Should a Dentist Incorporate? Dental Professional Corporations in Ontario

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Should a Dentist Incorporate? Dental Professional Corporations in Ontario

Targeted Accounting

Incorporating a Dental Practice: A Tax Deferral, Not a Tax Cut

Almost every dentist is told at some point that they should incorporate. Sometimes that is good advice and sometimes it just adds a second set of filings. A dental professional corporation lets you earn practice income inside a company taxed at a low small business rate, and leave what you do not need personally to grow there. Whether it pays depends on how much of your income you can afford to leave in the corporation.

This guide covers how dental professional corporations work in Ontario, who can own the shares, the tax mechanics, what changed for income splitting, and the costs. It is part of our guide to dental bookkeeping and accounting.

How a Dental Professional Corporation Works

A dental professional corporation is an ordinary Ontario corporation with extra conditions. Under Ontario Regulation 39/02, each voting share must be legally and beneficially owned by a member of the Royal College of Dental Surgeons of Ontario. Non-voting shares can be owned by another member, by a family member of a voting dentist shareholder (their spouse, child or parent), or in trust for the dentist’s minor children.

The corporation’s name must identify it as a professional corporation, and it must obtain a certificate of authorization from the RCDSO before practising through it. The corporation then bills patients and insurers, pays staff and expenses, and pays you a salary, dividends or both.

Incorporating does not limit your liability for your own professional work. It can limit liability for some business obligations such as leases, but you still need malpractice coverage.

The Tax Advantage of a Dental Professional Corporation

A Canadian-controlled private corporation pays tax at the small business rate on the first $500,000 of active business income: 9% federally plus 2.2% in Ontario (cut from 3.2% on July 1, 2026), about 11.2% combined. A dentist earning the same income personally pays graduated rates that reach 53.53% in Ontario.

The difference is a deferral, not a permanent saving. When you take money out as dividends, personal tax applies, and the system is designed so the combined tax ends up roughly similar. The benefit comes from leaving money in the corporation for years, investing it with pre-tax dollars and choosing when to draw it, for example in lower-income years or retirement.

If you spend everything the practice earns, the deferral is small and may not cover the extra costs. If you can regularly leave a meaningful amount in the corporation each year, it usually pays. Our salary vs dividend calculator and salary vs dividends worked example show how the mix of pay affects the result.

Income Splitting After the TOSI Rules

Before 2018, many dentists issued non-voting shares to a spouse or adult children and paid them dividends taxed at their lower rates. The tax on split income (TOSI) rules now tax most of those dividends at the top personal rate.

Some exceptions still apply. Dividends to a spouse are generally excluded once the dentist is 65 or older. Family members who work in the practice on a regular, continuous and substantial basis (generally at least 20 hours a week) can also be excluded. The “excluded shares” exception that helps other businesses is not available to professional corporations.

Paying a reasonable salary to a spouse or child who works in the practice, for example in reception or the business office, is still fully allowed.

Passive Income and the Small Business Limit

Money left in the corporation is usually invested, and investment income has its own rules. Once the corporation’s passive investment income goes above $50,000 a year, its small business limit starts to shrink by $5 for every $1 over, and it disappears at $150,000. That pushes practice income onto the higher general corporate rate.

This only bites for dentists with large investment portfolios inside the corporation, but it is worth planning for with corporate-owned insurance, an individual pension plan or the timing of capital gains.

HST, Costs and When a Dentist Should Incorporate

Most dental services are exempt from GST/HST, so a dental practice does not charge HST on its services and cannot claim back the HST it pays on equipment, supplies and rent. That is true whether or not you incorporate, so HST is not a reason to incorporate either way.

The costs are real: legal fees to incorporate and obtain the certificate, an annual corporate tax return and financial statements, payroll for your own salary, and more bookkeeping. Associates can incorporate too, but the numbers need to work for their own income level.

Signs it is time: steady practice income well above what you spend, a plan to buy or expand a practice, or a desire to build savings inside the company. Our guide to the T2 corporate tax return covers the annual filing, and tax planning for owner-managers covers how to pay yourself.

Written by Targeted Accounting

CPA-led bookkeeping, payroll and outsourced CFO for Canadian businesses, with 10+ years of running and cleaning up small business books.

Thinking About Incorporating Your Practice?

We model the numbers for your practice before you incorporate, then handle the corporate tax, payroll and bookkeeping afterwards. See our corporate tax services or get in touch.

Tips and Gratuities in Canada: Payroll Rules for Restaurant Owners

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Tips and Gratuities in Canada: Payroll Rules for Restaurant Owners

Targeted Accounting

Who Controls the Tip Decides the Payroll Treatment

Tips are a large part of what restaurant staff take home, and they come with more rules than most owners realise. Whether you have to deduct CPP, EI and income tax depends on one question: does the employer control the tip? Provincial employment law then limits what you can do with tips at all, including how a tip pool works and whether you can share in it.

Getting this wrong means either under-deducting payroll and owing the CRA, or treating staff tips as your revenue. This guide covers the CRA rules, Ontario’s employment standards and the bookkeeping. It is part of our guide to restaurant bookkeeping and accounting in Canada.

Controlled Tips vs Direct Tips

The CRA splits tips into two kinds, and the payroll treatment follows from that split. The CRA’s guidance defines controlled tips as tips the employer controls or possesses and then must pay to the employee.

Controlled tips (through payroll)	Direct tips (not through payroll)
Mandatory service charges added to the bill	Cash left on the table and kept by the server
Tips deposited into the employer’s bank account and paid out later	Tips handed directly to staff
Tip pools where the employer sets the sharing formula	Tip pools run and shared by employees themselves
Tips calculated as a percentage of sales by the employer	Card tips returned to the employee in full, in cash, at the end of the shift

The test is about control, not payment method. A card tip can be a direct tip if it is handed back in full and the employer has no say over it, and a cash tip becomes controlled once it goes into an employer-run pool.

How Tips Go Through Payroll: CPP, EI and Tax

Controlled tips are treated as employment income. You deduct CPP contributions, EI premiums and income tax on them, remit those deductions with the rest of your payroll, and report the tips in box 14 of the employee’s T4 along with their wages. They also count as insurable earnings on a Record of Employment.

Direct tips are still taxable income for the employee, but you do not deduct anything on them. The employee reports them on line 10400 of their return and can choose to contribute to CPP on them using form CPT20.

Because controlled tips increase each pay’s deductions, remember them when you calculate what to send the CRA. Our guides to payroll remittance in Canada and how to do payroll in Canada cover the mechanics.

