Workforce Payments Guide Canada
Last updated: Feb 23, 2025
Papaya offers Virtual IBAN accounts (or “wallets”) to hold your funds segregated and safeguarded until payments are ready to be processed. Opening and managing corporate bank accounts can often be complex and time-consuming, requiring extensive checks and due diligence.
Papaya’s Virtual IBAN solution, built on the trusted infrastructure of JPMorgan, streamlines this process-making it faster, easier, and more cost-effective while ensuring your funds are secured.
Delivery Timeline
| Currency | Route | Payment settlement speed | Cut off Time |
|---|---|---|---|
| CAD | LOCAL | T | 13:00:00 |
Same Day ACH Capability
- Papaya supports same-day payments in Canada, through local clearing routes.
- Transactions submitted by the 4:00AM E.T., 1:00PM E.T. and 6:00PM E.T. cut offs on a same day basis would be received in the beneficiaries account by 11:30AM E.T., 6:30PM E.T,. and 11PM E.T. respectively.
Supported Payment Types
Salary payments, authorities payments, contractor payments
3rd Party Payments
| Authority | Payment Frequency | Due Date | Payment Method |
| Personal Income Tax (PIT) | Annual | 30 April (15 June for self-employed individuals) | Various |
| Corporate Income Tax (CIT) | Monthly/Quarterly | Last day of each month (for some CCPCs, quarterly instalments are allowed if certain conditions are met). Any balance payable is generally due on the last day of the second month following the end of the tax year | Various |
| Goods and Services Tax (GST), Harmonized Sales Tax (HST), and Quebec Sales Tax (QST) for Financial Institutions | Annual | 30 June | Various |
| Provincial Taxes | Varies by province | Varies by province | Various |
| Pension Contributions (Canada Pension Plan) | Annual | Varies by plan | Various |
Contractor Payments
Papaya Global supports payments to contractors in Canada. The payout currency may vary based on the receiver bank account setup when receiving foreign currencies. it is advised for contractors to reach out to their bank to confirm how foreign currencies are handled
Bank Requirements
Routing Number
In Canada, banks and other financial institutions use routing numbers to identify individual bank branches. A routing number consists of a five-digit transit number (also called a branch number) and a three-digit financial institution number.
- The institution number (three digits) identifies the bank. (AAA)
- The transit number (five digits) indicates the branch of the account. (BBBBB)
| Electronic Transactions Routing Numbers (ETF) | 0AAABBBBB |
| Paper Transactions Transit Numbers (MICR) | BBBBB-AAA |
Payroll payment Frequency
Bi-Monthly / Monthly
KYC
The Know Your Customer (KYC) process in Canada is a legal obligation imposed by the Canadian government on banks and financial institutions to prevent illegal activities such as money laundering or funding of terrorist organizations.
The process involves collecting identifying information on the person opening the account, including an official photo ID, address, and Social Insurance Number.
This regulation was established by the 1991 Proceeds of Crime (Money Laundering) Act and expanded in December 2001 under the Anti-Terrorism Act.
An extension of these KYC laws is “Know Your Business” (KYB), which applies to business accounts and includes the verification of registration credentials, location, the Ultimate Beneficial Owners (UBOs) of the business, and a screener to ensure that the business hasn’t been involved in any criminal activity.
In 2021, further rules were introduced to enhance the standard of client care and require documentation for each step of the due diligence process. These client-focused reforms (CFR) act as a framework for firms to personalize portfolios and attract more clients.
Advisors must collect information on client circumstances that can help customize portfolios, including their client’s investment knowledge. They must update KYC information at least once every three years for most accounts and every 12 months for managed portfolios.
One of the major shifts in the KYC processes is the necessity to document both risk tolerance and risk capacity. The KYC process also requires advisors to document a reasonable range of alternatives to investment proposals.
