Original post here
Payroll mistakes are more common than you think, and they can get expensive fast. This guide breaks down 6 payroll errors that Canadian businesses, especially those in Toronto or with remote teams across provinces, should be watching for in 2025.
Paying employees in multiple provinces as if rules are the same everywhere
Quebec alone has its own pension, tax slips, and rules. Ignore them and you’ll owe back remittances plus penalties.
How we fix it:
We assess which province your company resides in and where and how you employ your team members (for example, whether you’re a distributed/remote team or have a permanent establishment in one or more provinces), and we ensure payroll deductions and remittances are set up correctly.
Misclassifying contractors as employees
CRA penalties for CPP/EI add up fast when contractors aren’t classified correctly.
How we fix it:
We audit roles against CRA tests and, if needed, transition them properly to payroll.
Crossing EHT thresholds without registering
Hitting $1M in Ontario payroll means you suddenly owe EHT. Many business owners aren’t aware of this common tax until they receive a letter from the Ministry with an amount outstanding + interest.
How we fix it:
We monitor payroll totals and file registrations as soon as you’re close.
And yes, other provinces have similar thresholds - we keep an eye on those too.
Benefits not syncing with payroll
If taxable benefits aren’t allocated correctly, employees could end up over- or under-taxed (and yes, they will notice on T4s).
How we fix it:
We reconcile benefit statements with deductions every month.
Severance and Record of Employment (ROE) errors
Get this wrong and ex-employees may be denied EI, making you the villain in their story.
How we fix it:
We calculate correct insurable earnings and file ROEs with Service Canada on time.
Assuming the payroll system “just takes care of remittances”
Some systems don’t auto-remit. If no one checks, you’re months behind before anyone notices.
How we fix it:
We confirm CRA and Ministry balances match, without only reliance on what the software shows.
Final Thoughts
Get systems that catch problems before they cost you.
Quick test:
When did you last reconcile your CRA remittance balance?
If you had to think about it, it's been too long... and that's exactly how problems start.
