Easy ways to pay CRA

CRA has been making a strong push to have all payments made electronically. Here are a few options that are simple to set up and easy to use.

Let’s face it — no one likes to pay taxes. But it’s vital if we want to live in a great country like ours that is the envy of people around the world.

Whether it’s for personal tax or business taxes such as GST/ HST, corporate tax or payroll, it seems that many people are not aware of the options available to pay Canada Revenue Agency. This lack of knowledge ends up causing stress on due dates and costs money in the form of late payment charges.

In the old days it was pretty straightforward. You used a form and took it to the bank or mailed in a cheque. You were even able to use a blank form printed from the Internet. Now you have to use a customized remittance form printed with special magnetic ink characters, which you need to request from CRA.

But why go to all that bother when there are so many easier options available? CRA has been making a strong push to have all payments made electronically and there are a number of options that are simple to set up and use.

Online banking: If you bank online, you can pay your taxes the same way you pay your cable or gas bill. As soon as you have registered and signed on to online banking, you simply select “Pay Bills” and add CRA to your list of payees. Then you choose from options such as “CRA (revenue) — 2014 tax owing,” “past tax owed” or “tax instalments.” Note that the tax owing option is for a one-time payment at the same time as filing your return. If you don’t pay the full amount, your next payment should be made under the “past tax owed” option. After entering your SIN, the dollar amount you want to pay and the account you wish to use, you set up a one-time or recurring payment and you’re done. Note that your bank may impose a daily limit on the total amount you can pay.

All the big banks also offer a government payment and filing service. You can pay your GST/HST (GST-P), file your returns (GST34), pay federal payroll deductions (PD7A) as well as corporate taxes (TXINS) and several types of provincial taxes. With this service, record keeping is simplified because each tax filing is issued a confirmation number.

Debit card — Interac Online: CRA’s My Payment service is an electronic payment service that uses Interac Online so individuals and businesses can make payments directly to CRA from an online personal or business banking account. Payments can be for individual income tax instalments, past tax owed and current year tax owing. Businesses can pay GST/HST, payroll source deductions, corporate income taxes, nonresident withholding taxes and more.

You can use My Payment if you have an online banking account at a financial institution that participates in the service, including BMO, Scotiabank, RBC, TD Canada Trust, BC’s Envision Financial and Libro Credit Union and Windsor Family Credit Union in Ontario. Bank cards with a Visa logo or both Interac and Visa logos can’t be used with the service — you need an Interac bank card without a Visa logo. Once you enter your payment info, you will be directed to a secure site to complete the transaction and then redirected to the My Payment website for a confirmation receipt. Note that CRA doesn’t exchange personal or account-specific information with your bank.

Pre-authorized debit (PAD) is an online, self-service payment option whereby you authorize CRA to withdraw a payment amount from your bank account on one or more dates. It can be CRA has been making a strong push to have all payments made electronically used for businesses and individuals and handles many different payment types. You can set up a PAD using CRA’s My Account for individuals or My Business Account for businesses.

Credit card: CRA does not accept credit cards directly, but you may be able to use a third-party service provider. Currently the only option is Plastiq, which offers T2 corporation, T1 individual, GST/HST, source deductions and excise tax. The service fee is 2.5% of each payment. It also accepts Visa debit cards and does not charge a fee for these payments.

Snail mail: As a last resort, you can still mail a cheque to CRA with a cover letter. Make sure you mention the account number (SIN or Business Number) and the applicable year for the balance or instalment or the year-end or instalment year for HST and corporate taxes. Include this information on the cheque to avoid the hassle of tracking down misallocated amounts.

In all cases, your payment will take two or three days to process so it’s best to make the payment in advance to avoid late fees. Why not set up all your payments electronically for 2016 so you never pay late fees again?