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Late filed ROE

I know this is a topic completely unrelated to TaxCycle, but hoping for an answer from an experienced practitioner…

I have a client that set up a non-profit organization providing after-school activities for disadvantaged youths. He was being funded through a government agency for the first year, and now that funding has ended. During the year there were 2 employees - himself and his wife. The non-profit can’t afford to pay salaries anymore, so he wants me to prepare ROEs. The last paycheques were a couple weeks ago, but he is REALLY worried because the ROEs haven’t been filed within the required 5 days.

How likely is it that the non-profit will be fined the $2,000 penalty? I have filed ROEs a few times, but never heard of anyone getting fined for late filing. Who levies this penalty? Service Canada? What criteria do they use? Is it an automatic penalty as soon as the ROE is filed late?

This is the only info I can find on any government of Canada website:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/penalties-interest-other-consequences/payroll-penalties/failure-file-record-employment.html

I don’t think I would be overly concerned about it. I think the fine is there for leverage if Service Canada requests an ROE on behalf of an employee and the employer fails to comply with a direct request.

We use ROE-web exclusively to issue ROE’s. Over the last 30 years I have issued ROE’s up to 6 months after an employee’s last date worked and have never heard anything from Service Canada about timeliness of the submission.

I agree that you shouldn’t be overly concerned. I have seen many late filed ROE and no penalties assessed on it yet. The only ones I heard about is when it actually goes to court… as in ex-employee is trying to collect EI but employer is not filing ROE within reasonable time and it causes damages/hardship to the ex-employee.

Just curious about one thing. Wouldn’t they be in the same situation with an NPO they founded as a shareholder of a corporation would be in regards to EI… meaning they would not be able to collect EI as you cannot really lay yourself off? I don’t have the answer, just putting that out there.

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As the founder of the NPO, they must also have been the board. Are NPO board members or executives allowed to take a salary out of NPO? I don’t think so.

@obhorst
I didn’t know that. Thanks for the info. I will pass that on.

However, he has been taking a salary for the last year, and the government agency that hired the NPO to perform the services knows he is taking a salary, and didn’t say anything, so…?

then it must be good. Things may have changed in recent years.

They (typically, under either Provincial Law or org By-Laws) are not allowed to be compensated for activities as Board Members or as Officers, excluding reasonable reimbursement of expenses.

Nothing, however, prevents them from being employees in the normal course of operations and being compensated appropriately for same.

If the members of the NPO have an issue, they can take that up at the next AGM.