V11 Payroll Setup for Canadians

[emellesee]

Hi,

We just loaded version 11 and I'm trying to convert the payroll module from version 10. Since I'm in Canada, and use the government "Payroll Deductions Online Calculator", we don't use tax tables in PowerChurch, so I just deleted all of those when I got to that step. However, now I'm at the "Tax & Item Deductions" step and at first I tried to change our income tax lines to 'tax lines', but that requires labelling them with tax types that don't correllate (the income tax withholding is both federal and provincial combined), and when I tried to change it back to "Other deduction" it's asking me to label it as "pre-tax deduction", "after tax deduction" or "retirement deduction". First of all, I don't get the difference between pre/after tax deductions and so I'm not sure how to label things and there doesn't seem to be an option for applying the labels that we use. We have payroll item lines for the following: Income Tax (federal & provincial combined), EI-employer (employer's employment insurance liability), EI-employee (employee's contribution to employment insurance), CPP-employer (employer's contribution to federal pension plan), CPP-employee (employee's contribution to federal pension plan), Group Benefits (employer's contributuion to plan), Pension-employee (employee's contribution to group pension plan), Pension-employer (employer's contribution to group pension plan) and we also have a line for a deduction for a tax-free loan repayment. We had this all set up and working fine for us in Version 10, and the conversion to version 11 doesn't let us skip this step, so what do I do now? The default seems to be to set everything to "Other deduction - after tax deduction", but the note at the bottom of the screen makes it sound like you can't change the designation later and I don't know how the designations work so I don't know if leaving everything at the default could be a problem later. Let me know what to do.

Thank you,
Mary Lynne Cameron

P.S. Payday is coming soon so I need an answer quickly!

[NeilZ]

I hate to say this, but when I did a search on the knowledgebase for anything about Canadian payroll, I got this knowledgebase article: http://powerchurch.com/support/kb/kbvie ... icle_id=69

which says:

Canadian payroll. PowerChurch Plus does not support the calculation of Canadian payroll taxes, nor does it directly generate Canadian income tax forms. Cheques can be generated using manually entered withholding figures and reports can be run for manual tax filings.

Now, is there a way around this and the error you're seeing. Yes, if you can, go back to the part of the wizard that asks you to setup tax type. Create a new tax type of Fed/Provincial Tax.

Now when you go to setup the tax item, select Tax Deduction from the list you are given, then create a new payroll item number, it will have the type already filled in, you then enter the liability account, and the next entry is for Tax Type. The pull down will show Fed/Provincial Tax in the list. Select that , enter an AP vendor and any description needed.

Now, when you go to setup the payroll items for the employees, you should be able to select your new item, and when adding it, you will see that next to the Tax Table you SHOULD see the label Manual Amount which will allow you to enter the tax amount manually.

Does this help ??

[emellesee]

I understand how to use PowerChurch to do Canadian payroll since we've been using it since version 7. However, my problem is with the upgrade to version 11 and the conversion of the payroll module. One of the steps in the conversion asks me to identify my previously existing payroll items as "Tax Deductions" or "Other Deductions" with several sub-categories and the instructions at the bottom of the screen at that step make it sound like whatever I choose is irrevocable. What I need to know is what the implications are of the various choices. By default, all of my items are set to "Other deduction - after tax deduction". If I leave them this way, will it cause me any problems? What does setting an item as "before tax" or "after tax" do in PowerChurch 11 anyway? Does this just help generate some American tax reports that I don't need anyway?

[NeilZ]

I understand how to use PowerChurch to do Canadian payroll since we've been using it since version 7. However, my problem is with the upgrade to version 11 and the conversion of the payroll module. One of the steps in the conversion asks me to identify my previously existing payroll items as "Tax Deductions" or "Other Deductions" with several sub-categories and the instructions at the bottom of the screen at that step make it sound like whatever I choose is irrevocable. What I need to know is what the implications are of the various choices. By default, all of my items are set to "Other deduction - after tax deduction". If I leave them this way, will it cause me any problems? What does setting an item as "before tax" or "after tax" do in PowerChurch 11 anyway? Does this just help generate some American tax reports that I don't need anyway?

Nothing is revocable, you can delete and recreate it if necessary. The steps I outlined above will let you create the proper deduction.

An after-tax deduction is an item much like health insurance that is not eligible for deduction from the gross salary before the tax is applied.

So if the weekly gross salary is 1,000, and the IRA deduction is 100, the person would be taxed on 900, not the 1000.

And yes, many of these deductions categories are for US income tax computations.

That said, if you want the pay stub to properly show that the amount deducted is for Fed/Provincial tax, as well as your tax liability accounts properly credited, those instructions I listed above will give you that.