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How to Set Up and Remit Payroll Source Deductions (CPP, EI, Income Tax)

A quick guide on how to register for a CRA payroll account, set up payroll in QBO, and remit CPP, EI, and income tax source deductions on time.

Before you can run payroll in Canada, you need a CRA payroll account and a way to calculate and remit the correct deductions. This article walks through the setup and the remittance process.

What You Will Need

  • Your CRA Business Number (BN)
  • Employee information: SIN, date of birth, address, and completed TD1 forms (federal and provincial)
  • Access to payroll software (QBO Payroll, Wagepoint, or equivalent)
  • Access to CRA My Business Account (for remittances)

Normal Procedure

Step 1: Register for a payroll deductions account with the CRA

Your payroll account is an "RP" sub-account of your Business Number (e.g., 123456789 RP 0001).

  1. Log in to CRA My Business Account at canada.ca.
  2. Go to Payroll and select Register.
  3. Enter your first payroll date and expected number of employees.
  4. The CRA will confirm your payroll account number.

Alternatively, call CRA Business Enquiries at 1-800-959-5525.


Step 2: Collect TD1 forms from each employee

Before running the first payroll, each employee completes two TD1 forms:

  • Federal TD1 — declares federal personal tax credits (affects federal income tax withholding)
  • Provincial TD1 — declares provincial personal tax credits (affects provincial income tax withholding)

Store the completed TD1s in the employee's file. You do not submit them to the CRA — you use them to calculate the correct deductions.

Step 3: Set up payroll in your software

In QBO Payroll (or your chosen software):

  1. Go to Payroll > Set up payroll.
  2. Enter your payroll account number (RP account).
  3. Add each employee — name, SIN, date of birth, address, start date, pay rate, and pay frequency.
  4. Enter the TD1 information for each employee.
  5. Set your pay schedule (weekly, bi-weekly, semi-monthly, or monthly).

The software will calculate CPP, EI, and income tax deductions automatically for each payroll run.

Step 4: Run payroll

  1. In QBO Payroll (or your software), go to Run Payroll.
  2. Confirm the pay period end date and payment date.
  3. Enter hours worked (for hourly employees) or confirm salary amounts.
  4. Review the calculated deductions for each employee.
  5. Approve and process.

The software generates pay stubs for each employee and records the payroll expense, deductions withheld, and employer contributions in QBO.

Step 5: Remit source deductions to the CRA

Due date: 15th of the month following the payroll period (for regular/new small employers).

  1. Log in to CRA My Business Account.
  2. Go to Payroll > Make a payment.
  3. Enter the payroll period and the amounts for: employee income tax withheld, employee CPP contributions, employer CPP contributions, employee EI premiums, employer EI premiums (1.4x the employee amount).
  4. Submit the payment.

You can also remit through your bank's bill payment system — search for "Federal – Payroll Deductions" as the payee and use your RP account number as the account number.


Abnormal Procedures

You missed a remittance deadline.

Remit immediately and file anyway — the penalty is based on how late the payment is, not whether you file. The CRA will calculate the penalty and interest; pay the overdue amount as soon as possible to stop interest from accumulating. Let your Mesa CPA advisor know.


You have more than 15 employees or a payroll over $1M/year.

You may be required to remit more frequently (accelerated remitter). Check your CRA notice of assessment or My Business Account to confirm your remitter type.


You need to correct a past remittance.

Contact the CRA directly or work with your Mesa CPA team. Over- and under-remittances can be corrected, but the process depends on whether the issue is within the current year or crosses year-end.


FAQ

What is the difference between the payroll account (RP) and the income tax account (RT)?

The RP account is specifically for payroll source deductions. The RT account is for corporate income tax instalments. They are separate accounts under your BN, and you remit to them separately.


Can I calculate deductions manually instead of using software?

Yes — the CRA publishes payroll deduction tables (T4032) that show the correct amounts to withhold for different provinces and pay frequencies. In practice, this is time-consuming and error-prone for anything beyond the simplest payroll. Software is strongly recommended.


Do I need to remit if I run payroll but the deductions are $0?

If your employees' incomes are below the thresholds for CPP, EI, or income tax for a pay period, the deduction may be $0. You typically do not need to file a nil remittance, but confirm with your Mesa CPA team — requirements vary based on your remitter type.


What records do I need to keep?

Keep all payroll records — employee information, TD1 forms, payroll calculations, pay stubs, and remittance records — for a minimum of 6 years.