Banking Regulations
In Canada, legislative proposals were made to address hybrid mismatch arrangements, which are cross-border arrangements characterized differently under different countries’ tax laws. These proposals aim to implement the recommendations of the Organization for Economic Co-operation and Development (OECD) BEPS Action Plan into the Income Tax Act to eliminate the tax benefits arising from hybrid mismatch arrangements.
The proposed rules aim to neutralize the deduction/non-inclusion mismatches arising from a hybrid mismatch arrangement. The primary operative rule generally applies to “inbound” arrangements – a payment by a Canadian taxpayer to a foreign entity under a hybrid mismatch arrangement, while the secondary operative rule generally applies to “outbound” arrangements – a payment received by a Canadian taxpayer from a foreign entity under a hybrid mismatch arrangement.
International Banks
| Bank Name | Bank Code |
|---|---|
| Citibank Canada | 260 |
| Bank of America Canada | 241 |
| JPMorgan Chase Bank Canada | 270 |
| Barclays Bank PLC Canada | 229 |
| BNP Paribas Canada | 250 |
| Deutsche Bank AG Canada | 265 |
| Credit Suisse AG Canada | 275 |
| UBS Bank Canada | 281 |
| State Bank of India (Canada) | 294 |
| ICICI Bank Canada | 278 |
Local Banks
| Bank Name | Bank Code |
|---|---|
| Royal Bank of Canada (RBC) | 003 |
| Toronto-Dominion Bank (TD) | 004 |
| Bank of Nova Scotia (Scotiabank) | 002 |
| Bank of Montreal (BMO) | 001 |
| Canadian Imperial Bank of Commerce (CIBC) | 010 |
| National Bank of Canada | 006 |
| Desjardins Group | 815 |
| HSBC Bank Canada | 016 |
| Laurentian Bank of Canada | 039 |
| Canadian Western Bank | 030 |
| Equitable Bank | 623 |
| Bridgewater Bank | 356 |
| ATB Financial | 219 |
| First Nations Bank of Canada | 308 |
| Manulife Bank of Canada | 540 |
| President’s Choice Financial | 509 |
| Tangerine Bank | 614 |
Payment Methods
In Canada, there are several popular B2C payment methods available:
Prepaid Cards: Cards like Visa and MasterCard prepaid cards.
Credit Cards: Visa, MasterCard, and American Express are widely accepted.
Debit Cards: Interac Debit is a common choice for direct bank transactions.
Digital Wallets: PayPal, Apple Pay, and Google Pay are popular for online and in-store purchases.
Interac e-Transfer: A widely used method for transferring funds directly between bank accounts.
Buy Now, Pay Later (BNPL): Services like Afterpay and Klarna are gaining popularity.
Direct Debit: Funds are withdrawn directly from the customer’s bank account.
Cryptocurrency
Cryptocurrencies are accepted in Canada. They are classified as commodities, implying that they are legal to buy and use as digital currency, even though they are still not recognized as legal tender. Crypto transactions can be used to purchase goods and services online or with merchants that accept them.
It is possible to pay employees with cryptocurrency in Canada, but it comes with certain considerations and potential risks.
The Canada Revenue Agency (CRA) considers cryptocurrency a barter transaction for income tax purposes. Employers must still comply with the CRA rules on deductions at source, remittances, and report employee earnings in Canadian dollars.
Employees receiving their pay directly through Bitcoin would face additional risks. According to the CRA, paying with Bitcoin is a barter transaction involving exchanging goods or services. In other words, bitcoin is considered a “good” and not a currency.
Employers that provide any compensation in the form of cryptocurrency should have the recipient employees sign written agreements confirming their consent to the arrangement, specifying which party is responsible for any exchange or broker fees, and informing the employees about and disclaiming employer responsibility for the potential risks that may flow from receiving their pay in cryptocurrency.
It’s important to note that the legal and tax implications of paying employees in cryptocurrency can be complex and vary depending on the specific circumstances, so it’s recommended to consult with a legal or tax professional for advice.
Questions & Answers