(CAN) Setting Up Additional Canadian Payroll Functionality

This chapter discusses how to:

Set up Canada Savings Bonds.
Set up Canada Payroll Savings (CPS) plans.
Set up Canadian low-interest loans.
Set up group-term life insurance in Canada.

Setting Up Canada Savings Bonds

This section provides an overview of Canada Savings Bonds setup and discusses how to define deductions for Canada Savings Bonds.

Note. There is a difference between the Canada Savings Bond (CSB) functionality versus the Canada Payroll Savings (CPS) functionality. The documentation for the Canada Savings Bond functionality describes the setups for the original Canada Savings Bond program while the documentation for the Canada Payroll Savings plan describes the setups for the new Canada Savings Bond program.

See Also

Setting Up Canada Savings Bonds

Understanding Canada Savings Bonds Setup

Canadian customers can establish savings bonds purchase programs through employee payroll deductions.

For each Canada Savings Bond purchase year, use the following pages to establish the new bond series and define the deduction information:

CSB Deductions (Canada Savings Bonds deductions) page.
CSB Denominations (Canada Savings Bonds denominations) page.

Purchase Years

A new series of Canada Savings Bonds (one series number per year) goes on sale every October. For example, series 57 is for the year 2002; series 58 is for the year 2003, and so on. A bond purchase year is normally defined as starting on November 1 and ending on October 31. November 1 is usually the last day of purchase for a series. Within a bond purchase year you can set up various plans with different start dates; the year must always end on October 31. For example:

Plan A starts on November 1 and ends on October 31.
Plan B starts on January 1 and ends on October 31.

Pages Used to Set Up Canada Savings Bonds

Page Name	Object Name	Navigation	Usage
CSB Deductions (Canada Savings Bonds deductions)	CSB_SERIES_TBL1	Set Up HRMS, Product Related, Payroll for North America, Deductions, Canada Savings Bond Table, CSB Deductions	Define bond deduction criteria for Canada Savings Bonds.
CSB Denominations (Canada Savings Bonds denominations)	CSB_SERIES_TBL2	Set Up HRMS, Product Related, Payroll for North America, Deductions, Canada Savings Bond Table, CSB Denominations	Enter Canada Savings Bond purchase denominations.

Defining Deductions for Canada Savings Bonds

Access the CSB Deductions page.

Deduction Details

For each bond series, specify deduction information for each company and pay group combination that participates in the purchase program.

Deduction Start Date

This can differ from the effective date.

This date populates the Deduction Start Date field on the Canada Savings Bonds page for employees belonging to this company and pay group who are registered to purchase bonds for this series.

Deduction Factor

Enter the deduction factor to use when calculating the required payment per 100 CAD par value of bonds being purchased. Deduction factors appear on the remittance schedules issued by the Bank of Canada.

Setting Up Canada Payroll Savings Programs

This section discusses how to:

Define a Canada Payroll Savings (CPS) organization.
Specify CPS campaign information.
Set up CPS deduction codes.

Pages Used to Set Up Canada Payroll Savings Programs

Page Name	Object Name	Navigation	Usage
Canada Payroll Savings Org ID (Canada Payroll Savings organization ID)	CPS_ORG_ID_PNL	Set Up HRMS, Product Related, Payroll for North America, Deductions, Canada Payroll Savings Org ID, Canada Payroll Savings Org ID	Specify details about a participating organization.
Canada Payroll Savings Table	CPS_CAMPAIGN_DATA	Set Up HRMS, Product Related, Payroll for North America, Deductions, Canada Payroll Savings Table, Canada Payroll Savings Table	Enter information specific to each campaign. Specify the parameters required to create the electronic data report file for transmission to the Bank of Canada.
Deduction Table - Setup	DEDUCTION_TABLE1	Set Up HRMS, Product Related, Payroll for North America, Deductions, Deduction Table, Setup	Set up CPS deduction codes.
General Deduction Table	GENL_DEDUCTION_TBL	Set Up HRMS, Product Related, Payroll for North America, Deductions, General Deduction Table, General Deduction Table	Setup the corresponding General Deduction table entry for each CPS deduction code.

Defining a Canada Payroll Savings Organization

Access the Canada Payroll Savings Org ID page.

The information on this page is required to uniquely identify each employer, ensure the secure processing of the employees’ contributions, and provide contact information for communications from the Bank of Canada (for example, to confirm file receipt and report the successful completion of batch processing).

Enter the employer organization ID in the entry dialog box. The Bank of Canada assigns this unique, five-digit identification number to participating employers and organizations.

Contact Type

Specify how you require file transmission confirmations from the Bank of Canada: E-mail, Fax Number, or None.

Specifying Canada Payroll Savings Campaign Information

Access the Canada Payroll Savings Table page.

