UPDATE
On August 9, 2022, the Government released a package of draft legislation to implement various tax measures announced in the 2022 Budget and to update certain previously released draft legislation. The effective date of the proposed change to require electronic remittance of payments of $10,000 or more is postponed to the year 2024.
In February, the Federal Government proposed a new rule which will require all payments to the Receiver General for Canada for income tax or Goods & Services Tax/Harmonized Sales Tax (“GST/HST”) of more than $10,000 to be made electronically via a designated financial institution. There will bean exception for payments that cannot “reasonably” be made electronically, but we have no guidance on what “reasonably” means in these circumstances.
While this new rule is not in force yet, we expect that it will become law soon.
The penalty for making such a remittance by non-electronic means is $100 per payment. However, the law appears to prohibit such remittances – so Canada Revenue Agency (“CRA”) could simply reject a cheque payment in an amount greater than $10,000 (and then charge additional interest and/or penalties because the required payment not made).
The rule applies to the payment amount, not the amount due. For example, if you have a balance of income tax of $18,000 which is due on June 30 and you send (i) one cheque by courier to CRA for $9,000 on June 28 and (ii) a second cheque for $9,000 by courier to CRA on June 29, then you have not made a payment in an amount greater than $10,000 and therefore you don’t seem to have violated the proposed rule (two payments on thesame day will probably be aggregated and counted as a single payment for the $10,000 threshold). We cannot confirm that CRA will accept this method, but it appears to comply with the law as proposed.
If you expect to make payments to the Receiver General in excess of $10,000 are not currently using electronic remittance methods via a designated financial institution, we recommend that you contact your financial institution and make arrangements to use their electronic remittance systems. Generally speaking, these electronic systems are faster and more reliable than using cheque payments but they sometimes require an initial effort to establish the correct structure. There can also be a requirement to initiate the payment process several business days before the remittance due date, so plan to initiate the electronic payment through your financial institution well before a payment due date.
For information on how to make electronic payments to the Receiver General for income tax, GST/HST, payroll remittances, and other taxes, please visit the Canada Revenue Agency webpage at https://www.canada.ca/en/revenue-agency/services/payments-cra.html.
You can also register for CRA’s online services, and use these systems to create pre-authorized payments to CRA from your bank account:
Please contact your D&H Group LLP advisor if you have any questions.
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