Taxes play an important role in the life of every Canadian family
The research organization Fraser Institute estimates that annual tax payments of the average Canadian household surpass housing, food, and clothing expenses combined. Thus, in 2017 the average Canadian family unit (including single Canadians) earned almost $86K in income while paying over $37K in total taxes. That means 43.1% of all the income Canadians receive is going to taxes.
The national institution responsible for collecting taxes is called the Canada Revenue Agency (CRA). There are numerous ways a citizen can pay taxes to the CRA:
- in person at any Canada Post outlet using cash or debit card;
- through a third-party service provider that offers payment by credit card or PayPal;
- via your financial institution’s telephone or online banking service;
- through the CRA’s My Payment service online;
- using the CRA’s pre-authorized debit service offered through My Account or My Business Account.
Online options are more convenient, accessible 21 hours per day (the time from 3 a.m. to 6 a.m. is dedicated to maintenance), and better in terms of health safety in the current pandemic situation. Moreover, they don’t require much tech-savviness to perform the task.
Unfortunately, non-residents who do not have a Canadian bank account can make their payments to the CRA only by wire transfer or with an internationally issued credit card through a third-party service provider (for a certain fee). The owners of Canadian bank accounts can use the privilege of direct online payments.
My Payment federal online service supports Visa, Mastercard, and Interac debit cards. Credit cards cannot be accepted there, so if you’re willing to use one for paying taxes, you’ll need to avail of a third-party service provider that offers payment by credit card, PayPal, or Interac e-Transfer.
You don’t need to register to use My Payment, and you can make payments to more than one CRA account in one single transaction.
In the My Payment ‘Pay now’ menu you should select a type of tax you’re going to settle. Individuals can pay their individual income tax or repay credits and benefits such as Canada child benefit, GST/HST credit, Universal child care benefit, Alberta credits, and Ontario credits. Non-residents are entitled to the non-resident withholding tax. However, the majority of applicable tax payments refer to business entities.
Once you choose the type of tax to repay, you’ll be guided to specify your choice, as there may be subtypes of the chosen tax. Next, you’re going to indicate the payment amount and all the relevant details. For individuals, it would be your Social Security Number.
For businesses, the account number or payroll details would be required. The 15-character program account number assigned to your business by the CRA consists of three parts: a nine-digit Business Number (BN)/tax ID that identifies your business; a two-letter identifier for the program type; and a four-digit reference number for the program account. The nine-digit tax ID number (Business Number) is the same across all program accounts. However, the numbers for the program ID and account number will change based on which of the four tax programs it’s referring to. The four programs are Goods and Service Tax (GST)/Harmonised Sales Tax (HST); payroll deductions; import/export privileges; corporate income tax.
After that, you proceed with choosing a payment method and making a payment, following the instructions from the service.
You needn’t necessarily visit the CRA’s official website to pay your taxes. In fact, most financial institutions allow payments using their banking system. You should just log in to your online bank account and add the CRA as a payee.
A few variants would be available, so you shouldn’t confuse them:
- CRA (revenue) – current-year tax return: make a payment for the current tax year.
- CRA (revenue) – tax amount owing: make a payment for previous tax years.
- CRA (revenue) – tax instalment: make payments for future tax year(s).
When you’re asked to enter your account number, use your social insurance number if you pay as an individual.
Businesses should look for a suitable payee option such as:
- Federal – Corporation Tax Payments – TXINS
- Federal – GST/HST Return – GST 34 – (GST34)
- Federal Payroll Deductions – Regular/Quarterly – EMPTX – (PD7A)
- Federal Payroll Deductions – Threshold 1 – EMPTX – (PD7A)
- Federal Payroll Deductions – Threshold 2 – EMPTX – (PD7A)
After selecting a payee, business owners must fill in their 15-digit account number.
CRA’s pre-authorized debit
When you use the pre-authorized debit (PAD) service, you authorize the CRA to withdraw a predetermined amount from your bank account to pay tax on a specific date(s).
If you pay business taxes, log in to My Business Account. On the Welcome page, select “Pre-authorised debit” under Make payments. Select “Create new agreement” and follow the instructions on your screen.
Businesses can also set up pre-authorized debit with their mobile device using CRA BizApp.
If you’re an individual registered for My Account, you should:
- Sign in.
- Select the ‘Proceed to pay’ button and select the ‘Pay later’ option to create a PAD agreement.
- Access ‘Manage pre-authorized debit’ under the Related services within the Accounts and payments section to view, modify, cancel or skip a payment.
A PAD agreement can also be created within MyCRA, for an amount owing, by selecting the ‘Proceed to pay’ button and the ‘Pay later’ option. Your credentials are the same as in My Account.
Some taxpayers may receive a notification that their CRA user ID and password have been revoked when attempting to log in to their CRA account. Visit the official website for more information. A potential malicious attack may cause that.