Payroll reporting in Canada is changing soon: What you need to know

Warren Orlans is Xero’s Product Compliance Manager for Canada and Erin Wood is Xero’s Payroll Product Compliance Lead for Canada.

THE Canadian government is making significant changes to payroll reporting to streamline and modernize the process. As the changes are set to take effect, it is important for everyone to be aware of the significant updates and prepare accordingly. 

Last month, the government announced the ePayroll Project. The project aims to streamline the process by changing the way employers report payroll, employment, and demographic information to government departments such as Service Canada, the Canada Revenue Agency (CRA), and Employment and Social Development Canada (ESDC). 

As you know, employers currently send payroll information to the federal government at a particular time, such as when they issue a T4 slip or a Record of Employment. Employers are often required to provide the same information to multiple government departments and agencies, causing a duplication of work for them and their accountants or bookkeepers. 

The goal of ePayroll is an admirable one: to reduce the administrative burden for Canadian employers and streamline the delivery of government benefits and services. This would ensure key information gets into the hands of the Government in a timelier manner, which can assist the government in the issuance of benefits and the collection of taxes. It also saves time for the businesses and their advisors, which can be reinvested into other areas of the business. 

So how would this work? ePayroll will require Canadian employers to securely send payroll, employment, and demographic information to a protected Government of Canada repository from which government departments and agencies could access the information they need, when they need it. 

It’s important to note that ePayroll is not a payroll processing system run by the Government. Canadian employers will continue to be free to choose the payroll processing software that suits them and their advisors. 

The government’s ePayroll Project Team will continue to consult with internal and external stakeholders to help identify challenges, opportunities and provide input on what features they would like to see in an ePayroll solution. Parties included in these consultations will be:

• Other government departments;
• Employers of all sizes;
• Indigenous peoples and businesses;
• Industry associations and labour unions;
• Payroll service software providers and vendors;
• Academics and professional experts;
• Employees who work and reside in Canada, and
• Other interested parties. 

Canadian employers will continue to be free to choose the payroll processing software that suits them and their advisors. (XERO)

Making the payroll process easier

As changes to the process evolve, Xero has been consulting with the government and staying informed in order to educate and support accountants, bookkeepers and small business owners. 

In the meantime, small businesses and accountants can make payroll easier by using the Xero platform, plus a payroll app partner from the App Store — Wagepoint, Payment Evolution or Rise — will streamline how businesses report their payroll to the government. Our payroll app partners offer automatic remittances and reporting to the CRA, which means that employees and the government are paid accurately and on time. 

Xero also acquired TaxCycle just over a year ago, which means integration into the Xero platform for an end-to-end workflow. 

By embracing cloud-based technology that integrates with tax and payroll partners, this not only future proofs for upcoming payroll reporting but it also gives small businesses, accountants and bookkeepers more time and energy to focus on running their businesses and not on government compliance. 

Warren Orlans is Xero’s Product Compliance Manager for Canada and Erin Wood is Xero’s Payroll Product Compliance Lead for Canada. Title image: iStock. Author photos: Xero.