Canadian Payroll 2018 Mid-Year Tax Update

I’m going to file this post under “I’m glad I was late writing it” because in the time that we were notified of a tax change, to the time Dynamics GP tax update code was ready for download, to yesterday’s news that Ontario has cancelled their planned update, things have changed!

Background

Every year, there is a mid-year tax update for Canadian Payroll and in recent years, it hasn’t contained changes that affect Ontario. Other provinces, yes, but none for Ontario so many of my former clients have been able to ignore it. The most recent tax update with mid-year Ontario changes was Sept 1, 2014 and prior to that it was July 1, 2012.

Back in March 2018, news came out that there were tax changes for Ontario so the planning began (for me, being a GP CanPay customer in Ontario), with scheduling the update and waiting for the service pack to be released. As of writing this post, Microsoft *has* released GP 2015 and GP 2016 tax update code that contains Ontario tax rate changes. If you have payroll in Ontario, DON’T install this!

What Happened?

Earlier this month, there was a provincial election and there was a new Ontario government elected. Yesterday the new government cancelled the tax changes! Here’s the email we received yesterday from a CRA mailing list on payroll updates.

What *is* happening?

Back to the regularly scheduled post! The mid-year 2018 tax update, effective July 1, 2018, affects only Prince Edward Island (PEI). There are no Federal tax changes in this update. There were planned Ontario changes but as I mentioned above, those don’t apply any longer.

Follow the official Microsoft blog for regular updates. That post (hyperlinked) *is* the post that will be getting updated regularly as tax changes are getting released for this mid-year update.

I am not going to list off the versions for the tax update because new ones will be issued and it’s too confusing with some updates already ready, but incorrect for Ontario (as of yesterday). The key thing to note is the updates are only available if you are on GP 2015 or higher. GP 2013 support ended in April so hopefully you are already on your way to moving off of that version.

The update also includes some non-payroll fixes, as outlined on the blog linked above. I recommend that you review the changes in this service pack to determine if anything in it is relevant to your organization. The most notable “generic” improvement I see in all versions of Dynamics GP is an update around scanner drivers, adding TWAIN driver functionality.

What should I install?

Here’s a mini decision tree of sorts, as depending on whether you have payroll in Ontario or not, you may have to plan carefully around this update.

Do you have Canadian Payroll and employees in Ontario?

Your only option, briefly, is to hold off installing anything yet. The tax releases for GP 2015 and GP 2016 that are posted include tax increases for Ontario that are no longer relevant. Installing this update means your employees will be taxed incorrectly. If you are on GP 2018, you can proceed to install as soon as it’s ready as that hadn’t been posted yet as of this news, so it will be fixed and posted once.

Recommendation: wait and watch the official blog for when the REVISED mid year update will be released (for GP 2015/2016) which will have all of the other changes except Ontario tax rate changes.

Do you have Canadian Payroll and employees in PEI?

Assuming you don’t have employees in both PEI and Ontario, you need to install the updates that are ready. GP 2018’s mid year tax update will be released shortly and will be *just* for PEI + the other scheduled non-payroll changes. For GP 2015 and GP 2016 users, the posted update will work just fine as Ontario doesn’t affect you.

Now, if you have employees in both Ontario and PEI, you’ll have to make a decision for a brief period if the revised tax update isn’t posted in time for your first July payroll. You will have to decide which evil is greater: over-taxing Ontario briefly or incorrectly taxing PEI briefly. I would imagine this impacts very few Dynamics GP customers!

Do you have Canadian Payroll but no employees in PEI or Ontario?

In this case, there is nothing to install unless you want or need any of the other fixes. The tax rates for Ontario being incorrect have no impact on anything in other jurisdictions if you do run CanPay.

Do you fit into any other category?

So, for anyone else, non-Canadian Payroll installations, the only decision is whether anything in this service pack are relevant to your organization. Just because this is labelled a mid-year tax update, doesn’t mean you can’t install it if the other things are useful!

Clear as mud? Ya, I thought so too…