If you're a business owner in Canada, you've likely heard the term "remit" in connection with taxes. But what does it actually mean, and why is it such a critical part of running a business? Let’s break it down in simple terms.
What Does "Remit" Mean?
In accounting and tax, to remit means to send or pay money owed to a recipient, often a government authority. For businesses, this typically involves collecting sales tax from customers and then remitting (sending) the collected amounts to the Canada Revenue Agency (CRA) or a provincial tax office.
Essentially, your business acts as a tax collector on behalf of the government.

Types of Tax Remittance
Here are the most common scenarios where businesses need to remit taxes:
1. Sales Tax (GST/HST/PST)
When you make a sale, you charge the applicable sales tax (e.g., GST, HST, or PST) based on the customer’s location.
At the end of your reporting period—monthly, quarterly, or annually—you calculate the total tax you collected, subtract any eligible input tax credits (ITCs) (tax you paid on business expenses), and remit the balance to the CRA or provincial authority.
Example:You collect $2,000 in HST from customers in Ontario during a quarter. You also paid $500 in HST on business expenses (e.g., supplies, rent). When remitting to the CRA, you only send the net amount:
Net Amount to Remit=Collected Tax−ITCs=2,000−500=1,500\text{Net Amount to Remit} = \text{Collected Tax} - \text{ITCs} = 2,000 - 500 = 1,500Net Amount to Remit=Collected Tax−ITCs=2,000−500=1,500
2. Payroll Taxes
Employers deduct taxes, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from employee wages.
These deductions, along with the employer’s share of CPP and EI, must be remitted to the CRA on a set schedule (e.g., monthly or quarterly).
3. Corporate Income Tax
Corporations are required to pay taxes on their profits.
Typically, corporations make installment payments throughout the year and remit any remaining balance after filing their tax return.
Why Is Tax Remittance Important?
Legal Compliance:
Failing to remit taxes on time can result in significant penalties and interest charges.
For example, the CRA can charge 6% interest annually on overdue amounts.
Accurate Financial Records:
Regular remittance ensures your financial statements reflect the true status of your tax obligations.
Government Revenue:
Taxes fund public services like healthcare, education, and infrastructure. By remitting taxes, businesses contribute to the well-being of society.
How to Remit Taxes in Canada
The CRA provides several ways to remit taxes:
Online: Through CRA’s My Business Account or your bank’s online platform.
In-Person: At your financial institution with a CRA remittance form.
By Mail: Using a cheque and remittance slip.
Be sure to meet the deadlines for your reporting period to avoid penalties.
Common Misunderstandings About Tax Remittance
Myth: If I collect taxes from the government (e.g., City of Mississauga), I don’t have to remit them.
Fact: Taxes collected from any client, including government entities, must still be remitted to the CRA.
Myth: I can keep the taxes I collect.
Fact: Taxes collected are not your business’s revenue—they are held in trust for the government.

Final Thoughts
Tax remittance is a critical responsibility for Canadian businesses. Whether it’s sales tax, payroll deductions, or corporate income tax, timely and accurate remittance keeps your business compliant and avoids costly penalties.
By understanding how to calculate and remit taxes, you can ensure your business operates smoothly and contributes to the Canadian economy.
Need Help?If you’re unsure about your remittance obligations or need help setting up a system to manage taxes, contact a professional accountant or bookkeeper today.
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