This year’s federal budget is proposing to increase the threshold level of average monthly withholdings by employers that it uses to decide how often businesses must remit source deductions.
The changes are designed to make it easier for businesses to prepare, file and remit taxes paid by their employees, the government says.
Employers are required to remit source deductions, including employee income tax, Canada Pension Plan contributions and Employment Insurance premiums. An employer remits source deductions on the basis of the employer’s total average monthly withholding amount in preceding calendar years in respect of these source deductions.
Specifically, the government proposes increasing the threshold level of average monthly withholdings remitted up to two times per month to $25,000 from $15,000; and increasing the threshold level of average monthly withholdings at which employers are required to remit up to four times per month to $100,000 from $50,000.
“Making remittances is a time-consuming and costly process for employers,” says Jamie Golombek, managing director of tax and estate planning with Canadian Imperial Bank of Commerce’s private wealth-management division. “Reducing the frequency at which certain employers are required to remit source deductions should cut down on the already too onerous compliance burden facing many small businesses.”
These proposed measures will apply in respect of amounts to be withheld after 2014.