The Importance of PD7A Forms: A Complete Guide 2022

by | Jun 1, 2022

Are you already gathering information and filling out PD7A forms to submit to the CRA? Because this can be time-consuming. The CRA requires all employers to file payroll taxes timely. Employers usually assign it to payroll tax specialists. So, Yogi & Associates, a payroll tax specialist in Mississauga, can assist you in meeting these obligations.
PD7A is a resource for Canadian employers that helps simplify remittances. Furthermore, It contains information on how to apply for and use the PD 7A form. It also gives guidance in administering a prepared file. You will learn more about it once you start reading it.

1. A Guide to the Payroll Deductions and Remittances:

According to CRA, an employer is responsible for paying salaries and benefits to his employees. Therefore, if you meet these criteria, CRA expects you to compute, deduct and remit source deductions for each payroll you provide to employees.

2. Deductions from Employee’s Payroll:

The deductions from an employee’s payroll include the following programs:

3. What Is A PD7A Form?

The PD7A is a payroll remittance form used by the CRA. Employers report EI premiums, CPP contributions, and federal income tax deducted from their employee’s pay. The CRA issues this form to eligible regular, quarterly, and expedited remitters.

4. PD7A Form: Overview

CRA distributes 11.5 million of these forms to 1.6 million remitters. The cost of producing the PD7A in 2009 was around $7.6 million. Over the last few years, prices have been growing.

5. Three Sections of PD7A Forms:

Here is a guide To Payroll Remittances: PD7A Forms sections:

  1. Remittance Account Balance
  2. Account Summary
  3. NIL Remittance

1. Remittance Account Balance:

This section includes the total paid and unpaid estimated payments for the year.

2. Account Summary:

This section includes all the transactions done after the last report you submitted. This part of the statement may contain any of the following:
  • Transfer of Account Balances
  • Arrears Account Balances
  • Explanation of Changes and other important Information

Transfer of Account Balances:

It is a year-to-date record of the payment you sent to CRA on your employees’ behalf.

Arrears Account Balances:

This statement includes the record of late payments or missing contributions. If you have to submit late payments, do not use the remittance vouchers attached to PD7A. Instead, click “Make a payment to CRA” or use the arrears remittance voucher (PD7D).

Explanation of Changes and Other Important Information:

This includes the modifications or corrections made to your account in written form.

3. NIL Remittance:

PD7A form also includes a Nil Remittance form. With this form, you inform CRA if you no longer have employees for a specific time or if you want to close your account.

6. Why Do You Need To Fill Out PD7A Forms?

You must fill out PD7A forms because you run a business with employees. You are responsible for sending deductions from CPP, EI premiums, and income tax to the CRA.

7. A Guide to the Criteria of PD7A Forms:

You must mention correct details, as incorrect information will only lead to penalties. To fill PD7A form, you need to say the following:
  • Account numbers
  • Gross payroll
  • Number of employees
  • Cheque number
  • Date of your remittance
  • Amount of tax
  • Canada Pension Plan (CPP)
  • Employment Insurance (EI)

8. What Information of Employees Needed To Fill The Form?

To fill out PD7A forms, you need to fill in the following information for employees:
  • First/Last name.
  • Date of birth.
  • Home address.
  • Employment province.
  • SIN.
  • Email.
  • The Hire date.
  • Territorial/Provincial and Federal TD1 Forms.
  • Pay group.
  • Pay type.
  • Pay rate.

9. Remittance Schedule for Payroll Deductions:

The remittance schedule for payroll deductions depends on your company’s average monthly withholding amount (AMWA) 

This is a total of all payroll deductions made to the CRA during the annual year, then averaged monthly.

10. Sections of Remitting Payroll:

The CRA assesses your company as a new, regular, or quarterly emitter. It depends on the two-year history of AMWA.
  1. New Remitter
  2. Regular Remitter
  3. Quarterly Remitter

1. New Remitter:

Someone new or has never transferred payments before falls in this section. Payments are due on the 15th day of the month following the one in which the deductions were made.

2. Regular Remitter:

Employers with a two-year history of less than $25,000 in revenue fall in this remitter. Payments are due on the 15th of the month to the month deductions are made.

3. Quarterly Remitter:

This includes employees with small businesses with AMWA of less than $3,000 in the past two years. Payments are due by the 15th of April, July, October, and January.

11. Submit Payments On Time To Avoid Penalties:

To avoid penalties, submit the payment on time with the required information. Also, you must sort payroll source deductions in a trust account separate from your primary operating fund.

12. What Are The Penalties For Late Payments?

  • Penalty on 1-3 days the late payment is 3%
  • Penalty on 4-5 days the late fee is 5%
  • Penalty on 6-7 days the late fee is 7%
  • Penalty for more than 7 days the late payment is 10%
  • The penalty for constant failures and irregularities is 20%

Contact Yogi & Associates!

Bottom Line:

PD7A Forms is a time-consuming and complex process. Due to its complexity, it’s common to misunderstand it, skip a stage, and submit your remittance after it’s due. These errors are difficult to repair without paying the price. So it’s better to offer the payments to the CRA on time to avoid penalties. You can also contact Yogi & Associates. Our qualified consultants can guide you through calculating deductions without errors. This will help you save time and a headache.