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Group Letter 1600 - 250 Bloor Street East Toronto, Ontario M4W 1E6 Tel: (416) 487-3380 Fax: (416) 487-3384 Toll Free: 1-800-387-4693 payroll.ca December 23, 2019 The Honourable Ahmed The Honourable Diane The Honourable Joyce Hussen P.C, M.P. Lebouthillier P.C, M.P. Murray P.C, M.P. Minister of Families, Children Minister of National Revenue Minister of Digital and Social Development Ministry of National Revenue Government Ministry of Families, Children Government of Canada Ministry of Digital and Social Development House of Commons Government– FORMATION ET DE LA REPRÉSENTATION Government of Canada Ottawa, Ontario Government of Canada House of Commons K1A 0A6 House of Commons Ottawa, Ontario Ottawa, Ontario K1A 0A6 K1A 0A6 Via email: Ahmed.Hussen@parl.gc.ca Diane.Lebouthillier@parl.gc.ca Joyce.murray@parl.gc.ca Dear Ministers, CONFORMITÉLA DE LA PAIE AU MOYEN DE ● ● The Canadian Payroll Association was pleased to find that the federal government has made the development of an e-Payroll system an important part of its mandate. We appreciate that this government has recognized the value e-Payroll presents to employers, workers, and government. ADVOCACY Over the past several years, the Canadian Payroll Association (CPA) has been offering subject matter AND AND expertise to the federal government on how to improve service delivery to Employment Insurance (EI) claimants, while reducing administration burden to employers and the government itself. We have long identified the development of an e-Payroll system (automated and secure payroll data sharing with the government) as the most promising way in which the federal government could improve service delivery while achieving other important goals in the process. EDUCATION Following multiple series of productive consultation sessions held between the federal government, the Canadian Payroll Association, and other stakeholders, we are pleased to see that the development of an THROUGH THROUGH e-Payroll system has been included in the Prime Minister’s mandate letters. The CPA has been representing Canadian employers’ payroll interests since 1978. CPA’s advocacy and education programs provide the legislative compliance content used in the payroll processing and remitting systems of over 500,000 small, medium and large employers. CPA members include 90 of COMPLIANCE Canada’s top 100 companies and the majority of Canada’s payroll service and software providers. I would be pleased to meet with you to discuss how the Canadian Payroll Association can help move this PAYROLL PAYROLL initiative forward. [2] If you have any questions, please contact me or our Director, Advocacy and Legislative Content, Rachel De Grâce at 416.487.3380 ext. 126 or Rachel.DeGrace@payroll.ca. Sincerely, Peter Tzanetakis President cc. Honourary Jean-Yves Duclos, President of the Treasury Board Honourary Carla Qualtrough, Minister of Employment, Workforce Development and Disability Inclusion [3] Towards an e-Payroll Solution Purpose The newly released mandate letters have identified three ministers who have been given responsibility for the implementation of an e-Payroll system: Hon., Ahmed Hussen, Minister of Families, Children and Social Development, Hon., Diane Lebouthillier, Minister of National Revenue Hon., Joyce Murray, Minister of Digital Government The Canadian Payroll Association continues to be interested in providing the government with our expertise and guidance on this initiative as part of its consultative process. We have included Hon. Jean- Yves Duclos, President of the Treasury Board in this correspondence because of the valuable support he has provided us in the past on this file and the relevance of e-Payroll to elements of his mandate. Hon. Carla Qualtrough, Minister of Employment, Workforce Development, and Disability Inclusion, has been included because the development of an e-Payroll system aligns with her mandate to strengthen labour market data. Examples of Potential Benefits Currently, the federal government gathers payroll data via “Record of Employment” files used to facilitate Employment Insurance (EI) claims and “Request for Payroll Data” forms to validate earned income during period of employment that may have over-lapped with the receipt of EI benefits. These forms require payroll professionals to translate/transcribe payroll data from their employer’s payroll systems to the format and mediums used by the forms. This results in unnecessary administrative burden, higher costs for employers and government, greater chance of human error and inaccurate payroll data reporting. An e-Payroll system would allow payroll professionals to automatically transfer payroll data from their payroll systems to the federal government’s records, ameliorating all of the negative consequences listed