Employers are responsible for withholding and remitting source deductions on payments to their employees. This principle becomes tricky to apply when the employer is a complex corporate structure made up of multiple legal entities. Questions about which entity is liable to deduct and remit source deductions to the CRA may occur when labour is shared among the group and the employer of record struggles financially and the others are doing well.

The CRA may look to shift employer status to one of the other entities or principal of the group and assess it for the unpaid remittances. The answer for when this is legitimate to do is NOT straightforward.  A number of the factors influencing the decision are – which entity pays the employees – when did the entity start paying the employees – it is best to consult your HR Expert to be sure – Platinum HR

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