What happens if I’m late on a payroll remittance?
CRA charges a graduated penalty on late source deductions — from 3% for a day late up to 10%, and 20% for repeat lateness — plus interest.
When you run payroll, the income tax, CPP, and EI you withhold are trust funds — CRA treats them as the government’s money sitting in your account. That is why the penalties for remitting late are steeper than almost any other filing.
The penalty ladder
CRA’s late-remittance penalty scales with how late you are: 3% (one to three days), 5% (four or five days), 7% (six or seven days), and 10% (more than seven days, or not remitted at all). Remit late more than once in the same calendar year and CRA can charge 20%. Interest accrues on top.
The part owners underestimate
Directors can be held personally liable for unremitted source deductions. Corporate protection does not cover trust funds, which makes payroll remittances the one deadline you never trade against cash flow.
How this never happens with current books
Remittances are due on a schedule set by your remitter type — for most small employers, the 15th of the month after payday. When payroll and books run on one system, the remittance goes out with the payroll run instead of living in someone’s memory.
This is general information, not tax advice for your situation. Book a call and a Canadian accountant will give you the answer for your business.
Common questions
I missed one remittance by two days. Will CRA really penalize me?
The penalty structure starts at 3% for one to three days late, though CRA sometimes shows flexibility on a first slip. Do not build a habit on that hope; the repeat penalty is 20%.
Can CRA come after me personally for payroll amounts?
Yes. Unremitted source deductions are trust funds, and directors can be personally assessed for them. It is the sharpest edge in Canadian small business tax.