Provincial and Federal Taxes

The payroll tax rates are set up on your behalf each year. We’ll cover them here just for the sake of completeness.

Federal Taxes

To review the federal tax rates, navigate to [c] Payroll, then [u] Set Up, then [h] Federal Tax Entry.

[c] Payroll | [u] Set Up | [h] Federal Tax Entry
[c] Payroll | [u] Set Up | [h] Federal Tax Entry

The settings in this table are applied to cheque earnings to determine the federal tax owed, as prescribed by the Canada Revenue Agency. Federal and Provincial tax is reported as a combined amount on the cheque entry screen, but the tooltip displays the break-out between the two amounts.

[c] Payroll | [h] Cheque Entry

Provincial Taxes

To review provincial taxes, navigate to [c] Payroll, then [u] Set Up, then [i] Provincial Tax Entry.

As you can see, the provincial tax rates are much more complex than the federal tax rates. Each province has different tables and different rules. As well, some provinces and territories have introduced additional payroll taxes.

[c] Payroll | [u] Set Up | [i] Provincial Tax Entry

Employer Payroll Tax

The BC Health Tax is an example of a provincial tax imposed on the employer. It is separate and distinct from remitting source deductions.

Employers with B.C. remuneration greater than $500,000 in a calendar year must register for the employer health tax.

The Employer Payroll Tax entry allows you to set up a G/L account and a vendor.

[c] Payroll | [u] Set Up | [i] Provincial Tax Entry | Employer Payroll Tax

Abio will create A/P invoices, posted to the selected vendor and G/L account, to manage these taxes.

The Employer Payroll Tax will be reported on the ‘Earn & Loss’ tab on the Cheque Entry screen:

[c] Payroll | [h] Cheque Entry

Employee Payroll Tax

Nunavat and the Northwest Territories impose a 2 percent tax on income earned working in those territories. You enter that tax as an Employee Payroll Tax.

The Employee Payroll Tax is deducted from the employee’s gross pay.

[c] Payroll | [u] Set Up | [i] Provincial Tax Entry | Employer Payroll Tax

The Provincial Employee Payroll Tax will display on the Cheque Entry screen:

[c] Payroll | [h] Cheque Entry

The following fields are available for the Employee Payroll Tax:

Description

This description will display on the cheque advice.

Rate

This rate is applied to the employee’s gross pay to calculate the Employee Payroll tax owed.

G/L Account

Invoices will be created to pay this tax. They will be posted to this G/L account.

Vendor

Invoices will be created to pay this tax. They will be posted to this vendor.

Change Allowed on Cheque?

If this option is selected, users will be able to modify the province payroll tax in the ’employee other deductions’ box on the Cheque Entry ‘Gross & Net’ tab. Otherwise, the field will be protected and calculated only when the cheque is approved.

If you’ve done a manual adjustment to cover this tax, selecting this option will give you the flexibility of adjusting the amount taken on individual cheques.