Ontario Rules on Tips and Tip Pools

Ontario’s Employment Standards Act protects employee tips. An employer cannot withhold tips or make deductions from them, except:

deductions required by law, such as income tax, CPP and EI on controlled tips;
deductions ordered by a court;
amounts redistributed to other employees under a tip-sharing (tip pool) arrangement.

The employer can decide who shares in a tip pool and how it is split, without employees’ consent. Owners, partners, directors and shareholders can share only if they regularly perform, to a substantial degree, the same work as some or all of the employees who share in the pool. Ontario also allows a limited deduction for credit card processing fees on tips (not debit), and requires employers with a written tip-sharing policy to keep a copy for three years after it stops being used.

Under the ESA, tips are not wages, so they do not count toward minimum wage. Other provinces have their own rules, so check the employment standards where you operate.

Sales Tax and Service Charges

A voluntary tip is not part of the price of the meal, so no GST/HST applies to it. A mandatory service charge, such as an automatic gratuity on large tables, is part of what the customer must pay, so it is generally subject to GST/HST. It is also a controlled tip when it is paid out to staff. Our GST/HST guide covers how to report it.

Recording Tips in Your Books

When customers add tips to card payments, that money lands in your bank account, but it is not yours. Record card tips to a tips payable liability account, not to sales. When you pay them out, through payroll or in cash, the liability goes back to zero. Reconcile the account every pay period: a balance that grows means tips are being collected but not paid out, which is exactly what an employment standards complaint looks for.

Keep the tip-sharing policy, the daily tip reports from your POS and the payout records together. They are your evidence if staff, the CRA or the Ministry of Labour ask questions.

Written by Targeted Accounting

CPA-led bookkeeping, payroll and outsourced CFO for Canadian businesses, with 10+ years of running and cleaning up small business books.

Want Tips Handled Correctly Every Pay Run?

We run payroll for restaurants, including controlled tips, remittances and T4s, and keep the tips liability reconciled in your books. See our payroll services or get in touch.

How to Reconcile Shopify Payouts in Your Books: A Guide for Canadian Sellers

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How to Reconcile Shopify Payouts in Your Books: A Guide for Canadian Sellers

Targeted Accounting

Why Shopify Payouts Never Match the Sales Report

Every Shopify seller hits the same wall. The sales report says one number, the bank deposit says another, and the gap is made up of refunds, processing fees, chargebacks, sales tax and timing. If you record each deposit as sales, your revenue is understated, your fees disappear and your GST/HST return is built on the wrong figures.

The fix is a standard bookkeeping method called a clearing account. It takes a little setup and then works the same way every payout. This guide walks through it with a worked example. It is part of our guide to ecommerce bookkeeping in Canada.

What Is in a Shopify Payout

Open any payout in Shopify and you will see it is built from several pieces:

Gross sales for the orders included, after discounts.
Shipping you charged customers.
Sales tax collected, which depends on where each customer is.
Refunds, including the tax and shipping refunded.
Processing fees deducted by Shopify Payments.
Chargebacks, dispute fees and reserves, if any.
Adjustments, such as reversed disputes or currency differences.

Payouts also lag behind orders by a few business days, so a sale on 30 June can arrive in July. That timing difference is another reason deposits and sales reports never line up month by month.

The Clearing Account Method, Step by Step

Create a current asset account called Shopify Clearing. Think of it as money Shopify is holding for you. Then, for each payout (or each day of sales):

Record the sale: debit Shopify Clearing for the total charged to customers, and credit sales, shipping income and sales tax payable.
Record refunds: debit sales returns and sales tax payable, credit Shopify Clearing.
Record fees: debit merchant fees expense, credit Shopify Clearing.
Record the deposit: debit the bank, credit Shopify Clearing.

Here is one payout worked through for an Ontario seller charging 13% HST:

Item	Amount	Recorded as
Product sales	$1,800.00	Sales
Shipping charged	$100.00	Shipping income
HST collected	$247.00	HST payable
Refund (one item plus HST)	-$113.00	Sales returns $100, HST payable $13
Processing fees	-$62.40	Merchant fees
Payout deposited	$1,971.60	Bank

After all four entries, the clearing account is back to zero, your sales are recorded at $1,800, your fees show up as an expense and your HST payable is exactly what you owe on these orders.

Getting Sales Tax Right on Shopify Orders

Shopify calculates tax on each order based on where the customer is, so a single payout can include 13% HST from Ontario, 5% GST from Alberta and 15% HST from Nova Scotia. Your books need to keep those apart, because your GST/HST return reports the tax you collected and the PST in some provinces is filed separately.

Use Shopify’s taxes report to split each period’s tax by province and record it to the right liability accounts. Sales to customers outside Canada are usually zero-rated. Our GST/HST guide for small business covers registration, rates and filing.

Other Channels and Payment Methods

Every place money is collected needs its own clearing account and its own reconciliation: Shopify Payments, PayPal, Shop Pay Installments, Amazon, Etsy and any wholesale invoices paid by e-transfer. Mixing channels in one account is the fastest way to end up with a balance nobody can explain.

Gift cards are another trap. Selling a gift card is not a sale yet; it is a liability until the card is redeemed, and sales tax applies when it is used, not when it is bought.

Shopify Bookkeeping Apps That Do the Heavy Lifting

Recording every order individually floods your accounting software and is hard to reconcile. Most sellers are better served by a connector that posts one summary entry per payout, already split into sales, tax by province, refunds and fees, into QuickBooks Online or Xero. You then only have to match each summary to its bank deposit.

Whichever tool you use, review the clearing account balance at every month end. A balance that keeps growing means something is not being recorded. Our guide to accounting software for small business in Canada covers how to connect your store, and inventory and cost of goods sold are covered in our ecommerce bookkeeping guide.

Written by Targeted Accounting

CPA-led bookkeeping, payroll and outsourced CFO for Canadian businesses, with 10+ years of running and cleaning up small business books.

Want Your Store's Books Reconciled Every Month?

We set up clearing accounts, sales tax by province and payout reconciliations for Canadian online sellers, then keep them current every month. See our bookkeeping services or get in touch.

T5018 Slips in Canada: How Contractors Report Subcontractor Payments

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T5018 Slips in Canada: How Contractors Report Subcontractor Payments

Targeted Accounting

What Is a T5018 Slip?

If your business is mainly in construction and you pay subcontractors, the CRA expects you to report those payments every year on a T5018 Statement of Contract Payments. The slips let the CRA match what you paid against what each subcontractor reported as income, which is exactly why they matter: they are one of the main ways the CRA finds unreported construction income.

