Employment tax, payroll and equity incentives

Empowering your workforce with comprehensive tax solutions

Organizations face a complex employment tax, payroll and rewards landscape. Diverging global rules, the rise of remote work and pressure to control the costs of equity incentives and benefits are creating new challenges for tax and human resource professionals.

Our employment tax specialists can help you meet your employment tax obligations, manage employment tax expenses and review your equity incentives to match your changing workforce needs. This enhances your ability to create a sustainable strategy for attracting and retaining market-leading talent while making the most of your employees’ skills and talents.

Our approach

Our employment tax and payroll specialists take a human-led and tech-powered approach to help organizations better understand and control their people’s pay and the link to performance. Employee rewards become even more crucial as organizations change the way they create, capture and deliver value. We draw on our global community of solvers to develop deeper insights into your compliance obligations and benchmark your employment tax function against your corporate goals, compliance requirements and governance best practices.

How we can help

Domestic employment tax

We’ll help you develop your employment tax strategy, understand and comply with employer taxation obligations and prepare for tax authority reviews. We can validate internal processes to control risks and costs. And, if compliance failures occur, we’ll work with you on remediation and can assist you in negotiating with tax authorities.

Employers are increasingly present in multiple jurisdictions across Canada, with numerous tax and regulatory authorities. Our team can help you navigate these complexities while elevating the benefits for your people and business.

We can help you determine the payroll implications when employees move between provinces in Canada.

When tax authorities launch an audit, we can assist you in addressing the long list of documentation requests, scoping the audit response, pinpointing areas of risk, responding to the authorities and negotiating on your behalf.

We help you determine if source deduction withholdings or other compliance measures are necessary.

Our teams can determine if you’re treating employee benefits appropriately for the purposes of source deduction withholdings.

Cross-border employment tax

Cross-border employment is becoming more common. Business travellers, virtual remote workers, non-resident directors, cross-border commuters, multi-jurisdiction employees and international contractors all present unique challenges. Our community of employment tax and payroll specialists includes professionals in Canada and from across our global network that bring the knowledge and perspectives you need to address these complex cross-border employment matters. We can help you manage the risk of tax exposure, compliance expenses and higher employer social security responsibilities—letting you focus on your operational requirements.

An employer’s responsibilities for source deduction withholdings can become even more complex when employees work virtually or in multiple territories. We can help you determine when you need to withhold Canadian source deductions and how to calculate these amounts.

Directors residing outside Canada, or residing in Canada while serving as a director to an entity outside Canada, may be subject to Canadian source deductions on deemed employment income. We can help you assess your responsibilities for deductions against director’s fees.

Any employer sending employees into Canada may be required to withhold source deductions in Canada, depending on the nature and length of the business travel. Our specialists can help you assess whether this requirement applies and, if so, how to implement the necessary compliance processes.

Certain aspects of employment and payroll tax compliance depend on tax treaties between Canada and other territories. Our team can help you interpret those treaties to determine the impact to employees while they work in Canada.

Payroll processes and compliance

Our teams can help you review the current design of your payroll delivery model and the efficiency of the payroll function. This helps you transform payroll operations to better manage compliance risks, streamline processes, standardize controls and create greater efficiency and flexibility. We also help you make the most of payroll data and get people analytics right.

Outsourcing your payroll requirements to our team lets you benefit from tried and tested payroll processes that enhance governance and accuracy. These include stringent controls over review and approval between management and payroll. Our team specializes in consistently handling Canadian domestic payroll. We augment our payroll outsourcing capabilities with technical employment tax specialists who bring deep insights into various regional requirements, helping you meet your compliance obligations with payroll tax agencies.

Companies with a relatively small human resources or finance function can run afoul of complex payroll requirements more easily than larger teams. Every payroll run handled by our team undergoes a multi-layer review, benefits from internal and external technical support and includes clear communication—simplifying the complexities that might otherwise overwhelm management.

Companies entering Canada by opening a Canadian business and employing Canadian residents can face a steep learning curve when trying to pinpoint the differences between the payroll requirements in Canada and their home territory. Our team can help you quickly set up your Canadian payroll as you enter the market.

Our team is part of PwC’s Global Employment Tax and Payroll network that can help meet your global payroll needs. Our Global Payroll Platform standardizes international payroll inputs and results, creating clear reporting across all territories, integration with existing platforms and seamless coordination across multiple territories.

We can help you manage the technical complexities of payroll processing and reporting, including:

technical aspects of tax slip reporting
payroll software data entry
coordination with other third-party processors
compliance with payroll tax agencies (e.g. workers’ compensation, employer health tax)
processing payroll in Québec and complying with provincial requirements

Equity compensation and incentives

One way to make employees feel more invested in their work is to give them a share of the company through employee equity plans. These require careful planning, clear communication and ongoing management to achieve your goals and navigate tax, accounting and legal issues.

We assist:

Canadian employers (either Canadian headquartered companies or subsidiaries of a multinational group) that provide incentive plans to their workforce

Employers offering incentive plans such as stock options, incentive units (including restricted stock units and performance stock units), stock appreciation rights / unit appreciation rights and/or deferred share units

Our team can help you plan, manage and comply with incentive and equity-based compensation plans at different stages of your company’s growth. We can also help manage Canadian and mobile workforce incentive plan issues and work with our internal network on non-tax-related issues such as strategy alignment, accounting and valuation.