PD7A Remittance Explained: How to Pay Source Deductions to CRA

When a client calls on the 15th because they missed a PD7A remittance deadline, the stress is immediate. Understanding how PD7A remittance works is the first step to keeping source deductions on time and avoiding penalties. This guide walks through what the PD7A is, how the remittance schedule works, what happens when you miss it, and how accountants, bookkeepers, and business owners can build a reliable workflow around CRA payroll remittances. Whether you are new to payroll or just need a refresher, the practical details here will help you stay compliant without guessing.

Source deductions include income tax, CPP, and EI contributions. When you fail to remit them, the CRA charges interest and may apply penalties on top of the balance. The good news is that the process is straightforward once you understand the rules. This guide covers the form itself, remittance frequencies, payment options, common mistakes, and the exact steps to avoid a late remittance.

Table of contents

• What is the PD7A and why does it matter?
• Understanding the remittance schedule and payment methods
• How to remit source deductions: a step-by-step walkthrough
• Common PD7A remittance mistakes and how to avoid them
• What to do when the CRA contacts you about a remittance
• How CPAs and bookkeepers can keep client remittances on track
• PD7A remittance FAQ
• What to do next

What is the PD7A and why does it matter?

The PD7A is a CRA remittance form used by employers to pay source deductions like income tax, CPP, and EI. It acts as a payment voucher that accompanies your remittance, whether you pay online or by mail. The form shows the amount owing for the period and which deductions the payment covers.

From a legal standpoint, source deductions are not your money. As an employer, you are required to withhold income tax, CPP, and EI from your employees' pay and remit those amounts to the CRA on behalf of the government. The funds are considered held in trust. That is why the CRA treats a missed remittance seriously: you are spending money that technically belongs to the Crown.

Most employers receive PD7A booklets in the mail with pre-printed vouchers. The booklet usually contains several vouchers, each with a unique remittance number. That number links your payment to your payroll account. Even if you pay electronically, the PD7A remittance number is part of the payment reference, so the CRA can apply your payment to the correct account. If you lose the booklet, you can retrieve the number through CRA's My Business Account.

Why does this matter? Because a missed PD7A remittance triggers interest on the balance and can lead to penalties if the CRA considers the omission negligent. Interest is charged daily at the CRA's prescribed rate, which is set quarterly. On top of that, the CRA can apply a penalty of up to 10% of the amount if the payment is more than three days late and you were previously assessed for a similar issue. For a small business, a single late remittance can eat into a month of profit. For accounting firms, it can lead to a difficult conversation with a client who expects you to catch these issues.

Municipalities in Canada are also employers and must remit source deductions. The underlying rules for the PD7A do not change based on the type of organization, but the internal approval process can be more complex because of council and policy requirements. If you are new to Canadian business taxes, you will also need to understand your GST/HST obligations, but the focus here is payroll.

Understanding the remittance schedule and payment methods

The CRA determines how often you remit based on your average monthly withholding amount (AMWA). This is calculated from the source deductions you reported over the previous two calendar years. If your business started recently, the CRA will estimate your AMWA using your projected payroll. The AMWA calculation is not optional; the CRA sets your remitter type in the system, and you are expected to follow it.

The CRA groups employers into three main remitter types: regular (which includes quarterly and monthly), accelerated, and accelerated threshold #2. The exact AMWA thresholds are published in the CRA's T4001 guide and can change. As of the current rules, employers with a lower AMWA remit quarterly, while larger employers remit more frequently. Since these thresholds are reviewed periodically, you should confirm your status in My Business Account rather than assuming you are still a quarterly remitter.

Here is a simplified outline of the remittance patterns. Use it as a general reference, but rely on the CRA's current payroll deductions and remittance schedule for the exact dates.

The important point is that you cannot simply choose your remitter type. The CRA sends you a PD7A booklet based on its calculation of your AMWA. If your payroll grows, you may move from quarterly to monthly or from monthly to accelerated, and that change can happen without a formal notification. Checking your remitter type at the start of each calendar year is a good habit, and you should also watch for new PD7A booklets that list a different remittance period.

To find the exact due date for a given period, check the CRA's online payroll remittance schedule. The schedule is posted each year before the start of the calendar year, and it accounts for weekends and statutory holidays. Many payroll software programs also display the next remittance date on the dashboard.

How to pay

You have several payment options. The fastest and most reliable is electronic payment through the CRA's My Payment portal or your bank's online bill payment. These methods give you an immediate confirmation and post the payment on the same day. You can also pay by wire transfer if you are a large employer, or by mail with a cheque and the PD7A voucher.

Mailed payments are riskier because the CRA considers the payment received on the date it arrives, not the postmark date. A cheque that sits in the mail for three days can easily be late. If you must mail, send it at least five business days before the due date and use a method that allows tracking. A better approach is to switch to electronic payment, which is faster and eliminates the risk of a lost cheque.