Most contractors only think about the T5018 when the deadline is close and they are digging through a year of supplier payments. This guide covers who has to file, which payments count, the deadline and how to set up your bookkeeping so the slips take minutes rather than days. It is part of our guide to construction bookkeeping in Canada.

Who Has to File T5018 Slips

The rule applies to individuals, partnerships, trusts and corporations whose primary source of business income is construction. The CRA treats construction as your primary source when more than 50% of your business income comes from construction activities.

Construction activities are broad. They include erecting, installing, altering, modifying, repairing, improving, demolishing, dismantling or removing any structure or part of one, from houses and commercial buildings to roads, bridges, dams and pipelines. General contractors, renovators, electricians, plumbers, HVAC companies, roofers, landscapers who build structures and site-preparation outfits are all commonly caught.

If you meet the test, you file for payments you make to Canadian-resident subcontractors for construction services, whether the work was done inside or outside Canada. The details are on the CRA’s T5018 slip page.

Which Payments Go on a T5018

Report the total you paid each subcontractor for construction services in the reporting period, as long as that total is more than $500. For the threshold you leave out GST/HST, but the amount you put on the slip in box 22 includes GST/HST and PST.

Payment	Report on a T5018?
Framing subcontractor paid $18,000 plus HST	Yes, $20,340 including HST
Electrician who supplied labour and materials	Yes, the full amount
Lumber yard, for materials only	No, goods only
Your own employees	No, they get T4s
Subcontractor paid $450 in total for the year	No, under the threshold

A slip is required whether the subcontractor is a sole proprietor, a partnership or a corporation. You report payments in the period you paid them, not when the work was invoiced.

T5018 Reporting Period and Deadline

You can report on a calendar-year basis or on your business’s fiscal period. Many contractors with a non-December year end choose the fiscal period so the slips line up with the year-end books.

The return, made up of the T5018 slips and the T5018 Summary, is due six months after the end of the reporting period. Using the calendar year, payments made in 2026 are due by 30 June 2027. With a 31 March fiscal year end, the slips are due by 30 September.

Put the date on the same calendar as your other filings. Our Canadian business tax filing calendar shows where it sits alongside your T2, GST/HST and payroll deadlines.

How to File T5018 Slips

You file the slips and the summary with the CRA, and you can also give each subcontractor a copy, which helps them reconcile their own income. Online filing through the CRA’s web forms or a payroll or accounting program is the norm, and electronic filing is mandatory if you file more than five slips.

Each slip needs the subcontractor’s name and address and their business number, or their social insurance number if they are an individual without one. Missing identification numbers are the most common reason the job drags on, so ask for them up front.

Late or missing slips attract penalties based on how many slips are involved and how late they are. A CRA review of a contractor who never filed T5018s also tends to widen into questions about whether those subcontractors were really employees.

Set Up Your Books So the Slips Write Themselves

The work is in the bookkeeping, not the form. A few habits make year end painless:

Onboard every subcontractor properly. Get their legal name, address, business number and GST/HST number before the first payment, and store them on the supplier record.
Flag subcontractors in your software. QuickBooks Online and Xero both let you mark suppliers or tag their bills so you can run a payments report for exactly that group.
Code labour and materials separately on bills, so materials-only suppliers never end up on a slip and mixed bills are reported in full.
Pay through the books. Cash and e-transfer payments that never get recorded are what makes a T5018 report wrong.

Our guide to accounting software for small business in Canada covers how to set this up. Getting the subcontractor’s GST/HST number also protects your input tax credits, which our GST/HST guide explains.

Written by Targeted Accounting

CPA-led bookkeeping, payroll and outsourced CFO for Canadian businesses, with 10+ years of running and cleaning up small business books.

Want Your T5018s Done for You?

We keep construction clients’ supplier records, sales tax and subcontractor reports in order all year, so the T5018 is a quick review rather than a scramble. See our bookkeeping services or get in touch.

How Much Does Bookkeeping Cost in Canada? Pricing Explained

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How Much Does Bookkeeping Cost in Canada? Pricing Explained

Targeted Accounting

Key takeaways

Outsourced monthly bookkeeping for a Canadian small business usually costs $300 to $1,500 a month.
Hourly rates run $30 to $60 for freelancers and $60 to $110 for firms.
Transaction volume, payroll, sales tax and how clean your records are drive the price.
The cheapest quote is often the most expensive one by year end.

How Much Does Bookkeeping Cost? The Short Answer

For a typical Canadian small business, outsourced monthly bookkeeping usually costs $300 to $1,500 a month. Very simple businesses sit at the bottom of that range. Businesses with payroll, sales tax in several provinces, inventory or more than one company sit at the top of it or above. Billed by the hour, freelance bookkeepers often charge $30 to $60 and firms $60 to $110.

Those ranges are wide because “bookkeeping” covers very different amounts of work. A consultant with one bank account and a credit card is a different job from a restaurant with two locations, daily sales, tips, payroll and suppliers. This guide explains the pricing models, what drives the price, what a fair quote should include and the hidden costs of cheap bookkeeping. For what bookkeepers do, see our guide to bookkeeper vs accountant.

Typical Bookkeeping Costs in Canada

These are broad market ranges for outsourced bookkeeping, not quotes. Your price depends on the factors in the next section.

Business profile or model	Typical range
Micro business: one or two accounts, under about 100 transactions a month, no payroll	$300 to $600 a month
Small business: payroll, GST/HST filing, several bank and card accounts	$600 to $1,500 a month
Growing business needing monthly reporting, forecasting or controller-level support	$1,500 a month and up
Freelance bookkeeper, billed hourly	$30 to $60 an hour
Bookkeeping firm, billed hourly	$60 to $110 an hour

For comparison, an in-house full-time bookkeeper typically costs a salary of $50,000 to $70,000, plus roughly 15% for employer CPP, EI, benefits and vacation, before software and the time spent managing them. Outsourcing is usually cheaper until a business needs someone on site every day.

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Get a range for your own transactions, accounts and payroll

The Three Bookkeeping Pricing Models

Hourly. You pay for the time spent. It is common with independent bookkeepers and for irregular work. It is fair when the work is unpredictable, but it makes costs hard to budget and gives the bookkeeper no reason to work faster.

Fixed monthly package. A set fee covers a defined scope, often tiered by transaction volume. It is the most common model for ongoing bookkeeping. You know what you will pay, and the provider absorbs the risk of a busy month. Read the scope carefully, because packages differ mainly in what they leave out.

Per project. Used for one-off jobs such as catching up a year of books, cleaning up a messy file, or setting up a new accounting system. Most providers quote a fixed price after seeing the books.

