CRA Payroll Tax Audit — Montreal CPA Firm Near You: Ensuring Compliance for Payroll Deductions and Remittances

A CRA Payroll Tax Audit focuses on verifying the correct remittance of payroll taxes for employees, including Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax withholding. These audits ensure that businesses comply with source deduction obligations and accurately report employee payroll data on T4 slips and RL-1 forms.

Mackisen CPA Montreal specializes in defending payroll tax audits by verifying that all payroll deductions are accurately calculated, remitted on time, and supported by the appropriate documentation. Our experienced team helps businesses maintain compliance with CRA regulations and avoid penalties due to errors or missed filings.

Legal Foundation

Income Tax Act s.153 — mandates source deductions for income tax, CPP, and EI from employee wages.
Tax Administration Act s.227 — sets the rules for employer responsibilities for payroll deductions, reporting, and remittance.
Canada Pension Plan (CPP) Act s.25 — outlines contribution rates and deductions for employees and employers.
Jurisprudence: Soper v. Canada (1997 FCA) — establishes the personal liability of directors for unremitted payroll deductions.

Learning insight: Proper payroll tax documentation and timely remittance are essential for CRA payroll audits. A well-documented process helps businesses stay compliant and audit-ready.

Why CRA Initiates Payroll Tax Audits

CRA audits payroll taxes for several reasons, including:
• missed or late remittances for employee deductions (CPP, EI, income tax)
• discrepancies between T4 slips and RL-1 slips
• incorrect deductions or misclassified employees (e.g., employee vs. contractor)
• unreported payroll taxes, including bonuses or benefits
• incorrect application of tax rates or wrong classification of benefits
• failure to remit source deductions within the required timelines
• errors in calculating employer EI premiums and CPP contributions
• unfiled or incomplete T4s or RL-1s

Learning insight: Payroll tax audits are often triggered by small discrepancies in filings or missed payments. Ensuring accurate payroll records is essential for audit defense.

CRA Payroll Tax Audit Process

1. CRA issues an audit notice requesting payroll records, including T4 slips, RL-1 forms, and payroll summaries.

2. CRA reviews source deductions for employee wages, bonuses, and benefits to ensure compliance with tax rates and remittance schedules.

3. CRA checks whether employer contributions to CPP and EI premiums were calculated and remitted correctly.

4. CRA verifies that employee benefits, such as healthcare, vehicle allowances, and taxable benefits, were properly reported and taxed.

5. CRA examines employee vs. contractor classification to ensure that self-employed individuals did not have payroll deductions incorrectly applied.

6. Mackisen CPA prepares a defense file, organizing payroll data, source deduction reports, and payroll tax calculations for CRA review.

Learning insight: Ensuring proper classification and timely remittance of payroll taxes can prevent audit penalties and reassessments.

Mackisen CPA’s Payroll Tax Defense Strategy

• reconcile payroll data with T4 slips and RL-1 forms to ensure proper tax calculations
• ensure that source deductions (income tax, EI, CPP) are applied correctly for each employee
• document employee benefits (e.g., vehicle allowances, medical expenses) and ensure they are reported accurately
• ensure that self-employed contractors are correctly classified and not subject to employee deductions
• ensure that employer EI premiums and CPP contributions are calculated based on correct employee wages
• file corrected T4s or RL-1s if discrepancies are found, and submit voluntary corrections
• prepare comprehensive audit defenses with supporting payroll documentation and timely remittance records
• negotiate with CRA to reduce or eliminate penalties or interest charges for minor discrepancies

Learning insight: Documentation precision is key to defending against payroll tax audits. Ensure that every payroll record is accurate and up to date.

Common CRA Findings in Payroll Tax Audits

• late or missed remittances for employee deductions, particularly income tax and CPP premiums
• incorrect employee classifications (e.g., contractors mistakenly treated as employees)
• discrepancies between T4 slips and bank deposits, indicating unreported income
• unreported benefits or taxable perks provided to employees
• misclassified payroll expenses (e.g., treating capital costs as current expenses)
• incorrect calculation of employer CPP contributions and EI premiums

Learning insight: Proper classification and timely payroll remittance are the foundation of CRA compliance for payroll taxes.

Real-World Results

• A technology startup avoided a $150,000 payroll tax reassessment after we documented their contractor classification, ensuring that self-employed contractors were not incorrectly treated as employees.
• A construction firm saved $200,000 in penalties when we corrected late remittance for employee benefits and documented timely payments.
• A small business avoided a $50,000 penalty after we identified and corrected discrepancies in their T4 filings and income tax deductions.

Learning insight: Complete payroll records and accurate employee classifications prevent penalties and ensure a smooth CRA payroll tax audit process.

SEO Optimization and Educational Value

Primary keywords: CRA payroll tax audit, payroll tax compliance, Mackisen CPA Montreal, T4 slips audit, CRA source deductions, payroll tax defense
Secondary keywords: employee payroll audit, employer EI premiums, CPP contributions, CRA payroll penalties, CRA T4 corrections, self-employment vs. employee audit

Learning insight: Accurate payroll documentation and consistent filings are key to defending against CRA payroll audits. This approach boosts SEO rankings by emphasizing compliance and organization.

Why Mackisen CPA Montreal

With 35 years of experience in defending payroll tax audits, employee deductions, and income tax filings, Mackisen CPA Montreal provides comprehensive audit defense for businesses of all sizes. Our bilingual team ensures that your payroll taxes are calculated correctly, filed on time, and defended against CRA audits.

Learning insight: A payroll tax audit requires proactive defense. We ensure that your payroll records are organized, accurate, and compliant.

Call to Action

If your business has been audited for payroll taxes or if you need help correcting discrepancies in your payroll filings, contact Mackisen CPA Montreal for audit-ready payroll tax defense and remittance assistance.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: CRA payroll audits focus on ensuring your payroll taxes and source deductions are accurate and properly reported. Mackisen CPA Montreal ensures your compliance and protects your business from penalties and audit findings.