For employers who use payroll software, the software should calculate the source deductions and provide a summary of what to remit. The Awditify payroll module does this automatically and keeps a history of each remittance period, so you can reconcile at a glance.

How to remit source deductions: a step-by-step walkthrough

The actual remittance process changes depending on whether you are paying electronically or by mail. Here is the typical workflow.

1. Confirm the amount owing. Run your payroll for the period and calculate the income tax, CPP, and EI for each employee. Do not forget the employer's share of CPP and EI. For example, if a single employee has $500 in CPP contributions for the year, your share is an additional $500, and you remit both amounts together.

2. Identify your remitter type and due date. Look at the PD7A booklet or check My Business Account for your remittance schedule. The due date can shift if it falls on a weekend or holiday, so use the CRA's payroll due date calendar rather than counting forward from the end of the period.

3. Choose your payment method. If you pay online, you will need the remittance number from the PD7A. If you pay by mail, you will use the physical voucher. Some banks allow you to add the CRA as a payee and enter the remittance number on the payment date.

4. Submit the payment. For electronic payments, the money leaves your account on the day you submit. For mailed payments, use a tracked method and account for processing time. The CRA's website states that mailed payments are considered received when they arrive at the CRA office, not when they are sent.

5. Record the payment. Save the confirmation number or copy of the voucher and reconcile it against your payroll journal. This step is easy to overlook but crucial if the CRA asks for proof of payment.

6. Review your account. Log into My Business Account after the payment is posted to confirm that the remittance was applied to the correct period. This takes two minutes and can prevent a future headache.

The final step is where most accounting firms add value. If a client's payroll records are clean, they can answer a CRA inquiry without panic. The Help Center article on payroll tax forms shows how to generate the records you need for each remittance period.

Worked example: calculating a remittance

Consider a small Ontario business with four employees. In a typical bi-weekly pay period, the payroll run shows total employee income tax of $1,200, employee CPP of $800, employer CPP of another $800, employee EI of $300, and employer EI of approximately $420. The total remittance would be $3,520. On the PD7A, you remit that total amount under the appropriate payroll account. The exact numbers will vary, but the principle is the same: you must remit both the employee and employer portions together.

Common PD7A remittance mistakes and how to avoid them

Missing a deadline is the most obvious mistake, but there are others that trip up employers. Let's look at a few.

Scenario: A 12-person contractor firm in Ontario has been remitting quarterly for years because their withholdings were low. After a busy year, their average monthly withholding crosses the threshold into the monthly remitter category. The CRA sends an updated PD7A booklet, but the bookkeeper does not notice and keeps remitting quarterly. Six months later, they get a notice of interest and penalties for late remittances.

This example shows why checking your remitter type at the start of each year is important. The CRA uses the last two years of withholdings to set your remittance frequency, so growth can change your obligation without you realizing it. The change is not announced with a letter; it simply appears in the new PD7A booklet. If you do not read the booklet carefully, you will keep following the old schedule.

Another common issue is misapplying payments. If you remit by mail, the PD7A voucher has a specific remittance number. If you use online banking without entering the correct reference number, the payment can sit unmapped in the CRA's system. Electronic payments through My Payment or your bank using the correct reference solve this, but you still need to double-check the number before you hit submit.

We also see clients who accidentally remit the employee's share of CPP and EI but forget the employer's portion. That leaves the account in arrears even though the employee's deductions are up to date. The employer's share is calculated on top of the employee's contribution, so the total remittance is higher than what you see on a single pay stub.

Finally, there is the simple problem of cash flow. When a business struggles to make payroll, the source deductions can be tempting to skip. But the CRA treats these funds as held in trust. Avoiding the remittance is never a viable option, and the interest plus penalties will only make things worse. In severe cases, the CRA can take collection action, including garnishing bank accounts.

Manual vs automated workflow

If you rely on handwritten remittance envelopes and a paper log, you are more likely to miss a rate change or a due date. A manual workflow also makes it harder to reconcile your payroll records with the CRA's account. For example, if the CRA adjusts a CPP rate partway through the year, you need to update your payroll calculations in multiple places. With an automated payroll system, the rates are built into the software, so the calculation updates automatically.

In contrast, an automated payroll system calculates the deductions, tracks the remittance dates, and generates a PDF that matches your bank payment. When the CRA sends a notice, you can pull up the exact record in minutes instead of digging through a shoebox. This is not just about convenience; it is about being able to prove your remittance history when the CRA asks.

What to do when the CRA contacts you about a remittance

A notice from the CRA about a late or missing remittance is a clear signal that something in your workflow needs attention. The first step is to verify the amount the CRA says you owe. Log into My Business Account and compare the CRA's records with your own payroll journal. If the numbers match, pay the balance immediately to stop the interest. If they do not match, gather your supporting documents and call the CRA's payroll line.