What Drives Bookkeeping Prices

Transaction volume. More bank and card transactions mean more coding and reconciling. This is the biggest factor.
Number of accounts. Each bank account, credit card, loan and payment processor such as Stripe, Square or Shopify Payments needs its own monthly reconciliation.
Payroll. Running payroll, remittances, T4s and Records of Employment adds cost per employee or per pay run.
Sales tax. Preparing and filing GST/HST returns, and PST or QST where it applies, is often priced as an add-on. Filing monthly costs more than filing annually.
Receivables and payables. Invoicing customers, chasing payments and paying suppliers are bookkeeping-adjacent services that many owners assume are included and often are not.
Inventory, job costing and classes. Tracking stock, projects or locations adds work every month.
Frequency and turnaround. Monthly books closed by the 15th cost more than quarterly catch-ups.
State of the books. Clean, current books with bank feeds and receipt capture cost less to maintain than shoeboxes and spreadsheets.

Catch-Up and Cleanup Bookkeeping

If your books are behind, expect a separate charge to bring them current before monthly service starts. Catch-up work is usually priced per month of backlog, often at a similar or slightly higher rate than ongoing monthly work, because the bookkeeper has to reconstruct transactions without the benefit of fresh memory.

Cleanup is different: the books exist, but they are wrong. Duplicated transactions, unreconciled accounts, personal expenses mixed in and sales tax that does not tie to filed returns all take time to unwind, and the cost depends on how far back the problems go. A good provider will review the file before quoting a cleanup rather than guessing.

Both are one-off costs. Once the books are current and set up properly, the monthly fee should be stable.

What a Bookkeeping Package Should Include

When comparing quotes, ask each provider to confirm in writing whether these are included:

coding every transaction and reconciling every bank, credit card and loan account monthly;
a monthly or quarterly profit and loss statement and balance sheet;
preparing and filing GST/HST returns;
payroll, if you have employees;
accounts receivable and payable, if you want them handled;
a named contact and a response time for questions;
year-end support: handing a clean, reconciled file to your accountant.

Year-end financial statements, corporate tax returns and personal tax returns are accounting work. They are usually billed separately, even when the same firm does both. Our guide to bookkeeper vs accountant explains the split.

Bookkeeping Software Costs

Most bookkeepers work in cloud software you subscribe to, such as QuickBooks Online or Xero. Subscriptions run from roughly $30 to well over $100 a month depending on the plan, payroll add-ons and number of users. Some firms include the subscription in their fee, often at a discount. Receipt capture, bill payment and payroll tools can add more.

The software is usually worth the cost because it cuts the bookkeeping time through bank feeds and automation. Our guide to accounting software for small business in Canada compares the options.

The Real Cost of Cheap Bookkeeping

The lowest quote is often the most expensive one by year end. Common problems with bargain bookkeeping include unreconciled accounts, sales tax returns that do not match the books, personal and business expenses mixed together, and no one who understands CRA rules. Each of these turns into cleanup fees, a higher accounting bill at year end, or reassessments with interest.

Red flags when you are getting quotes:

a price given without asking about your transaction volume or accounts;
no mention of monthly bank reconciliations;
no experience with Canadian sales tax or payroll;
no written scope of work.

A good bookkeeper should save you more than they cost, in time, missed deductions avoided, penalties prevented and a lower year-end accounting fee. If you want a quote to compare, our virtual bookkeeping services page is a good place to start.

Written by Targeted Accounting

CPA-led bookkeeping, payroll and outsourced CFO for Canadian businesses, with 10+ years of running and cleaning up small business books.

Want a Quote for Your Books?

Tell us how many accounts you have, roughly how many transactions a month, and whether you run payroll. We will put together a quote with the scope set out clearly, plus an estimate for any catch-up work needed first.

CRA Business Number in Canada: What It Is, Format and How to Get One

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CRA Business Number in Canada: What It Is, Format and How to Get One

Targeted Accounting

What Is a CRA Business Number?

A CRA business number (BN) is a nine-digit number the Canada Revenue Agency assigns to a business or other legal entity. It is the identifier the CRA and many other government programs use for your business, in the same way your social insurance number identifies you personally.

On its own the business number does nothing. What matters are the program accounts attached to it: one for GST/HST, one for payroll, one for corporate income tax, and so on. Most of the questions owners ask about “getting a business number” are really about which of those accounts they need and when. This guide explains both, and how to register online.

Business Number vs Program Accounts

A full CRA account number has three parts: the nine-digit business number, a two-letter program identifier, and a four-digit reference number. A corporation with GST/HST, payroll and corporate tax accounts might have:

Account	Example	Used for
RT	123456789 RT0001	GST/HST returns and payments
RP	123456789 RP0001	Payroll source deductions, T4s
RC	123456789 RC0001	Corporate income tax (T2) and instalments
RM	123456789 RM0001	Importing and exporting commercial goods
RZ	123456789 RZ0001	Information returns such as T5 and T5018 slips

The reference number lets one business hold more than one account of the same type. A company that runs two divisions with separate payrolls might have RP0001 and RP0002. When you pay the CRA or file a return, always quote the complete account number. A payment made to the right BN but the wrong program account is one of the most common causes of “overdue” notices.

Business Number Format: 9 Digits, 15 Characters

The business number itself is nine digits, for example 123456789. A full program account number is 15 characters: the nine digits, a two-letter program identifier and a four-digit reference number, for example 123456789 RT0001 for a GST/HST account. The CRA uses the same nine digits across every program, so a corporation’s T2 account (RC0001), payroll account (RP0001) and GST/HST account (RT0001) all share one business number.

Where to find your business number: it is printed on every CRA notice and letter for the business, shown at the top of My Business Account, and quoted on your GST/HST returns and payroll remittance vouchers. If you have lost it, the CRA business enquiries line can confirm it after verifying your identity. A customer’s GST/HST number can be checked with the CRA’s online GST/HST registry.

Is a Corporation Number the Same as a Business Number?

No. A corporation number comes from the registry that incorporated the company, such as Corporations Canada or the Ontario Business Registry, and identifies the legal entity in that registry. The CRA business number is a separate, federal tax identifier. Most provinces now forward incorporation details to the CRA so the business number is issued automatically, but the two numbers are different and are used for different filings.

Three other names people use for the same thing: a CRA number or BN is the business number; an HST number or GST number is the business number with its RT program account (123456789 RT0001); and a payroll account number is the business number with its RP account. There is no separate “tax ID” for a Canadian business beyond these.