above. The implementation of an e-Payroll system would also bring about other positive effects beyond the administration of Employment Insurance, many of which align with your mandates. Additional examples include the following: Eliminate the need for employers to fill out T4 and T4A forms and for employees to fill out T11 personal income tax returns. Year- end tax reporting processes for employers would be processed automatically over the normal course of tax reporting throughout the year. o Eliminating these forms aligns with Minister Lebouthillier’s mandate to eliminate paper forms, modernize the Canada Revenue Agency and simplify tax forms. It would also align with Minister Lebouthillier, Minister Duclos and Minister Hussen’s joint mandate to improve Canadians’ satisfaction with the “quality, timeliness, and accuracy” of the CRA’s services as well as Minister Qualtrough’s mandate to “strengthen local labour market data so that Employment Insurance can better reflect local labour market realities”. 1 Other jurisdictions that have implemented e-Payroll systems has rendered their T1 equivalent forms obsolete. [4] A well-constructed e-Payroll system would provide government with real-time, accurate data on labour market trends. This data would be invaluable for Employment Insurance claim expedition and administration, and for any up-to-date analysis of movements in the labour market intended to bolster employees and firms in emerging industries or support industries experiencing downturns. o Access to this data would align with Minister Hussen and Minister Murray’s mandate to expand and improve the services provided by Service Canada. Risks Potential Roll-Out Issues: There are better and worse ways of developing an e-payroll system. Without a well-tested and controlled roll-out, an e-payroll system could be designed in a way that conflicts with predominant practices and processes used in the payroll industry, which could cause widespread service disruption. o Mitigation: Continue to engage in ongoing consultation with stakeholders and ensure that any roll-out plans are well-communicated and set well in advance. Potential Impact on Small Business: Where e-Payroll has been included in mandate letters, there is currently an indication that there will be an “initial focus on small businesses”. We appreciate that the federal government is considering the positive impact of e-Payroll on small business. We are also encouraged by the government’s desire for a gradual roll-out process which should minimize disruption and allow the government and payroll providers to work out any issues before the system’s full release. However, focusing on small businesses during the initial roll-out phase could lead to unintended negative consequences. Small businesses have fewer resources to manage systems testing and are less likely to employ or have access to dedicated payroll professionals who could guide them through new cutting edge processes. In addition, small businesses often lack the full range of payroll reporting requirements compared to larger employers which could falsely minimize the true needs and potential of e-Payroll. o Mitigation: The best mitigation strategy for testing new system processes is to use both the new e-Payroll process for an initial testing period while also operating parallel old systems in case of disruption (i.e., dual-systems operation). Operating two payroll systems at once is difficult and requires significant expertise and administrative resources, which large businesses are much more likely to possess when compared to small businesses. The Canadian Payroll Association has been in the process of recruiting large businesses interested in undertaking dual-process testing of e-Payroll and have successfully located many such volunteers. Testing phases of the system early on with willing large enterprises would enable government to leverage the resources of larger organizations while exposing small businesses to less risk. We would be happy to collaborate with the federal government to locate more suitable and willing testing organizations. Potential Bifurcated System: Many of the most significant benefits of the development of an e- Payroll system require a complete shift between the current system and e-Payroll: streamlining tax processes (e.g., eliminating T1s, T4s, and T4As), centralizing labour market data, streamlining administrative processes for payroll service and software providers. Ministers’ mandate letters currently indicate that e-payroll will be voluntary. The Canadian Payroll Association agrees that [5] testing initial versions of the e-Payroll system should be voluntary since early issues should not be thrust on unwilling organizations. However, the full benefits of an e-Payroll system
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