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Canadian Payroll Services

At Bradford Jacobs, our Employer of Records (EOR) platform provides reliable solutions for companies wishing to establish their presence in the Canadian economy. From the first steps of setting up operations to ensuring compliance with the local payroll laws and regulations, we offer dedicated Canada Payroll solutions that can be personalized to your requirements. We aim to make business expansion easy. At Bradford Jacobs, we navigate the administration of the Canada payroll system for you, and we also make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities. We do the work, so you do not have to. When expanding into a new country, you may encounter some challenges regarding payroll. The mysteries of Canadian and Québec taxation can be daunting but allow us to take the reins and answer any of your questions and concerns with our trusty guide on payroll for Canada.

What Canadian Payroll Options Are Available for Companies?

  • Remote payroll – This option allows businesses to operate under a single payroll system, by adding employees in Canada to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
  • Internal payroll – You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Canada. However, this does require hiring dedicated HR staff who understand Canadian employment and compliance laws.
  • Canada payroll processing company – If you are considering outsourcing, then working with a Canadian payroll company will help in processing your payroll – but not when it comes to compliance.
  • Canada payroll outsourcing – However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can manage payroll and compliance for all your employees in Canada. We take the administrative stress off your shoulders so you can focus on what you do best.

Canadian Payroll Services

Companies expanding their operations into Canada open up a world of opportunity – but challenges come alongside the benefits. Payroll management is among those challenges, whether your company is considering moving employees abroad or hiring fresh staff in-country. Employment laws, payroll regulations and income tax requirements vary between the federal government and the 10 provinces and three territories. Bradford Jacobs’ Employer of Record (EOR) payroll solutions will navigate around these potential pitfalls effectively and efficiently by putting into action our comprehensive knowledge of federal and provincial taxes and payroll regulations.

As part of our service, we file returns and associated payments for wages tax and social security contributions directly from our payroll system to the relevant authorities. Staying up to date with federal and provincial laws is a vital element of our payroll services. Our role in consulting with the Canada Revenue Agency includes:

  • Confirming the requirement to make payroll deductions. Any remuneration relating to employment requires registering for payroll
  • Obtaining the employee’s Social Insurance Number (SIN) within three days of their starting work, and completing Form TD1 (Personal Tax Credits Return) within seven days of starting and before paying the employee
  • Obtaining a Business Number (BN) from the federal government or a Québec Enterprise Number for those incorporating in that province
  • Opening a payroll program account to obtain the payroll number needed to remit deductions and file returns. We register for the program account as soon as hiring begins
  • Calculating deductions and contributions for Canadian Pension Plan (CPP), Employment Insurance (EI) and income tax
  • Submitting payroll information returns, completing, and filing year-end summary of all employees’ pay and deductions and remitting deductions for CPP, EI and income tax. In most cases deductions are filed by the 15th of the month after employees are paid. Remuneration includes taxable benefits and allowances. Different rules may apply to Small and Medium Enterprises (SMEs)

Additional payroll support includes:

  • Negotiating any tax exemptions for skilled expats (where applicable)
  • Reconciling federal, and any provincial, territorial and local taxes to assess for refunds or extra payments
  • Calculating employees’ monthly salary and sending their pay slips
  • Researching for any available tax incentives
  • Submitting employees’ and employers’ wage tax returns
  • Creating and submitting your company’s annual accounts and year-end statements
  • Creating payment schedules for salaries and any insurance contributions (if applicable)
  • Ensuring accurate personal income tax returns are filed for you and your employees, where required

The above checklist highlights why the vast percentage of foreign companies expanding into Canada’s strictly regulated business environment hand their payroll to EOR providers such as Bradford Jacobs. By outsourcing payroll, your company complies with tax and employment regulations without risking sanctions or financial penalties for late or incomplete filing. You focus on your goals and expansion, free of any concerns over payroll.

What is required to set up Payroll in Canada?

Companies expanding into Canada must meet basic legal requirements with running payroll, in addition to complying with minimum wage, overtime pay and employee benefits which vary between federal government and provincial regulations.