Who Needs a Business Number

Corporations. Every corporation needs one, because it must file a T2 corporate return. If you incorporate federally, or provincially in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island or Saskatchewan, the CRA issues the business number automatically with a corporate income tax account. Corporations formed in Quebec, Newfoundland and Labrador or the territories register with the CRA separately.

Sole proprietors and partnerships. You need a business number only when you need a program account. The usual triggers are:

your taxable revenue passes $30,000 in a single quarter or over four consecutive quarters, so you must register for GST/HST (our HST registration guide explains the test), or you choose to register voluntarily;
you hire your first employee and need a payroll account;
you import or export commercial goods.

A sole proprietor with no employees and revenue under $30,000 does not need a business number at all. Your business income goes on your personal return under your social insurance number, as our sole proprietorship tax guide explains.

Provincial Registration Is a Different Thing

Registering a business name with your province, such as an Ontario sole proprietorship’s business name registration, is not the same as getting a CRA business number. The provincial registration protects and records the name. The CRA number is for federal tax accounts. Several provinces now share information with the CRA, and some use the CRA business number as their own identifier, but completing one registration does not automatically give you the other program accounts you need.

Quebec is a special case. Revenu Québec administers the GST and the QST for most Quebec businesses, so registration for sales tax happens with Revenu Québec, and the business also has a Quebec enterprise number (NEQ) from the provincial enterprise registrar.

Business Numbers in British Columbia, Alberta and New Brunswick

Several provinces have integrated their business registries with the CRA, which changes where you start. In British Columbia, the BC Registry issues the CRA business number when you register or incorporate, and the same nine digits are used as your BC identifier. In Alberta, incorporating or registering a trade name through an Alberta registry agent also triggers the CRA business number, and you can add program accounts afterwards through Business Registration Online. In New Brunswick, registering through Service New Brunswick’s business registry obtains the CRA business number as part of the process. In every province the program accounts you need, such as GST/HST or payroll, are still opened with the CRA. If you are unsure whether a number was issued, check My Business Account before registering again, because a duplicate business number creates filing confusion that takes months to unwind.

How to Get a Business Number Online

Since November 2025 the CRA requires new business numbers and program accounts to be registered online, through Business Registration Online (BRO). Since July 2026, BRO is only reached through a CRA account: you sign in with your CRA user ID and password, a Sign-In Partner such as your bank, or a provincial partner in British Columbia or Alberta. Registration is free, and in most cases the number is issued immediately.

Have this ready before you start:

the legal name of the business, and the operating name if different;
the business structure: sole proprietorship, partnership or corporation;
the name, social insurance number and contact details of each owner, partner or director;
the business address and mailing address;
a description of what the business does, which the CRA codes using the North American Industry Classification System;
for a corporation, the incorporation date, jurisdiction and corporation number;
for GST/HST, your expected annual revenue, effective date and preferred filing frequency;
for payroll, the date of your first pay, how often you pay and how many employees you expect.

A few situations cannot be handled in BRO, such as reactivating a closed program account, a business owned only by non-residents, or a business owned by another business. For those, the CRA’s business enquiries line or a paper application is still used.

Be wary of private websites that offer to “register your business number” for a fee. Some are legitimate filing services, but the CRA charges nothing, and the online registration takes most owners less than half an hour.

After You Register Your Business Number

Set up My Business Account. It shows every program account under your business number, with balances, returns, notices and payment options. It is also where you authorize your accountant or bookkeeper to deal with the CRA on your behalf, and where you can choose online mail so notices do not sit in a mailbox.

Put the number where it belongs. Once you are registered for GST/HST, your full RT number must appear on invoices to customers who want to claim input tax credits. Your payroll RP number goes on T4 slips and remittances.

Start filing. Registering an account creates obligations immediately. A GST/HST account expects returns from its effective date, and a payroll account expects remittances. If you will not have activity for a while, tell the CRA rather than ignoring the notices. The dates are all in our business tax filing calendar.

Business Number Changes, Incorporation and Closing

Update your business number details through My Business Account when your address, directors, fiscal year end or other details change.

A business number belongs to a legal entity. When a sole proprietor incorporates, the new corporation is a different taxpayer and receives its own business number. The old sole proprietorship’s GST/HST and payroll accounts have to be closed, and new ones opened under the corporation. This is one of the steps covered in our guide to starting, selling or closing a business, and it is easy to get wrong in the first few months after incorporating.

When a business stops operating, close each program account once its final returns are filed. Leaving a dormant GST/HST account open means the CRA keeps expecting returns, and missing ones can lead to estimated assessments and penalties.

CRA Business Number FAQ

Do I need a business number as a sole proprietor?
Only when you need a program account: once you must register for GST/HST, hire an employee, or import or export commercial goods. Until then your business income is reported under your social insurance number.

How long does it take to get a CRA business number?
Registration through Business Registration Online is free and in most cases the number and program accounts are issued immediately at the end of the session.

Is my CRA business number the same as my HST number?
Your HST number is your business number followed by the RT program identifier and a reference number, for example 123456789 RT0001.

Can I register a business number by phone or on paper?
Since November 2025 the CRA requires new registrations online. Phone and paper remain for the few cases Business Registration Online cannot handle, such as reactivating a closed account.

What happens to my business number when I incorporate?
The corporation is a new taxpayer and gets its own business number. Close the sole proprietorship’s GST/HST and payroll accounts and open new ones under the corporation.

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Vacation Pay in Canada: Rates by Province, Accrual and Payout

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Vacation Pay in Canada: Rates by Province, Accrual and Payout

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Vacation Time vs Vacation Pay: Two Separate Entitlements

Every employee in Canada is entitled to two things: vacation time, which is time off work, and vacation pay, which is money calculated as a percentage of what they earned. They are related but legally separate. Paying an employee 4% on every cheque does not remove their right to take two weeks off, and giving someone time off does not satisfy the pay requirement unless the pay goes with it.

The rules come from provincial employment standards, or the Canada Labour Code for federally regulated businesses such as banks, airlines and telecoms. The minimums are similar everywhere, but the details differ enough to cause problems. This guide covers the rates, how to calculate vacation pay, the ways to pay it, termination and the bookkeeping. It is part of our guide to how to do payroll in Canada.

Vacation Pay Rates by Province

These are the statutory minimums. Your employment contracts or policies can give more, never less.

