Groups 6, 7, 8 - Canadian Federal Deductions
Group 6 Type 0
This is the Employment Insurance (EI) deduction.
Group
- Enter '6'
Type
- Enter '0'
Factor
- The current percentage for UIC
Limit
- The annual limit for UIC
1Share %
Employer's percentage of deduction divided by the employee's percentage of deduction.
- Enter 'Benefit' if employer pays 100%.
Step
Extras
Group 6 Type 1
This is the Canada Pension Plan (CPP) deduction.
Group
- Enter '6'
Type
- Enter '1'
Factor
The current percentage for the first tier of CPP
Limit
The annual limit for the first tier of CPP
Share %
Employer's percentage of deduction divided by the employee's percentage of deduction.
- Enter 'Benefit' if employer pays 100%.
- Leave blank if employer does not pay.
Step
Extras
EXEMPT/P/YYYYPP/YYYYPP/YMPE/RATE2/YAMPE/
3500/ / / /68500/.04/73200/
Or
3500/ /202417/202418/68500/.04/73200/ Note: as of 2024
Enter the annual exemption amount for CPP. e.g. 3500/
As of 2024, for the two tier CPP, where YMPE is the currently yearly maximum pensionable earnings for the first tier, RATE 2 is the CPP second tier rate, and YAMPE is the current yearly additional maximum pensionable earnings, for the second tier of CPP. The deduction LIMIT will reflect the first tier CPP limit.
or
Enter the per pay period CPP exemption followed by a 'P', e.g. 291.66/P/.
Or
Enter a pay period range in the 3rd and 4th positions on the EXTRAS line to indicate the CPP Exemption should not be active during those pay periods. The intent of this feature is for summer payments to 10 month employee that receive their full CPP exemption from September to June. The year of the pay period range may be wild carded.
For example 3500/ /201207/201208/ or 3500//????07/????08/
NOTE: The employee's eligible earnings for CPP is shown as the full eligible earnings before reducing the eligible by the exemption amount, although the deduction is calculated after the exemption is removed.
Group 6 Type 2
This is the Federal Income Tax deduction.
Group
- Enter '6'
Type
- Enter '2'
Factor
Limit
Share %
Step
- Enter Red 1%/PC,Red2%/PC,Red3%/PC, Red4%/PC,
Red1% is the tax deduction percentage to be applied to the pay code which follows the "/". All amounts paid under this pay code will be taxed at the percentage indicated (e.g.: 10% on pay code 20 (.10/20,)).
PC is the pay code to which the special tax rate will be applied.
There is a maximum of six (6) special rates with six (6) special pay codes allowed. e.g. .10/20, .15/30,
FUNS/PC, - is a special setting for Canadian taxes which allows the percentage of tax to be used to be determined from the Federal plus Provincial income tax tables based on the individual employee's annualized salary as determined from the employee's function lines.
- Enter a comma after the last code.
Extras
Enter P##/P##/P##/P##/P##/P##/ where ## are the pay codes (up to 15) which are to be taxed at the marginal tax rate for everyone. Pay codes or deduction codes included in this list are excluded from the annualization calculation. Deduction codes only refer to the employer's share. These are added to the annualized earnings as a one-time amount. The tax is calculated first with these amounts added to the annual salary and then the tax is calculated excluding these amounts. The final tax is the base annual tax reduced to a period tax amount plus the difference in the annual tax arrived at by subtracting the annual tax calculated in step two from the amount calculated in step one.
e.g. Monthly earnings $1,000
Extra earnings | 1,000 |
Annual = 12 X 1,000 or | 12,000 |
Annual plus extra = | 13,000 |
Tax rate on income = .267 | |
Tax on Annual | 3,204.00 |
Tax on Annual plus Extra | 3,471.00 |
Period Tax = 3204 12 = | 267.00 |
Tax on Extra = 3471.00-3204.00 | 267.00 |
Total tax for period is: |
Period 267.00
Extra 267.00
534.00
e.g. P01/D02/P10/
Enter a slash after the last code.
NOTE: Earnings set-up for taxing based on #15 Step or #16 Extra must still be included or not excluded from the include/exclude list of earnings on the tax deduction (Field #19).
NOTE: The amount field on employee's income tax deduction can be used to indicate additional tax to be taken. Entering 10.00 would calculate tax as usual and then take an additional 10.00 of tax per pay period.
A value in the amount field on the income tax deduction of .01 to .99 represents an additional percentage of income tax to be taken. For example, entering .25 means the system will calculate the employee's income tax and then calculate 25% of the income tax amount and add that in as extra optional income tax.
A value in the amount field on income tax deductions of greater than .99 cents and less than $2.00 represents a percentage with 1 subtracted from its value. This value indicates to take additional tax at this percentage based on the eligible earnings of the income tax. For example, if 1.25 was entered on the employee's income tax deduction, the 25% of the period's income tax eligible earnings would be taken as additional tax.
