As an employer, you have to deduct, remit, and report payroll deductions. You may be liable for penalties and interest for failure to do so.
Failure to deduct
You can be charged a penalty of 10% of the amount of CPP, EI, and income tax you failed to deduct. The penalty can be 20% for second or later failures in a calendar year.
Failure to remit and late remittance
If you deduct the amounts, but you do not remit them or you remit them late (after due date), the penalty is:
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- 3% if it is 1 to 3 days late;
- 5% if it is 4 to 5 days late;
- 7% if it is 6 to 7 days late; and
- 10% if it more than seven days late, or if no amount is remitted
Generally, the penalty is applied to the part of the amount you failed to remit that is more than $500.
The penalty can be 20% for second or later failures in a calendar year.
You will also be charge interest from the day your payment was due.