Jurisdiction	Starting entitlement	Increased entitlement
Ontario	2 weeks, 4%	3 weeks, 6% after 5 years
British Columbia	2 weeks, 4% after 1 year	3 weeks, 6% after 5 years
Alberta	2 weeks, 4% after 1 year	3 weeks, 6% after 5 years
Manitoba	2 weeks, 4% after 1 year	3 weeks, 6% after 5 years
Saskatchewan	3 weeks, 3/52 of wages, after 1 year	4 weeks, 4/52 of wages, after 10 years
Quebec	2 weeks, 4% after 1 year	3 weeks, 6% after 3 years
Federally regulated (Canada Labour Code)	2 weeks, 4% after 1 year	3 weeks, 6% after 5 years; 4 weeks, 8% after 10 years

The Atlantic provinces and the territories start at the same two weeks and 4%, but require longer service, often eight years or more, before the higher tier applies. Check the current rules for your province before relying on a table, including this one. Ontario’s are set out in the province’s guide to the Employment Standards Act and the federal rules on Canada.ca.

Vacation pay applies to part-time, casual and seasonal staff at the same percentages. An employee who works two days a week still earns 4% on every dollar.

Which Earnings Count Toward Vacation Pay

Vacation pay is a percentage of the employee’s gross wages for the vacation entitlement year. In Ontario, gross wages include:

regular wages and salary
overtime pay
public holiday pay
commissions and non-discretionary bonuses, meaning bonuses tied to hours, production or efficiency
termination pay

They exclude tips and gratuities, discretionary bonuses that are not tied to performance measures, expense and travel allowances, employer contributions to benefit plans, severance pay and vacation pay itself.

Other provinces use similar definitions with small differences, usually around bonuses and commissions. Your payroll software applies a single rule to every pay type, so set up each earning code correctly once. A commission code that is set to “not vacationable” will underpay every commissioned employee for years.

How to Calculate Vacation Pay

Multiply the eligible earnings by the percentage. An Ontario employee earning $26 an hour who works 1,950 hours in the year earns $50,700. At 4%, her vacation pay is $2,028. Add $1,300 of overtime and $624 of public holiday pay and the eligible earnings become $52,624, so her vacation pay rises to $2,104.96.

For salaried employees, the usual practice is to continue their regular salary while they are on vacation. That satisfies the pay requirement as long as the amount is at least the statutory percentage of their eligible earnings. If a salaried employee earns large commissions or bonuses, the percentage method can give a higher figure, and the employer must pay the difference.

When an employee crosses into the higher tier, for example their fifth anniversary in Ontario, the 6% rate applies to the entitlement year that follows. Mark the date in your payroll system, because it rarely updates itself.

Ways to Pay Vacation Pay

There are three common approaches.

Accrue and pay when vacation is taken. The 4% or 6% builds up in a vacation bank, and the employee draws it as pay while they are off. This is the default and the easiest to explain. It also means a growing liability on your books if staff do not take their time off.

Pay with every cheque. The vacation pay is added to each pay and shown as a separate line on the pay stub. The employee then takes unpaid time off for their vacation. In Ontario this requires the employee’s written agreement. It is common for part-time, casual and hourly staff with irregular schedules, and it eliminates the accrued liability, but employees sometimes find they have no money set aside when they take their time off.

Lump sum before the vacation. The full balance is paid before the employee leaves for vacation. It is less common now that most pay is by direct deposit.

Whichever you choose, apply it consistently, document it in the employment agreement or a written policy, and make sure the pay stub shows vacation pay separately from wages.

Taking Vacation Time

Employers generally schedule vacation, but they must make sure it is taken. In Ontario, vacation must be taken within 10 months after the end of the year in which it was earned. An employee can agree in writing to give up a year’s vacation time, but only with the approval of Ontario’s Director of Employment Standards, and never the vacation pay.

Carry-over policies, use-it-or-lose-it rules and paying out unused time instead of granting it all sit on top of these minimums. A policy that would leave an employee below the statutory entitlement is not enforceable. If you are unsure, get the policy reviewed before relying on it.

Vacation Pay When Employment Ends

When an employee leaves for any reason, you must pay out all vacation pay earned but not yet paid, including the part year in progress. In Ontario it is due within seven days of the end of employment, or on the next regular pay day if that is later.

The payout goes on the employee’s Record of Employment as vacation pay paid or payable because of the separation. Our guide to the Record of Employment explains how it affects the EI claim.

Vacation pay is taxable, pensionable and insurable like ordinary wages, so withhold income tax, CPP and EI on the payout and include it in your next payroll remittance.

Recording Vacation Pay in Your Books

If you accrue vacation pay, record the cost as it is earned, not when it is paid. Each pay period, debit vacation pay expense and credit a vacation pay payable liability for the 4% or 6% earned. When the employee takes vacation, the payment reduces the liability rather than hitting the profit and loss again.

At year end, the liability should equal the vacation pay owed to every employee, and it should reconcile to the vacation balances in your payroll system. A balance that only ever grows usually means vacation is being paid but not relieved from the liability, which overstates your expenses. Our guide to bookkeeping basics explains how liabilities like this appear on the balance sheet.

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Payroll Remittance in Canada: Due Dates, Remitter Types and Penalties

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Payroll Remittance in Canada: Due Dates, Remitter Types and Penalties

Targeted Accounting

What Is a Payroll Remittance?

Every time you run payroll, you withhold three amounts from each employee: Canada Pension Plan contributions, Employment Insurance premiums and income tax. You then add your own employer share of CPP and EI. A payroll remittance is the payment of all of that to the Canada Revenue Agency by a fixed due date.

The money you withhold is not yours. The law treats it as held in trust for the Crown, which is why the CRA is stricter about source deductions than almost anything else, and why directors can be held personally liable when a corporation fails to remit. This guide covers how much you remit, when it is due, how to pay and what late payments cost. For the wider payroll process, see our guide to how to do payroll in Canada.

What a Payroll Remittance Includes

For each pay period, the remittance is the sum of five amounts:

Amount	Who bears it
CPP contributions withheld (including CPP2 above the first earnings ceiling)	Employee
EI premiums withheld	Employee
Income tax withheld, federal and provincial	Employee
Employer CPP and CPP2, equal to the employee’s contributions	Employer
Employer EI, 1.4 times the employee’s premiums	Employer

Quebec employers remit QPP, QPIP and Quebec income tax to Revenu Québec instead of the CPP and provincial portions, and still remit EI and federal tax to the CRA. Provincial payroll levies such as Ontario’s Employer Health Tax, and workers’ compensation premiums, are paid separately to the province or the board, not with your CRA remittance.