  • All companies must be established as legal entities to process payroll, either under federal or provincial/territorial laws
  • Federal incorporation allows a business to trade overseas and in any Canadian province or territory; provincial incorporation allows a company to trade overseas but only in the Canadian province or territory where they are incorporated
  • Employers running their own payroll must check every employee’s Social Insurance Number (SIN) card within three days of starting work and ensure the employee completes Form TD1 for personal tax credits return. The TD1 governs the amount of tax withheld from employment or other income, such as a pension scheme
  • Taxes must be remitted to federal or provincial authorities at the risk of severe penalties for failure to file on time
  • Employers must also withhold contributions for Canada Pension Plan (CPP) and Employment Insurance (EI) premiums

What Entitlement and Termination Terms apply to Canada Payroll?

Workers’ compensation programs vary between federal, provincial, and territorial regulations. The Labor Code and Canada Labor Standards Regulations form the structure of laws and regulations covering termination and entitlements. Arrangements can differ between Canada’s 10 provinces and three territories. Provisions include

National Minimum Wage: On December 29, 2021, Canada introduced a new Federal Minimum Wage affecting all private sector federally regulated employees of CAD 15 (US$11.92), regardless which province or territory they work in. This is the lowest hourly rate which can be paid, although if the province mandates for more than CAD 15, the higher rate applies.

For those workers not covered as federally regulated private sector employees, the minimum wage will still be set according to which of the 10 provinces or three territories they work. For example, as of October 2021, rates included Alberta CAD 15 (US$11.92), Newfoundland and Labrador CAD 12.50 (US$9.93), Northwest Territories CAD 13.46 (US$10.69) and Nunavut CAD 16.00 (US$12.71).

Sick Leave: Federal Employment Insurance (EI) sickness benefits allow for up to 15 weeks’ allowances at 55% of salary to a maximum of CAD 595 (US$472). Certification is required to prove inability to work due illness, injury, quarantining or any other designated condition. Arrangements can differ between Canada’s 10 provinces and three territories.

Working Hours and Breaks: Standard working hours in a federally regulated industry are eight per day in a period of 24 consecutive hours, for a total of 40 in a week, stretching from midnight Saturday till midnight the following Saturday

Employees are entitled to one full day of rest, usually the Sunday. Except in certain circumstances the maximum working hours should not exceed 48 in a week. Employers are entitled a minimum 30-minute for each five-hour period worked.

Overtime: Any hours worked over the standard week are considered overtime and reimbursed at 1.5 times the normal hourly rate. Managers and executives and professions such as doctors, lawyers, dentists, architects, and engineers are precluded from overtime.

Paid Vacations: Federally regulated employees receive two weeks’ paid vacation for a completed ‘year of employment,’ with an increase to three weeks after five years with the same employer and four weeks after 10 years’ employment.

The employee’s qualifying ‘year of employment’ begins on the date they were hired, or a 12-month period decided by the employer within parameters of the Canada Labor Standards Regulations. Arrangements can differ between Canada’s 10 provinces and three territories.

Maternity Benefits: These are federally administered for all jurisdictions from Employment Insurance (EI) except for Québec. Benefits depend on the type of benefit chosen and the pre-tax earnings in the previous 52 weeks or since the last claim, whichever is shorter. The benefit is 55% of average insurable weekly pay up to a maximum of CAD 595 (US$478) in 2021. Québec employs an independent Parental Insurance Plan (QPIP), with rates assessed according to which plan is chosen. Québec is the only province that identifies “paternity leave” as a separate benefit.

Parental Leave: Job-protected entitlements vary between regulations for federally regulated private sectors and those of the 10 provinces and three territories. Typically, parental leave is for 35 weeks from when the baby is born until the baby is one year old. Parents can choose between standard benefits at 55% of average weekly insurable earnings to a maximum of CAD 595 (US$478), or extended benefits up to a maximum of 61 weeks, at 33% of average insurable weekly earnings capped at CAD 357 (US$286), plus family supplement if the parents are entitled.

Notice Periods, Termination and Severance: An employer must provide an employee with at least two weeks written notice of their intention to terminate employment. In lieu of written notice, the employer must pay two weeks’ wages at the regular rate. Employers must give severance pay regardless of the length of service or the company’s size. Written notice or pay in lieu does not apply in certain circumstances – if the employee has not completed three months’ continuous service, is being dismissed for just cause or the contract specifies an end date for employment. An employee is not legally required to give notice, but contracts usually include a notice period clause for both employer and employee. Also, each province/territory has its own rules and regulations.

Public Holidays: Not all public holidays are celebrated throughout Canada so employers and employees should check with each province or territory.