There are specific rules for payroll and taxation in Canada, depending upon whether your company employs foreign nationals or local Canadian employees, and the type of business structure used. The primary concerns for a foreign company that needs to comply with tax laws in Canada are: individual income tax (IIT) for employees in Canada, social security costs, payroll tax, GST/HST tax, withholding tax, corporate tax and permanent establishment concerns.
Employment standards in Canada provide a set of minimum standards by law for work conditions. Both the federal and provincial governments have authority over labour and employment law in Canada, which could affect payroll administration.
A remote payroll in Canada is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Canada. This path will still require the company to report Canadian source earnings and tax withholdings, so it can carry quite an administrative burden. One option for a non-resident company to payroll its employees (local and foreign) in Canada is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.
In some cases, a company will register their business in Canada under one of the forms available, but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Larger companies with a commitment to Canada may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Canadian payroll, and can fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Canadian employment laws.
Companies can outsource the employment and payroll of their staff in Canada to a GEO, like Shield GEO. This is possible for both foreign workers and Canadian nationals. This is the easiest, fastest and safest way to payroll staff in Canada.
Shield GEO manages all aspects of payroll for workers in Canada, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.
Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.
Read more about outsourced payroll and employment through Shield GEO.
|Employee Information Required ?||
Canadian laws require that the following information shall be provided to employees, or printed on employees’ pay statement:
|Tax Registration Requirements ?||
In Quebec, employers are required to register with Revenu Québec if income is paid to an employee who reports for work at one the employer’s establishments in Québec or the amount is paid to an employee who is not required to report for work at any of the employer’s establishments (in Québec or elsewhere), but is paid from one of your establishments in Québec.
|Social Security Registration ?||
Pension Plan contributions in Canada and Quebec are required by both the employee and employer.
|Documentation Required for New Employees ?||
Documents required for new employees in Canada are as follows:
|Payment Mode ?||
Online filing is preferred. Majority of payments, indeed, are done electronically and may be a requirement based on remitter type
|Frequency of Salary Payment ?||
Most common are:
|Invoice / Payslips required ?||
A payslip is required and can be provided either by paper or electronically, depending on the jurisdiction.
|Minimum Wage ?||
Ranges from $8.90/hour to $11.00/hour by jurisdiction and legislated by the provincial and territorial governments.
|Working on Sundays ?||
An employee of a retail business who was hired before September 4, 2001 has the right to refuse to work on Sundays.
If an employee has agreed to work on Sundays, whether or not the agreement was made when he or she was hired, the employee can later decline to work on a Sunday by giving the employer at least 48 hours’ notice before the employee’s work was to begin.
An employee of a retail business who was hired on or after September 4, 2001 does not have the right to refuse to work on Sundays if he or she agreed in writing at the time of being hired to work on Sundays, unless he or she is refusing to work on Sundays because of religious belief or observance (in which case the employee must give the employer notice before the Sunday at least 48 hours before the Sunday work was to begin). Note that if a Sunday falls on a public holiday, the employee could refuse to work on the day, even if he or she had agreed at the time of hire to work on Sundays.
An employee who did not agree in writing at the time of being hired to work on Sundays may agree at some later point to work on Sundays or on a particular Sunday. In that case, the employee could subsequently decline to work the Sunday(s) by giving the employer at least 48 hours’ notice before the employee’s work was to begin.
|Disclosure and Confidentiality of Personal Information ?||
Employers and employees are often subject to privacy laws in Canada, one of which is the Privacy Act, which applies to employee information in federal government institutions and the Personal Information Protection and Electronic Documents Act (PIPEDA) applies to employee information in federal works, undertakings and businesses.
It is considered an employer’s responsibility to safeguard employee data. Policies and procedures, in particular, should be put in place in reference to the methods they currently use to collect, use and disclose personal information, and make the proper determinations in relation to what is reasonably required for the purpose of establishing, managing, or termination an employee relationship.
|Employee Protection and Anti-discrimination Rights ?||
Most employees have the right to refuse work that they feel is unsafe to themselves or another worker or believes they are endangered by workplace violence or harassment
|Time Off Work ?||
Almost all employees have a legislative right to unpaid or paid time off work for the following reasons:
|Medical Leave ?||
Not all jurisdictions have legislation in place relating to sick leave. Those do not have legislation in place rely on employer sick leave policies or general/emergency leave provisions in their legislation to cover individuals who are absent due to illness.
|Resignation / End of Service Payment ?||
An employer must either give the employee a period of notice, or pay the employee wages in lieu of the notice period to an employee who has been continuously employed for 3 months (or 90 days) or more, depending on the jurisdiction.
|Termination of Employment ?||
All employers must complete a Record of Employment (ROE) when an employee experiences an interruption of insurable earnings. The employer must provide a copy to Service Canada, the employee and retain copy with the employee’s records.
The ROE can also be completed online either through Service Canada or through a payroll service provider where the electronic copy is automatically led with Service Canada and the employee can access their copy on Service Canada’s website.