Payroll Remittance Due Dates by Remitter Type

The CRA assigns you a remitter type based on your average monthly withholding amount (AMWA): the total you remitted in a calendar year divided by the number of months you had payroll, generally looking back two years. The CRA’s due-date rules work out like this:

Remitter type	Who it applies to	Payment due
Quarterly, new small employer	Monthly withholdings under $1,000 and a perfect compliance record	April 15, July 15, October 15, January 15
Quarterly, small employer	AMWA under $3,000, account open 12 months or more, perfect compliance	April 15, July 15, October 15, January 15
Regular	AMWA under $25,000, and all new employers to start	15th of the month after you paid employees
Accelerated, threshold 1	AMWA $25,000 to $99,999.99	Pay from the 1st to the 15th is due by the 25th; pay from the 16th to month-end is due by the 10th of the next month
Accelerated, threshold 2	AMWA $100,000 or more	Within 3 working days after the end of each period ending the 7th, 14th, 21st and last day of the month

The due date is driven by when you paid employees, not the period the work was done in. A December 31 pay date is a December remittance, due January 15 for a regular remitter. When a due date falls on a weekend or public holiday, the payment is on time if the CRA receives it by the next business day.

The CRA writes to you when your remitter type changes, usually because your payroll grew. The new schedule applies whether or not you read the letter, so it is worth checking your type each January. All the dates sit alongside your other obligations in our Canadian business tax filing calendar.

Regular and Quarterly Remitter Due Dates

Regular remitters (average monthly withholding under $25,000, and every new employer until the CRA says otherwise) remit by the 15th of the month after the month you paid employees. March pay dates are due April 15; a December 31 pay date is due January 15.

Quarterly remitters (average monthly withholding under $3,000 with a perfect compliance record, or new small employers withholding under $1,000 a month) remit by April 15, July 15, October 15 and January 15, each covering the previous calendar quarter. The CRA tells you in writing when you qualify; you cannot simply choose quarterly.

Threshold 1 Remitter Due Dates

You are an accelerated threshold 1 remitter when your average monthly withholding amount two years earlier was $25,000 to $99,999.99. Two due dates apply each month:

Pay dates from the 1st to the 15th: remit by the 25th of the same month.
Pay dates from the 16th to the end of the month: remit by the 10th of the following month.

A semi-monthly payroll therefore produces two remittances a month, and the CRA sends an annual letter each December confirming your remitter type for the coming year.

Threshold 2 Remitter Due Dates

Accelerated threshold 2 remitters (average monthly withholding of $100,000 or more) remit within three working days after the end of each of four periods in the month: the 1st to 7th, the 8th to 14th, the 15th to 21st, and the 22nd to the last day. Threshold 2 remittances must be made electronically or at a Canadian financial institution; a payment mailed to the CRA is treated as late.

Payroll Remittance Worked Example

A Toronto agency pays four employees semi-monthly, on the 15th and the last day of the month, with total gross pay of $24,000 a month. In a typical month it withholds roughly $1,350 of CPP, $390 of EI and $3,800 of income tax. It adds the employer share: another $1,350 of CPP and about $545 of EI.

The monthly remittance is therefore about $7,435. Its AMWA is well under $25,000, so it is a regular remitter. Both September pay dates are combined into one remittance due October 15.

If the agency grew to thirty staff, its AMWA would cross $25,000 and, two years later, it would become a threshold 1 remitter. The September 15 pay would then be due September 25, and the September 30 pay would be due October 10.

How to Remit Payroll Deductions to the CRA

You can pay through:

Online banking, using your bank’s business tax payment option for payroll source deductions (the RP account).
My Business Account, by pre-authorized debit you set up in advance.
Your payroll provider, many of which withdraw the remittance and pay the CRA for you on the right date.
A remittance voucher at a Canadian financial institution, though this is now the slow option.

Since 2024, remittances over $10,000 are expected to be made electronically, and the CRA can charge a penalty for paying a large amount on paper.

Always pay to the payroll (RP) program account of the right business number. Remittances applied to the GST/HST account by mistake are a common problem. The CRA may show the payroll account as overdue while the other account sits in credit.

Nil Remittances and Seasonal Payroll

If you have no employees for a period, you still need to tell the CRA. Report a nil remittance through My Business Account, your payroll software or by phone. Otherwise the CRA expects a payment that never arrives, and you receive notices and possibly an estimated assessment.

If you stop paying employees permanently, close the payroll account once your final T4s are filed. If you pay staff only part of the year, tell the CRA which months you expect to have no payroll so it does not chase you for missing remittances.

Late Payroll Remittance Penalties and Interest

The CRA’s employers’ guide sets a graduated penalty for remittances received after the due date:

Days late	Penalty
1 to 3 days	3%
4 or 5 days	5%
6 or 7 days	7%
More than 7 days, or not remitted	10%

The penalty generally applies only to the part of the late amount over $500, unless the failure was deliberate or grossly negligent. A second failure in the same calendar year that was made knowingly or through gross negligence can attract a 20% penalty. Failing to withhold in the first place carries its own 10% penalty, and you still owe the amounts you should have deducted. Interest at the CRA’s prescribed rate, compounded daily, runs on top of all of it.

For corporations, the bigger risk is personal. Directors are jointly and severally liable for unremitted source deductions, plus interest and penalties, unless they can show they took reasonable steps to prevent the failure. In practice, payroll remittances are the first bill a struggling business should pay, not the last.

If You Have Missed Remittances

Pay what is owing as soon as you can, even if you cannot pay all of it. Penalties are based on the amount and how late it is, and interest stops on whatever you have paid. If you have been withholding but not remitting, or not withholding at all, the CRA’s Voluntary Disclosures Program can sometimes reduce penalties when you come forward before the CRA contacts you.

Then fix the cause. Most missed remittances come from cash pressure, a change of bookkeeper, or a remitter-type change nobody noticed. Automating the payment through your payroll system, or handing payroll to a provider who remits on your behalf, removes the risk. If you would rather hand it off, see our payroll services for small business.

Payroll Remittance FAQ

When are payroll remittances due?
For most small employers, the 15th of the month after you paid employees. Quarterly remitters pay on April 15, July 15, October 15 and January 15; threshold 1 remitters by the 25th and the 10th; threshold 2 remitters within three working days of each weekly period.

What is the penalty for a late payroll remittance?
3% if one to three days late, 5% at four or five days, 7% at six or seven days, and 10% beyond that or for amounts never remitted, plus daily compound interest. A second deliberate or grossly negligent failure in the same year can be penalized at 20%.

What if I had no payroll this period?
File a nil remittance through My Business Account, your payroll software or by phone so the CRA does not expect a payment that never arrives.

Are payroll remittance due dates different in Alberta or other provinces?
No. CRA due dates are the same in every province and territory. Quebec is the exception in what is remitted, not when: Quebec employers send QPP, QPIP and Quebec income tax to Revenu Québec and the EI and federal portions to the CRA.

