Who this is for
Owners of a new or small corporation who pay themselves, or a family member, a salary. If you only take dividends, there is no payroll and this does not apply, although dividends have their own slip after year end.
What a salary actually requires
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A payroll account with the CRA. It hangs off the company’s business number. Open it before the first pay, not after.
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Deductions from every pay. Income tax and CPP contributions come off your salary. EI usually does not apply to an owner who controls the company, but check. The company also pays its own matching CPP share.
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Remittances by the 15th of the following month. For a new employer the default is monthly. Deductions taken in March are due by April 15. A very small employer with a clean record can later qualify to remit quarterly.
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Penalties when late. 3% if one to three days late, 5% for four or five days, 7% for six or seven days, and 10% beyond that. Repeated late remittances can be charged at 20%.
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A T4 slip and summary by the last day of February. The slip tells the CRA and you what was paid and withheld. Your personal return cannot be done properly without it.
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Record the salary decision. A short directors’ resolution setting the salary, and payroll records showing each pay. This is also what makes the salary a deductible expense for the company.
One thing many people do not realize
The year-end accountant cannot fix missed remittances. Payroll deductions are due to the CRA by the 15th of the month after each pay, every month. A new owner who pays themselves a salary all year and only discovers this in April owes the deductions. A penalty applies to each late month. The salary itself was fine. The timing was the problem.
What to prepare
- The company’s business number and whether a payroll account exists
- The salary amount and how often it will be paid
- Your SIN, date of birth and address
- Any salary already paid this year without deductions, with dates and amounts
When professional help may make sense
If you have already paid yourself for several months without a payroll account, the fix involves catching up remittances. It may also mean reconsidering whether those amounts should have been dividends. That decision has to be made with the facts in front of you, and the CRA does not accept re-labelling after the fact. Get it looked at before year end.
How Rex Tax may be able to help
We set up and run payroll for owner-managed companies: the account, the monthly calculation and remittance, and the year-end T4. Our guide on salary versus dividends covers the choice itself.
From the Rex Tax desk
This is the single most common first-year surprise we see with new corporations. The owner decides on a salary and transfers money to themselves each month. Nobody tells them the company became an employer the day it did that. Set up the payroll account before the first transfer, or take dividends until it is set up.
Official sources
This guide is general information, not advice about your situation. It reflects the rules for the 2026 tax year. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.