Want to PAD your tax bill?

Few people get excited about paying more tax. On the other hand, it may be helpful to have a variety of options when clients are making payments for the taxes they owe.

As in the pre-Internet days, a client can send a cheque by mail to CRA, or hand deliver it to his local financial institution. Either way, a personalized remittance voucher must accompany the cheque. It can be ordered by phone or online from CRA.

But if he’s capable of ordering a remittance voucher online—which requires him or his designated representative to navigate the My Account or Quick Access gateway on CRA’s website—then he may find it more convenient to use one of the online payment methods.

Standing online payment methods

None of the following methods require a remittance voucher.

Most financial institutions include CRA as a payee in their online banking/billing system. Here’s the process.

The client should log into his online banking account and go to the bill payment section.
Then, he should click on “Add a payee.” Tell your client to search the list of payees for “CRA (revenue)-(2013)-tax owing,” or something similar. This ensures the payment makes it there, and is applied to the correct purpose (instead of used against a past due amount or current installments, for example).
The bank will ask for a biller identification number. He should input his social insurance number.
The client can now add CRA as a payee on his account.

Alternatively, he can pay CRA directly by registering and logging into the My Payment service on CRA’s website. It’s like using a debit card online through Interac, so the money will actually have to be in your client’s bank account for it to be processed. Currently, only four banks participate in this program: BMO, RBC, TD and Scotiabank.

Scotiabank is the lone institution designated by CRA to receive payments on its behalf from non-residents, whether by online payment or wire transfer. Canadian residents can’t use wire transfers.

PAD your payment

The latest addition to payment options is pre-authorized debit, or PAD, available through the My Account service. Once logged in, tell clients to look for the bright red “new” flag in the left margin to create a new PAD agreement. It will take five business days to process, so make sure clients don’t leave it to the last minute. Through PAD, the client can make a single payment, or a series, for items including income tax, and child and family benefit repayments.

In fact, he can file his tax return early and authorize a PAD in time for April 30—even if his tax return is processed later, no interest will be charged and the withdrawal will be processed on the appropriate date.

And if he feels this leaves him a bit too exposed to online fraud, he can rest assured. CRA only takes payments for the purposes and amounts as per his instructions. And all information is private.

If debit, why not credit?

CRA does not accept credit card payments directly. It does, however, allow credit card payments through third-party service providers.

While there are many third-party providers that send payment and remittance details online to CRA (e.g., source deductions taken by payroll managers), the only registered company that accepts credit card payments is Plastiq.

Of course, clients will pay a nominal fee (about 2%) to any third-party provider for this service. Also, if your client uses a third-party provider, it can take four to five business days for the payment to make it to CRA. So tell him to familiarize himself with his service terms so that the payment is in by the due date, or else he may face penalties.

Doug Carroll, JD, LLM (Tax), CFP, TEP, is vice president, Tax and Estate Planning, Invesco Canada