Payroll Deductions for Salary Drawn from your corporation

When you earn through your own private corporation, obviously you need to withdraw money from it. As explained in detail in my last blog, the most common ways of drawing the money from your corporation is either by way of salary or dividend.

When you draw salary from corporation, you need to pay the payroll taxes regularly within the prescribed time limit. Many private corporations pay the payroll deductions on a monthly basis. Payroll deductions need to be paid within 15 days from the end of the month in which such salaries and wages are paid out from the corporation. Some corporations also pay on a quarterly basis.

Canada Revenue Agency (CRA) also keeps track of all the payroll deductions that your corporation remit regularly to them (CRA).CRA has its own cash flow planning for payroll deductions payment. Therefore, in case if you do not take out any payroll from your corporation, there will be no payroll taxes to pay. In such case, the fact that there is no payroll deduction for the month needs to be intimated to CRA before CRA makes a call to inquire about no payroll deduction.

You can intimate it to CRA either by phone on 1-800-959-5525 or file NIL remittance payroll report through “My Business Account “of CRA.

Disclaimer: Any discussion on this blog relating to tax matters is purely for educational purposes and not taking any specific actions based the general tax rules described therein. Your tax situation could be different and as a result there may be different tax strategies applicable in your case. We do not claim the tax situations described above to be exhaustive or conclusive. In case of any specific tax situations or problems, you are advised to seek professional advice.