The café that 'borrowed' from payroll remittances — and paid for it

A Fraser Valley café owner hit a brutal February. Sales were down, rent was due, and there was just enough in the account to cover one but not both: the rent or the CRA payroll remittance. She paid the rent and told herself she'd catch up on the remittance next month.

Next month came with the same math. Then the month after. By summer she was three remittances behind and the CRA had noticed.

The CPP, EI, and income tax you withhold from employees' paycheques are 'trust funds.' That money never belonged to the business — you're holding it on behalf of your staff and the government. Spending it is treated far more seriously than being late on your own taxes.

Late remittances trigger a penalty of up to 10% of the amount due, rising to 20% for repeated failures. And because these are trust funds, the CRA can hold directors personally liable — your house and personal savings are no longer behind the corporate veil.

First, we got current: we calculated the exact arrears, filed the missing remittances, and stopped the penalty from growing. Then we set up a payment arrangement with the CRA so she wasn't trying to clear it in one impossible lump.

The structural fix mattered most. We moved her to a separate remittance bank account — every pay run, the withheld amounts and the employer portion get swept out automatically the same day. The money is simply never available to 'borrow' again.

If cash is tight, talk to your bookkeeper before you skip a remittance — there are almost always better levers to pull. Payroll source deductions should be the last dollar you ever touch, not the first.