Does my Ontario corporation need to set up a payroll account with the CRA?

Yes. If your Ontario corporation pays salaries, wages, bonuses, or other remuneration to employees, it must register for a payroll deductions account with the Canada Revenue Agency. This is a federal requirement and applies regardless of which province the corporation is incorporated in.

Once registered, the corporation must deduct income tax, Canada Pension Plan contributions, and Employment Insurance premiums from each employee's pay, and remit these amounts to the CRA by the prescribed deadlines. The frequency of remittances depends on your average monthly withholding amount — new employers remit monthly, but larger payrolls may remit more frequently.

Directors of the corporation can be personally liable for unremitted payroll source deductions, similar to the liability for unpaid wages. This is one of the most serious personal liability risks directors face because the CRA actively pursues directors for these amounts. If your corporation is having cash flow difficulties and considering not remitting source deductions, that is a situation that warrants immediate legal and accounting advice. The payroll account is also separate from the corporation's HST account and business number accounts — each has its own registration and remittance obligations.