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Dynamics 365 Community / Forums / Microsoft Dynamics GP (Archived) / Canadian Payroll Bonus...
Microsoft Dynamics GP (Archived)

Canadian Payroll Bonus Calculation

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Posted on by Ray G 75

Ever since Jan 2013, our GP10 Bonus paycodes calculate tax at a flat rate of 10%, without regard to the person's regular pay or salary.  It did not behave like this in any other year.  Anyone else see this issue?

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  • Accounting Department Profile Picture
    Accounting Department 1,552 on at
    RE: Canadian Payroll Bonus Calculation

    I realize I am replying to an older thread, but Yes, I noticed this issue, and wasn't sure if it had always been like that and if I was imagining things.  I noticed this on April 24 (my internal IS TIcket date). What we noticed is this:

    When a Bonus is paid by itself, taxes are calculating as a flat 10%.

    When a Bonus is added to regular pay, it is much higher - probably based on b/w income.

    I ran a few tests with different paycode settings, using a paycode called “TEST”.

    As long as you do not use PayType “Bonus” or Reference “Lump Sum Payout” the taxes should be okay.

    I don’t like that the tax calculation is much higher when paying Salary on top of it but that's something to take up with mister Harper!

    I used two different Test employees, the first test with Bonus set up as a Bonus. I calculated a batch with Bonus and Salary paycodes, Salary by itself, and Bonus by itself.

    Bonus Paycode set up as a Bonus:

    Bonus+Salary Salary only Diff due to Bonus    Bonus only

    Emp 1 576   248      328                              125

    Emp 2 1340   849      493                               125

    The second test uses Bonus Paycode set up as Regular Pay:

    Emp 1 670 248 422 193

    Emp 2 1385 849         536 189

    What I would recommend, if you are running a Bonus by itself, change the paycode to “Regular Pay” and the tax will calculate as in Test #2 (193 and 189). If you are running a Bonus as part of a payroll, change the paycode to “Bonus” and the tax will calculate as in Test 1 (576 and 1340 in total)

  • Suggested answer
    Ian Richardson Profile Picture
    Ian Richardson 4,150 on at
    RE: Canadian Payroll Bonus Calculation

    10% (unless you are in Quebec) is the government mandated deduction rate for lump sum payments up to $5000.  Run a test between $5k and 15k and watch the rate change.  It will change again over $15k.

    source

    www.cra-arc.gc.ca/.../wthhldng-eng.html

    Dear Santa i'd like to work somewhere that I get a $15k bonus.

  • Accounting Department Profile Picture
    Accounting Department 1,552 on at
    RE: Canadian Payroll Bonus Calculation

    community.dynamics.com/.../105368.aspx

    oh wow looks like I already posted this back in April.  Santa can bring me early retirement!!

    I never considered a Bonus as a lump sum payment - didn't there used to be specific tax calculations for bonus pay (from what I remember back in my payroll days)?

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