What is the difference between threshold 1 and threshold 2?
Threshold 1 covers average monthly withholdings of $25,000 to $99,999.99 and has two due dates a month. Threshold 2 starts at $100,000 and has four, each due within three working days of the period end.

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Behind on Remittances, or Unsure of Your Remitter Type?

We reconcile what you have withheld against what the CRA has received, confirm your remitter type and due dates, and set up remittances that happen automatically. If there is a balance owing, we will help you deal with it before it grows.

Record of Employment (ROE) in Canada: When and How to Issue One

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Record of Employment (ROE) in Canada: When and How to Issue One

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The Form That Decides an Employee's EI Claim

A Record of Employment (ROE) is the form an employer issues to Service Canada whenever an employee stops earning insurable income. Service Canada uses it to decide whether the person qualifies for Employment Insurance, how much they receive and for how long. For the employee it is often the most important document an employer produces. For the employer it is a legal obligation with a short deadline.

Most small businesses issue only a handful a year, which is exactly why they go wrong: nobody remembers the rules between one departure and the next. This guide covers when an ROE is required, the deadlines, what goes on it, the reason codes, and how to correct one. It is part of our guide to how to do payroll in Canada.

When You Must Issue a Record of Employment

The trigger is an interruption of earnings, which Service Canada defines in three ways:

The employee has seven consecutive calendar days with no work and no insurable earnings from you. This covers resignations, terminations, layoffs, the end of a contract or season, and unpaid leaves.
The employee’s pay falls below 60% of their regular weekly earnings because of illness, injury, quarantine, pregnancy, parental leave, compassionate care or family caregiver leave.
The employee starts receiving wage-loss insurance payments.

You issue the ROE even if the employee says they will not apply for EI, even if they were with you for a week, and even if they are going straight to another job. Their eligibility is Service Canada’s decision, not yours. A regular scheduled vacation is not an interruption of earnings, and there are special rules for commission salespeople, real estate agents and non-standard schedules, all set out in the Service Canada ROE guide.

ROE Deadline: When It Must Be Issued

How fast you must issue depends on how you file.

Method	Due
Electronic, weekly, biweekly or semi-monthly payroll	Within 5 calendar days after the end of the pay period in which the interruption occurred
Electronic, monthly or 13 pay periods a year	The earlier of 5 calendar days after the end of the pay period, or 15 days after the first day of the interruption
Paper	Within 5 calendar days of the interruption, or of the day you became aware of it

Electronic ROEs go straight to Service Canada, and the employee views theirs through their My Service Canada Account, so you do not need to hand them a copy. Paper ROEs must be ordered in advance from Service Canada, and the employee gets a copy. For a business that issues ROEs rarely, electronic is far easier: the forms are always available and the deadline is tied to your pay cycle rather than the calendar.

How to Issue an ROE: Three Options

ROE Web. Service Canada’s free online system. You register your business and authorize the people who will sign ROEs, then complete each form online. It is the right choice if you run payroll in a spreadsheet or a basic tool.

Your payroll software. Most Canadian payroll systems build the ROE from the employee’s pay history and upload it for you. This is the most accurate route, because the insurable hours and earnings come directly from the payroll records rather than being retyped.

Paper. Still allowed, but slower, harder to correct, and easy to run out of. We do not recommend it for anyone who issues more than one or two a year.

If an outside provider such as our payroll services for small business runs your payroll, confirm that issuing ROEs is part of the service. Some providers treat it as an extra.

What Goes on the ROE

The form is short, but every field affects the employee’s claim.

Employer and employee details: your business number with its payroll account, the employee’s name, address and social insurance number, and your pay period type.
Key dates: the first day worked, the last day for which the employee was paid, and the end date of the final pay period.
Insurable hours: the total insurable hours in the reporting period, generally the last 53 weeks or since the last ROE, whichever is shorter. Paid leave counts. Unpaid overtime and unpaid hours do not.
Insurable earnings by pay period: the earnings for each recent pay period, up to the number Service Canada requires for your pay frequency. Electronic ROEs ask for more periods than paper ones.
Expected date of recall: if you plan to bring the person back, or “unknown”, or “not returning”.
Reason for issuing (see below).
Vacation pay, statutory holiday pay and other monies: amounts paid or payable because of the separation, such as outstanding vacation pay, pay in lieu of notice, severance or a retiring allowance.
Special payments: paid sick leave, maternity or parental top-ups, and wage-loss insurance.

Separation payments matter because Service Canada can allocate some of them to the weeks after the last day worked, which delays EI payments. Leaving them off does not help the employee. It creates an overpayment they will have to repay later.

ROE Reason Codes

Each ROE carries one reason code. Choose the one that reflects what happened, and add a comment if the situation is not obvious.

Code	Reason
A	Shortage of work, end of contract or end of season (layoff)
B	Strike or lockout
D	Illness or injury
E	Quit
F	Maternity
G	Retirement
H	Work-sharing
J	Apprentice training
K	Other (only when no other code fits, with an explanation)
M	Dismissal or suspension
N	Leave of absence
P	Parental
Z	Compassionate care or family caregiver

The two codes that cause disputes are E (quit) and M (dismissal), because both can lead to EI being refused. Do not soften a dismissal into a layoff to be kind, and do not record a layoff as a quit. Service Canada may contact you to ask what happened, and knowingly giving false information on an ROE is an offence that can lead to fines or prosecution.

Amending an ROE

If something changes after you issue the ROE, such as a retroactive raise, a vacation pay balance you missed or a corrected last day worked, you issue an amended ROE rather than a new one. In ROE Web and most payroll software you open the original and amend it. A paper ROE is replaced by a new paper form that references the original serial number.

Amend promptly. An employee whose claim is calculated on the wrong earnings will either be underpaid or face a repayment demand, and both tend to come back to the employer as a phone call.

Common ROE Mistakes

Missing the deadline because nobody owns the task when a manager, not the bookkeeper, handles a departure.
Leaving out vacation pay owing at termination, or paying it later without amending.
Counting the wrong hours, for example scheduled hours instead of paid hours, or omitting paid leave.
Using code K when a specific code applies.
Not issuing at all for a short-term employee or a family member on payroll.

Every one of these is easier to avoid when ROEs are generated from payroll software rather than prepared by hand. Remittances of the final pay’s deductions follow the usual rules in our guide to payroll remittance due dates.

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Have an Employee Leaving and Not Sure What to File?

We prepare the final pay, calculate vacation pay and other amounts owing, and issue the Record of Employment on time with the right code. If an ROE you have already filed looks wrong, we can amend it.