Updated Checked by the Tax-Services.ca editorial team How we check
To record CRA payments, match each one to the balance it pays down. A GST/HST payment reduces GST/HST payable, a payroll remittance reduces source deductions payable, and none of them is an expense. Say you collect $1,300 of HST on $10,000 of sales and paid $520 of HST on $4,000 of purchases. Your return says $780, and that $780 is a debt you’re clearing.
It’s an easy trap. The money always goes to the same place, yet each payment settles something different.
Which account does each payment belong to?
Start by asking what the payment was for. Then pick the account it settles.
| Payment | Reduces | Expense? |
|---|---|---|
| GST/HST remittance | GST/HST payable | No |
| Payroll remittance (tax, CPP, EI) | Source deductions payable | Only the employer share of CPP and EI, when first accrued |
| Corporate tax instalment | Income tax payable, or a prepaid tax balance | Tax expense is set at year end |
| Personal instalment by a sole proprietor | Owner’s drawings | No, it’s your own tax |
| Interest or penalty charged | Nothing | Yes, on its own line |
The last row needs a line of its own. Interest and penalties don’t pay down any balance, so give them a separate account and don’t bury them in a tax payable line. Whether you can deduct them on a return is a question for your accountant or the CRA, so look it up before you claim anything.
How do you record a payroll remittance?
Payroll is where the split bites. Take $3,000 gross every two weeks for one employee in Ontario. The payroll remittance calculator shows $732.62 held back from the employee (income tax $521.48, CPP $167.94, EI $43.20), plus $228.41 that you add as employer (CPP $167.94 and EI $60.47). The cheque to the CRA is $961.03.
Only the $228.41 is your expense. The $732.62 came off the employee’s paycheque and was never yours, so it sat in a liability account from payday until you paid it in. If you booked the whole $961.03 as a cost, you’d overstate payroll by $732.62 every pay period.
When is each payment due, and what does being late cost?
For most small employers (regular remitters), the CRA’s payroll remittance schedule says the money is due on the 15th of the following month. Pay your people in March and the remittance is due April 15. Quarterly and accelerated remitters follow different dates.
Late remittances carry a graduated penalty: 3% if the amount is one to three days late, 5% for four or five days, 7% for six or seven days and 10% beyond that. On the $961.03 above, five days late is a 5% penalty, or about $48. Not a disaster, but it’s $48 for nothing, and it shows up in your books as its own line.
What about sales tax you remit?
Keep collected HST in one payable account and HST paid on purchases in another, or net them in one. Either way, the return figure is the difference. The GST/HST calculator splits a price into base and tax at Ontario’s 13% so you can check a single line.
Monthly and quarterly filers file and remit one month after the period ends, according to the CRA’s 2026 business deadlines. Annual filers get three months after their fiscal year end. If your books close the period before the return, the payable balance should equal the return figure to the cent. When it doesn’t, something was coded wrong.
And when the return comes out negative? A refund works the other way. When the CRA pays you, debit the bank and credit the GST/HST receivable, which clears the balance. Don’t book the refund as income.
Instalments and the year end true up
Instalments are prepayments.
For an individual with business income, the CRA lists March 15, June 15, September 15 and December 15 for 2026. A corporation pays monthly, or quarterly if it qualifies as a small Canadian-controlled private corporation with a clean filing record. Corporations owe any balance two months after year end, or three for a small CCPC that claims the small business deduction and meets the conditions.
For a sole proprietor, the tax instalments calculator turns $9,000 of expected tax into four payments of $2,250. Book each one to owner’s drawings, because you’re the one who owes it. For a corporation, park the payments in a prepaid tax account, and clear it against the tax expense once the return is done. The corporate tax calculator gives a rough yearly figure to compare (a small Ontario corporation with $100,000 of profit shows $11,696, but the Ontario small business rate changed in July 2026, so that’s a blend and not a published rate).
Common slips when you record CRA payments
Wrong account, first of all. A payroll payment lands in GST/HST payable, both balances look wrong, and the fix takes an hour. Reconcile against the CRA account statement as well as your bank.
Also watch for a payment that gets credited to a different year or program than you meant. It happens, and the bank line alone won’t tell you. If you spot one, fix your own books first, then contact the CRA and keep the confirmation. And record the payment on the date the money left the account, not the date you decided to pay.
One habit helps more than any software feature: a standing note in the memo line with what the payment was for and the period it covers. Six months later, “HST Q2” beats a mystery $780 every time.
Where this information comes from
Due dates come from the CRA‘s 2026 tax deadlines page for businesses, its payroll remittance page and its page on required tax instalments. Payroll and HST figures come from the 2026 data in our calculators. How each account is treated on a return depends on your situation, so this page sticks to the bookkeeping side. This is an independent site with no government connection.
Frequently asked questions
Is a payment to the CRA an expense?
Usually not. GST/HST and payroll deductions you remit pay down a liability. Only the employer share of CPP and EI is a business cost.
Where do I book a sole proprietor's tax instalments?
As owner's drawings, because it's tax on you and not a cost of the business.
How should I book interest the CRA charges?
On its own expense line, apart from the tax itself. We couldn't confirm how it's treated on a return, so check before claiming it.
When do I record the payment?
On the date the money left your account, and match it to the CRA statement.
How do I know GST/HST payable is right?
At period end the balance should equal the return amount. If it doesn't, look for purchases or sales coded to the wrong tax account.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST