Declining Formula: Feds continue to alleviate the paperwork burden

National Post

2014-04-01


February's federal budget contained very few measures for small business owners, but buried in the proposals was a measure that should continue to help alleviate the paperwork burden for them. Roughly 900,000 small employers and businesses since 2007 haven't had to make an estimated 7.6 million filings and remittances annually. There should be even fewer filings starting in 2015. Here's why.

Under the tax law, employers are required to withhold and remit source deductions (incometax, CPP contributions and EI premiums) on a regular basis.How often a business must remit is based on the employer's total average monthly withholding amount in preceding calendar years. Regular remitter: If an employer's average monthly remittance two years ago was less than $15,000, it is a regular remitter and must remit source deductions by the 15th day of the month following the month the deductions are made.

Quarterly remitter: Small employers have the option of remitting source deductions quarterly. To qualify for quarterly remitting, an employer has to have an average monthly withholding amount of less than $3,000 in either the first or the second preceding calendar year and have a perfect compliance history.

Accelerated remitter: An employer whose average monthly withholding amount from two years ago is large enough may have to make accelerated remittances.

Threshold 1: This group includes employers that had a total average monthly withholding amount of $15,000 to $50,000 two calendar years ago. Amounts deducted or withheld in the first 15 days of the month are due by the 25th of the same month, while amounts withheld fromthe 16th to the end of the month are due by the 10th day of the following month. In order to reduce the tax compliance burden for these remitters, the recent budget proposes to increase the threshold level of average monthly withholdings at which employers are required to remit up to two times permonth to $25,000from$15,000, starting in 2015. Threshold 2: This group includes employers that had a total average monthly withholding amount of $50,000 or more two calendar years ago.Amounts are due four times monthly. The 2014 budget proposes to increase the threshold level of average monthly withholdings at which employers are required to remit up to four times per month to $100,000 from $50,000, starting in 2015.