Staying compliant when hiring student employees
As back-to-school season approaches, students are also gearing up to go back to work part-time throughout the school year. In 2010, Statistics Canada found that more than 3.3 million Canadians worked part-time and more than one third (1.17 million) of those were aged 15 to 24.
The Canadian Revenue Agency (CRA) and Intuit Canada, makers of QuickBooks Payroll accounting software, warn that businesses must remain compliant when hiring part-time employees.
“Mistakes can be costly to both employers and their employees. Small businesses must maintain up-to-date records throughout a student’s employment to avoid potential fines and penalties. And for the students, paying the proper taxes and taking accurate deductions can save them from owing money to the CRA at tax time,” a statement from Intuit said.
“Being responsible for the paycheque of younger employees is a job small business owners do not take lightly,” said Brad Card, senior payroll products manager with Intuit Canada.
The ABCs of Compliance
To help small business owners stay compliant throughout the entire cycle of a part-time student’s employment, Card offered the following tips:
- Before they start: If hiring an employee for the first time, register your business as an employer with the CRA (www.cra-arg.gc.ca). This will provide a payroll account allowing you to issue T4s and remit the necessary statutory deductions.
- When they start: Among the connected generation, email and cell numbers are as critical as home phone and address. Ensure you have all of these up front, and their social insurance number and completed TD1 forms – both federal and provincial.
- While they work: Applying accurate deductions is critical and tax changes can occur every six months. Students turning 18 must start paying into the Canadian Pension Plan (CPP) in the month following their birthday.
- When they leave: Prepare a record of employment, which must be provided to the employee within five days after their last day. Also be sure to retain your records. You are required to keep employee records for six years after they leave.
