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Payroll Planning
The last payroll remittances for the 2021 calendar year are due on your next payroll remittance date. For many of you that will be January 15th. This is a good time to do some tax planning around payroll.
If you have your own corporation and are taking a salary each month, you would have made source deductions or payroll remittances each month. This included remittances for yourself and any employees for your corporation and includes the following:
- Federal and provincial income tax
- Canada Pension Plan (CPP)
- Employment Insurance (EI) for your staff
These deductions are required to be made by the employer for payments of salary, wages, commissions, taxable benefits and pension income. Remittances include both the withholdings from employees as well as the employer’s portion of the amounts owed. Timely payment should be considered to avoid costly penalties and interest.
Planning considerations may include anticipated income in 2022 in comparison to your 2021 income. If you anticipate earning more next year, you may consider taking a higher income for 2021 to maximise the lower tax brackets over the two year period.
As you consider the amount to include in your final payroll remittance for 2021 – you should also consider setting up a payroll schedule for 2022. This may include a closer look at the new tax brackets for the 2022 year.
Other considerations include:
- Maximum RRSP Contributions in 2021 is 18% of earned income up to $154,611 allowing for a contribution increase of $27,830 in 2022.
- Maximum CPP Contributions in 2021 is 5.45% of earned income up to $58,100 for employees for $3,166 in contributions ($6,333 for self employed).
If you require a consultation, we are here to help.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2022 Shajani LLP.
Shajani LLP is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning services.
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