable tax payable. If an employer has not paid any remuneration in a particular month, a nil report must still be filed by the due date. The monthly return forms are mailed to employers in advance of the due date by the Taxation Division. The forms are also available for download on the Manitoba Finance website. If the return provided by the Taxation Division is not received, the employer must still report and remit any payment of tax by the due date. The monthly return is due no later than 4:30 p.m. Central time on the 15 th day of the following month. For example, the return for March must be received by the Taxation Division no later than 4:30 p.m. on April 15 th. If the 15 th falls on a weekend or public holiday, the due date is 4:30 p.m. on the next business day. If the return is filed by mail, adequate time must be provided for mail delivery to ensure the return and remittance is received no later than 4:30 p.m. on the due date. Returns received by the Taxation Division after the due date will be subject to penalty and interest. Note: The postmark date on the envelope will not be accepted as the date of receipt. Annual Reporting and Remitting Requirements Employers who remit the Health and Post-Secondary Education Tax Levy during the year must file a Payroll Tax Annual Report MG 3204, by March 31 st of the year following the taxation year reported, to reconcile their year-to-date remittances against the calculation of total tax due. The Annual Report is available for download on the Manitoba Finance website. A copy of the Manitoba T4 and T4A summaries for the taxation year being reported must accompany the Annual Report. Associated employers must designate one employer from the group to complete, on the group s behalf: the Payroll Tax Annual Report Schedule A for Associated Corporations/Corporate Partnerships, which provides details of the tax of each employer within the group Section 1 of the report calculates total tax due by multiplying the annual remuneration that is subject to the tax by the appropriate rate. The Canadian Payroll Association Payroll Fundamentals 2 5-31
Section 2 reconciles the total tax due against the total tax remitted by the employer during the year. Any amount owing must be remitted to the Manitoba Finance Taxation Division by the last day of March of the following year. Penalties and interest will be applied to any amount owing, as the tax payable should have been reported and remitted on a monthly basis throughout the year. Any overpayment by the employer will be applied to the subsequent year, unless a written request for a refund is attached to the report. Penalties for Non-Compliance The penalties for non-compliance with regard to the reporting and remitting requirements of the Health and Post-Secondary Education Tax Levy are: as per the Health and Post-Secondary Education Tax Act, o an employer who fails to pay the tax incurs a penalty of 10% on the balance of tax owing o in addition, an employer who fails to file a return can be fined up to $200 for each day the return is outstanding o late or unpaid balances are subject to interest charges. The interest rate payable is set every January 1 and July 1 at the prime lending rate given to the province plus 4% as per sections 75 and 76 of the Tax Administration and Miscellaneous Taxes Act, o failure to supply information and/or produce records incurs a fine of at least $300 and not more than $10,000 for a first offense and between $1,000 and $20,000 for a second or subsequent offense o evasion of the payroll tax incurs a minimum fine of $500 and not more than $10,000 for a first offense and between $2,000 and $20,000 for a second or subsequent offense Newfoundland and Labrador The Health and Post-Secondary Education Tax (HAPSET) is paid by all employers who have a permanent establishment in Newfoundland and Labrador and who either: have employees who report for work at a Newfoundland and Labrador permanent establishment or have employees who do not report for work at a permanent establishment, but are paid from the Newfoundland and Labrador permanent establishment Remuneration refers to those payments and benefits which constitute income from employment, but does not include a pension, annuity, retiring allowance or superannuation income paid by an employer to a former employee after retirement. The Canadian Payroll Association Payroll Fundamentals 2 5-32
For the purpose of calculating the amount of taxable remuneration, employers in the province who are corporations and are associated with other employer corporations in the province will be treated as if they are one entity. Similarly, a partnership and all of its partners who are separate employers in the province will also be treated as one entity. In either of these circumstances, the applicable exemption must be shared. Tax Rate An exemption of $1,200,000.00 is applied to the total annual Newfoundland and Labrador payroll before the tax rate of 2% is applied. Example: The employer has a total estimated payroll of $775,000.00. As employers with payrolls of $1,200,000.00 or less are exempt, this employer is not subject to the HAPSET. Example: The employer has a total estimated payroll of $2,500,000.00. Total annual remuneration $2,500,000.00 Less exemption - 1,200,000.00 $1,300,000.00 Tax rate x 0.02 Tax due $ 26,000.00 Monthly Reporting and Remittance Requirements The reporting and remittance requirements for the Health and Post-Secondary Education Tax are: a monthly tax return must be filed by the 20 th of the month following the month in which the remuneration was paid, along with the employer s monthly remittance, or if no tax is due, a nil return must be filed. Cheques or money orders should be made payable to the Newfoundland and Labrador Exchequer. E-Filing Employers can also register for both e-filing of their HAPSET returns and for preauthorized debit services. Interested employers can file an Application to e-file Returns and Payments and a Payor s Authorization for Pre-Authorized Debits (PADs) for Business Purposes with the Tax Division of the Department of Finance for Newfoundland and Labrador. The Canadian Payroll Association Payroll Fundamentals 2 5-33