Income Tax Code option:
To force an exact tax amounts for employees who request exact percentages, an option is to change the Exemption codes on the employee's Pay screen to 99, meaning full exemption, and then on the individual employee's Master deduction screen, in the Amount column, enter the amount of tax requested. For example, to take 50% tax, enter 1.50 or to take 25% enter 1.25.
Group 6 Type 3
This is the Provincial Income Tax deduction.
Group
- Enter '6'
Type
- Enter '3'
Factor
Limit
1Share %
Step
Extras
Group 6 Type 4
This is the Provincial Pension Plan deduction.
Group
- Enter '6'
Type
- Enter '4'
Factor
The current percentage for the P.P.P.
Limit
The annual limit for the P.P.P.
Share %
Employer's percentage of deduction divided by the employee's percentage of deduction.
- Enter 'Benefit' if employer pays 100%.
Step
Extras
- Enter the annual exemption amount for the P.P.P. followed by a slash.
Group 6 Type 5
This is a deduction to process garnishees which are a percentage of income after statutory deductions (Income Tax, CPP and EI).
Group
- Enter '6'
Type
- Enter '5'
Factor
- Enter the current percentage for the garnishee.
Limit
Share %
Step
Extras
Group 6,7,8 Type 6
An exemption from income tax only, for a specific amount as defined by the limit field. The limit can be adjusted per employee for flexibility of exemption amount. The exemption on gross income only applies to the income paid out as regular pay codes, not included in the special tax calculation as related to the step and extra parameters. The eligible earnings for the regular tax code will still reflect the full eligible amount. This was done so that this exemption will not interfere with the calculation and T4 reporting of Taxable Benefits. The deduction code used to establish the exemption will appear on the payroll register and in the history record for the employee, with eligible earnings reflecting the amount that was exempted for that payroll run. The deduction does not appear on the employee's pay statement. The deduction code must be in cycle for the pay period run for that exemption to be picked up and used.
In order to reduce the gross earnings of the employee when reporting T4's, the deduction code eligible earnings would be included as a subtraction when reporting the Box 14 or gross earnings on the T4's. For example, " -E88 " would be added to the list of pay codes that make up the gross earnings. This would reduce the gross earnings by the amount of exemption taken for that year.
Group
- Enter 6,7 or 8
Type
- Enter 6
Table
- Enter 'N', not applicable.
Factor
Limit
- Enter the dollar amount of the total exemption.
Share %
Arrears
- Enter 'N', arrears are not applicable.
Step
Extra
GL LIAB.
- No entry, not applicable.
GL REC.
- No entry, not applicable.
Group 6,7,8 Type 7
Group 6,7,8 Type 7is a special deduction type that will calculate the difference of the EI employer's share portion at two different share rates. The first share rate is taken from the employee's actual EI deduction code. The second share rate is defined as the second element of the extra parameter. The first element of the extra parameter is a reducing percentage of the difference. For example, 5/12 or .416666666. The calculated amount can then be included as a taxable benefit on income tax and CPP. The taxable benefit amount cannot be included on the EI deduction, though. This deduction must be set up as a Benefit. There is no limit defined on this deduction as this deduction amount is dependent on the deduction amount from the employee's actual UIC.
Variable deduction entries against this EI Rebate deduction should be entered against the Employer Share value.
The EI Rebate can be setup to globally payout for every pay period or based on a specific pay period. Employees must be in cycle to receive the EI Rebate payout. Refer to the description for field 16= Extra on how to activate a global EI Rebate payout.
An option is also available to trigger EI Rebate payout on an individual employee basis. A special variable deduction entry will generate a signal for the system to payout the employee's accumulated EI Rebate. Refer to Variable Deduction Entry for details on how to enter this special variable deduction.
Group
- Enter 6,7 or 8
Type
- Enter 7
Table
- Enter 'N', not applicable
Factor
Limit
Share %
- Enter Benefit
Arrears
- Enter 'N', arrears are not applicable.
Step
Extra
- Enter per/Share/YYYYPP/where per is the reducing percentage and Share is the full EI employer's share amount.
YYYYPP is an optional payout feature. A pay period may be entered which indicates the accumulated rebate that should be paid out to the employee. The payout of the rebate will also reduce the share to date value on the EI rebate deduction. The payout of the EI rebate includes the current pay periods rebate amount.
NOTE: The YYYYPP may be entered as ????PP. The ?'s are considered wild cards, thus indicating the EI rebate should occur in a specific pay period regardless of the year. The payout period may include the wild card '?' in any position required.
i.e. .41666666/1.4/
.41666666/1.4/199224/
.41666666/1.4/????24/
.41666666/1.4/??????/ - payout every pay period.
GL LIAB.
- Enter the GL number that will receive the employer's share.
GL REC.
- No entry, not applicable.
Group 7 Type 1,2,3,4,5,6,7
The values and entries for these deductions are the same as group 6 and the specific type. This group is only to be used if a second tax group number is to be kept track of. Refer to group 6 for instructions.
Group 8 Type 1,2,3,4,5,6,7
The values and entries for these deductions are the same as group 6 and the specific type. This group is only to be used if a third tax group number is to be kept track of. Please refer to group 6 for instructions.