Am I responsible for a CPP or EI remittance shortfall tied to payroll before I bought the business?

Payroll remittance obligations for the Canada Pension Plan and Employment Insurance are federal requirements owed by the employer at the time wages were paid, and whether you inherit a shortfall again depends on your deal structure. In a share purchase, yes generally — the corporation that failed to remit properly is the same one you now own, so any shortfall and related penalties or interest continue with it.

In an asset purchase, this liability generally stays with the selling corporation as the employer responsible for those specific remittances, provided your purchase agreement is clear you aren't assuming pre-closing payroll liabilities. A remittance shortfall can also connect to broader red flags, like worker misclassification or unreported cash wages, so a shortfall found during due diligence is worth investigating for what it says about the seller's overall payroll practices, not just its dollar value on its own.

Have your accountant review payroll remittance history as part of financial due diligence, and make sure your purchase agreement clearly addresses responsibility for any pre-closing shortfall. A Treadstone business lawyer can help build appropriate protections into the deal.