Annual Reporting and Remittance Requirements Although there is no official annual return form for the Health and Post-Secondary Education Tax, it is expected that employers subject to the tax reconcile the total taxes paid throughout the year with their final Newfoundland and Labrador T4 slips at the end of the year. Example: The employer reported a total payroll of $2,700,000.00 on their final Newfoundland and Labrador T4 slips. Total annual remuneration $2,700,000.00 Less exemption - 1,200,000.00 $1,500,000.00 Tax rate x 0.02 Tax due $ 30,000.00 The total HAPSET payments remitted to the Ministry of Finance during the year were $28,000.00 Tax due $30,000.00 Tax remitted - 28,000.00 Balance due $ 2,000.00 Penalties for Non-Compliance The penalties are: failure to file the Employer Information Return by the required due date may result in a penalty of not less than $100 nor more than $5,000 failure to pay the correct tax at the time required can incur a penalty of 10% of the amount of the tax that is unpaid failure to produce records may incur the following penalties: 1 st offense: minimum $300; maximum $10,000 and/or a 90 day prison term 2 nd offense: minimum $500; maximum $20,000 and/or a 180 day prison term 3 rd or subsequent offense: minimum $1,000; maximum $30,000 and/or a maximum 365 day prison term an employer who attempts to evade payment of the tax is liable to a fine not exceeding 50% of the amount of the tax evaded or sought to be evaded Interest, compounded daily, will be levied on outstanding amounts from the date the sum is required to be paid to the date of payment. The Canadian Payroll Association Payroll Fundamentals 2 5-34
Ontario The Employer Health Tax (EHT) is paid by all employers who have a permanent establishment in Ontario and who either: have employees who report for work at a location in Ontario or have employees who do not report for work at any location, but are paid from an establishment located in Ontario EHT is calculated on the employer s total gross Ontario remuneration paid to employees or former employees. Remuneration includes all payments, benefits and allowances required under sections 5, 6 and 7 of the Income Tax Act to be included in the income of the employee from office or employment that is considered employment income. Remuneration does not include the following: a retiring allowance/severance pay a pension, annuity or superannuation paid by an employer to a retired employee remuneration paid by employers who are native people carrying on business on a reserve remuneration paid to native people working for a corporation which is located on a reserve remuneration paid to employees by an embassy or a consulate Tax Rates The EHT rate to be applied is determined by the employer s gross total Ontario remuneration. Exhibit 5-4 GROSS TOTAL ONTARIO REMUNERATION EHT RATE Up to $200,000.00.98% $200,000.01 - $230,000.00 1.101% $230,000.01 - $260,000.00 1.223% $260,000.01 - $290,000.00 1.344% $290,000.01 - $320,000.00 1.465% $320,000.01 - $350,000.00 1.586% $350,000.01 - $380,000.00 1.708% $380,000.01 - $400,000.00 1.829% Over $400,000 1.95% The Canadian Payroll Association Payroll Fundamentals 2 5-35
Tax Exemptions The first $450,000.00 of the annual payroll is exempt from EHT for employers who are: in the private sector with annual Ontario payroll of $5 million or less organizations that are considered part of the Ontario public sector for the purposes of the Social Contract Act and are funded by the Ontario Government but are not controlled by it registered charities crown corporations subject to tax under Part 1 of the Income Tax Act. Employers not eligible for the tax exemption are: private sector employers with annual Ontario payrolls in excess of $5 million public sector employers, including federal, provincial and municipal governments, universities, colleges, school boards and hospitals crown agencies not subject to tax under Part 1 of the Income Tax Act employers exempt from income tax under paragraphs 149(1)(a) to (d.6), (h.1), (o) to (o.2), (o.4) to (s.2) and (u) to (z) of the Income Tax Act, that is, municipal and provincial corporations and certain trusts The gross total Ontario remuneration determines the rate that will be applied to the taxable total Ontario remuneration. Gross total Ontario remuneration is the remuneration before the exemption is deducted. Taxable total Ontario remuneration is the remuneration after the exemption is deducted. Example: The Employer Health Tax for a private sector employer eligible for the $450,000.00 exemption is: Gross total Ontario remuneration $750,000.00 Exemption amount - 450,000.00 Taxable total Ontario remuneration $300,000.00 Tax rate (based on gross total Ontario remuneration, $750,000.00) 1.95% Taxable total Ontario remuneration $300,000.00 Tax rate (1.95%) x 0.0195 Tax payable $ 5,850.00 The Canadian Payroll Association Payroll Fundamentals 2 5-36