Ottawa, Ontario, November 24, 2006â€¦.The Canada Revenue Agency (CRA) today took serious exception to allegations that it treats some taxpayers unfairly. The CRA clarified its application of the mandatory bank remitting penalty to enforce timely remittance of source deductions to the Government of Canada.
The Income Tax Act requires employers whose monthly source deduction remittances exceed $50,000 make their payments at a financial institution by the business day they are due. This is to ensure that the payments are immediately credited to the Government of Canada. Some employers have been making their remittances directly to the CRA, with the result that the deposit was often delayed until the next business day, which might occur two or even three days later. Playing the system this way, while advantageous to some employers, was unfair to all other taxpayers.
Acting on the recommendations of an internal CRA audit and of the Auditor General, as well as on a recommendation of the House of Commons Standing Committee on Public Accounts, the CRA in March 2006 launched an information and education campaign to remind all large employers of their obligations under the Income Tax Act to make remittances at their financial institution.
Throughout the Spring and Summer of 2006, CRA clearly advised nearly 57,000 large employers that there would no longer be any flexibility in the application of the penalty as of October 2006. Where large employers continue to make their remittances at a CRA office, the penalty is being assessed in full. The penalty represents 10 per cent of the amount of the payment.
Suggesting that such penalties are unfair is in fact suggesting that the CRA not apply the provisions of the Income Tax Act. This would have the effect of giving a small number of businesses what amounts to unfair financial advantages.
The CRA is committed to ensure that all taxpayers are treated equally and will impose penalties where warranted.
For more information on the CRA services, please visit our Website at www.cra.gc.ca.
This is just my humble opinion .. but YES! I DO SUGGEST THAT SUCH PENALTIES ARE UNFAIR and recommend that businesses write to the fairness committee to complain and get these penalties reversed. I am a strong believer that a deadline is a deadline – and if payroll deductions are due on the 15th or any other date .. they should be received by Canada Revenue Agency by the 15th – midnite. If businesses want to pay a 3rd party (like the financial institutions) then the date that the 3rd party receives the payment should be the date received. I do believe it is unfair to these businesses who pay on time (which they should – it’s not their money and is trust funds) but get penalized up to 10% because their cheque didn’t clear the bank?
PS .. if you were not aware … according to CRA’s T4001 Employer Guide … Basically, there are three types of remitters …
(1) Regular remitters (under $10,000 per month)
* .. have to receive your deductions on or before the 15th day of the month after the month you made them.
(2) Accellerated remitters – Threshhold 1 – (between $10,000 and $50,000 per month)
* Amounts you deduct from remuneration paid in the first 15 days of the month are due by the 25th of the same month. Amounts you deduct from the 16th to the end of the month are due by the 10th day of the following month.
(3) Accellerated remitters – Threshhold 2 – (over $50,000 per month)
* Amounts you deduct from remuneration you pay any time during the month are due by the third working day (not counting Saturdays, Sundays, or public holidays) after the end of the following periods: from the 1st through the 7th day of the month; from the 8th through the 14th day of the month; from the 15th through the 21st day of the month; from the 22nd through the last day of the month
ALSO: Can you imagine offhand .. if a business has more than $50,000 payroll deductions to be remitted every month .. what is their gross payroll? How much payroll tax is the company already paying? How much company portion of CPP and EI are they paying? Penalizing the companies that provide employment to the community? What do you think?
If you do get charged with these unfair penalties .. and decide to complain – here’s what you do:
* In Most Cases … PAY THE BALANCE DUE – and then request a refund .. instead of witholding payment. IF you are in the right and a refund is issued, CRA will refund your money in tact plus interest. Whereas, if you are in the wrong and they do not cancel the amount .. you will end up paying more interest for no reason.
* Direct your enquiry to “Client Services – Fairness Committee” … In Winnipeg, for instance .. the mailing address is:
WINNIPEG TAX SERVICES OFFICE
CLIENT SERVICES â€“ FAIRNESS COMMITTEE
66 Stapon Road