When you call, have your payroll account number, the period in question, and the confirmation number or cancelled cheque for the remittance. Explain the situation clearly and ask the agent to review the account. If the discrepancy is the result of a missing payment reference number, the agent can often reallocate the payment to the correct period.

If the CRA has already imposed a penalty, you can request cancellation if you have a valid reason, such as a sudden illness or a service disruption at your financial institution. The CRA has a formal process for requesting penalty relief. You will need to write a letter explaining the situation and provide evidence. Acts of oversight are generally not accepted, but clear circumstances can help.

For CPAs and bookkeepers, the most useful thing you can do for a client is to keep a clean record of every remittance. That way, when a notice arrives, you can respond within the CRA's 30-day window instead of scrambling to reconstruct the history.

How CPAs and bookkeepers can keep client remittances on track

When you manage payroll records for multiple clients, the PD7A can become a calendar feature you check constantly. If you are the end-of-month accountant, you are not necessarily the one making the remittance. The client is. That makes it your job to set the reminder, confirm the payment, and reconcile the CRA account.

A practical workflow is to enter all client remittance dates into a shared calendar, then spend 10 minutes each morning checking which amounts were paid the day before. If a client misses a due date, you can catch it early and arrange payment before the penalty snowballs. Many CPAs use a simple spreadsheet with columns for client name, remittance period, due date, payment method, and confirmation number. The key is to make the workflow repeatable so nothing falls through the cracks.

You also need to watch for discrepancies between the payroll journal and the CRA's records. A payment can be applied correctly but later matched to the wrong period if the client used the wrong reference number. Reconciling your payroll system against the PD7A records at least quarterly catches these issues. If you find a mismatch, contact the CRA right away; they are generally willing to correct an obvious error.

For firms that want to reduce the risk of manual errors, a cloud accounting platform with integrated payroll can help. Awditify for accounting firms lets you manage multiple clients' payroll records in one place, automate tax calculations, and keep a clean audit trail. The payroll tax settings guide explains how to configure employer-specific deductions like WCB and EHT, which are common in many provinces.

When you work with clients who pay by cheque, you can use the PD7A voucher as a cover sheet, but you still need to verify that the payment was deposited. A cheque that is lost in the mail is still your problem, even if you sent it on time. Ask clients to send you a screenshot of the online payment confirmation or the bank statement showing the debit. That gives you a record you can rely on.

Once you understand the PD7A process, the next decision is often which payroll software to rely on. Our comparison of the best payroll software for Canadian small business walks through the options, including how cloud-based platforms handle source deductions.

PD7A remittance FAQ

What is the PD7A?

The PD7A is a CRA form used to remit payroll source deductions, including income tax, CPP, and EI. It lists the amount owing for a specific period and serves as a payment voucher. Employers use the PD7A either by mailing it with a cheque or by entering the remittance number when paying electronically. The form is typically sent at the start of the year to employers who have payroll accounts with the CRA.

When is the PD7A due?

The due date depends on your remitter type. Quarterly remitters pay on the 15th of the month after the quarter ends, monthly remitters pay on the 15th of the following month, and accelerated remitters pay on specific dates set by the CRA. The exact dates can shift because of weekends and holidays, so always check the CRA's payroll due date calendar. You can also find your remittance schedule in My Business Account.

How do I make a PD7A remittance?

You can pay electronically through CRA's My Payment, your bank's online bill payment, or by mail with the PD7A voucher. Electronic payments are faster and give you a confirmation number. If you use a payroll solution like Awditify, you can track your source deductions and see when each remittance was made. The key is to use the correct remittance number so the payment is applied to the right period.

What happens if I miss a PD7A remittance?

The CRA charges daily compound interest on the outstanding amount and may apply a penalty if the omission is considered negligent. Interest starts the day after the due date and continues until the balance is paid. If you catch the error quickly, you may reduce the interest cost and, in some cases, the CRA will waive the penalty if you can show reasonable cause. The best approach is to pay the balance as soon as you notice the mistake.

Can I remit electronically instead of using the paper voucher?

Yes, the CRA encourages electronic payments. You can use My Payment or online banking, but you need to enter the correct remittance number from your PD7A booklet. If you lose the booklet, you can find the number in CRA's My Business Account. Many accounting platforms, including Awditify, help you keep this information in one place.

What to do next

The PD7A is a simple form, but it sits at the center of serious compliance. The most important decision you can make today is to check your remitter type and set up a system that ensures every deadline is met. If you rely on spreadsheets and paper reminders, the risk of missing a payment grows with every new payroll period.

For accountants and bookkeepers, automating the calculation and tracking of source deductions can save hours of manual review. Awditify's payroll module is built to handle Canadian rules, so CPP, EI, and income tax are calculated correctly. You can also connect your payroll records to the rest of your bookkeeping, giving you a complete financial picture. Explore the payroll pages to see how the platform handles remittance records and tax forms, so you can close the books with confidence.