Campaign Details

Effective Date	Enter the date on which the payroll savings contribution period begins for each annual campaign.
End Date	Enter the date on which the payroll savings contribution period ends for each annual campaign.
Employer Organization ID	The ID selected here will identify the company with employees who participate in the plan, as indicated on the plan application forms. This ID will be used by the bank to update their system with purchase information. If you select Batch in the Payment Type field, the company specified here will be responsible for forwarding the contributions to the bank on behalf of their employees.
Transmitter Organization ID	The ID selected here will identify the company that processes the transmission file and transmits the file to the bank, for one or more companies. If you select Transmission in the Payment Type field, the company specified here will be responsible for forwarding the contributions to the bank for every employee in all companies included in the transmission file.
Payment Type	Select: Batch: To send individual cheques for each batch header record or participating company. Transmission: To send one cheque for the whole transmission. Note. Multiple company processing − As one transmission file will be created for each pay run ID, multiple companies sharing the same pay run ID will be reported in one transmission file. The same transmitter organization ID and payment type must be specified for every company participating in a single transmission.
Min. Weekly Contribution Limit (minimum weekly contribution limit)	Enter the minimum limit established by the Bank of Canada for employees paid on a weekly pay frequency. The system uses this value to calculate the minimum contribution limits for employees in all other pay frequencies.

Election Period(s)

Start Date and End Date

Enter start and end dates for the campaign contribution period. These dates represent the earliest and latest dates on which the system accepts payroll savings contribution change information through the General Deduction Data page.

Note. If you permit changes to employee contribution information for the entire campaign contribution period, enter the campaign effective date in the Start Date field and the campaign end date in the End Date field. You can also define multiple election periods for one campaign contribution period.

Setting Up Canada Payroll Savings Deduction Codes

Access the Deduction Table - Setup page and the General Deduction Table page.

Deduction Table - Setup Page

If you offer both non-Registered Retirement Savings Plan (RRSP) and RRSP account types, define a separate deduction code to process contributions for each account type.

Plan Type	Define CPS deduction codes as general deductions (plan type 00).
Special Processing	Select Bond in the Special Processing field to identify CPS deduction codes for reporting contribution information.

See Setting Up Deductions.

General Deduction Table Page

Setup the corresponding General Deduction table entry for each deduction code.

See Defining General Deductions.

Setting Up Canadian Low-Interest Loans

This section discusses how to:

Specify the government’s prescribed interest rate.
Activate calculation routines for low-interest loans.
Establish loan deductions.

Pages Used to Up Canadian Low-Interest Loans

Page Name	Object Name	Navigation	Usage
Canadian Company Tax Table	CAN_USR_TAX_TABLE1	Set Up HRMS, Product Related, Payroll for North America, Canadian Taxes, Company Tax Table	Identify the prescribed interest percent, province, provincial premium tax percent, and health insurance rate override for each company that you set up. You must maintain the government’s prescribed interest rate on this page.
General Deduction Table	GENL_DEDUCTION_TBL	Set Up HRMS, Product Related, Payroll for North America, Deductions, General Deduction Table, General Deduction Table	Activate the unique calculation routines used for low-interest loans.
Deduction Table - Tax Class	DEDUCTION_TABLE2	Set Up HRMS, Product Related, Payroll for North America, Deductions, Deduction Table, Tax Class	Specify deduction classifications and sales taxes applicable to deduction codes that are used for Canadian low-interest loans.
Deduction Table - Tax Effect	DEDUCTION_TABLE3	Set Up HRMS, Product Related, Payroll for North America, Deductions, Deduction Table, Tax Effect	Specify tax considerations for the low-interest loan deduction that you are defining.

Specifying the Government’s Prescribed Interest Rate

Access the Canadian Company Tax Table page.

See (CAN) Defining Canadian Tax Information.

Activating Calculation Routines for Low-Interest Loans

Access the General Deduction Table page.

To activate the unique calculation routines used for low-interest loans, select the Loan Processing (Canada) check box.

See Defining General Deductions.

Establishing Loan Deductions

Access the Deduction Table - Tax Class page and the Deduction Table - Tax Effect page.

Deduction Table - Tax Class Page

Access the Deduction Table - Tax Class page.

In the Deduction Classification group box, select the Taxable Benefit option.

Deduction Table - Tax Effect Page

Access the Deduction Table - Tax Effects page.

In the Canadian Only group box, select the appropriate Canadian tax effects. Select Adds To in the following fields: Effect on QIT Gross (effect on Quebec income taxes gross), Effect on CPP Gross (effect on Canada Pension Plan gross), Effect on QPP Gross (effect on Quebec Pension Plan gross), Eff on True T4 Gross (effect on true T4 gross), Eff on True RL Gross (effect on true RL gross), and Eff on Payroll Tax Gross (effect on payroll tax gross).

See Also

Defining Deductions

Setting Up Group-Term Life Insurance in Canada

This section provides overviews of Canadian group-term life insurance and imputed income calculation for Canadian group-term life insurance and discusses how to select deduction and tax classifications for group-term life insurance.

Understanding Canadian Group-Term Life Insurance

Group-term life insurance that employers provide to employees and their dependents is a special type of benefit subject to taxation and reporting requirements. In Canada, the value of all employer-paid premiums for group-term life insurance on employees and their dependents constitutes a taxable benefit.

Understanding Imputed Income Calculation for Canadian Group-Term Life Insurance

To calculate the taxable benefit for all group-term life plans, the system performs the following processes when you run the Pay Calculation COBOL SQL process (PSPPYRUN):

Determines an employee’s total life insurance coverage (all plans that have a taxable benefit component defined), including both employer- and employee-paid coverage.

For example, an employee might belong to several group-term life plans, such as basic life, supplemental life, and extra life coverage. In this case, the system combines the calculated coverage of all the plans to determine the employee’s total life insurance coverage. (Any plans that are completely employee-paid should not have a taxable benefit defined).
Determines the percentage of the total for each plan.
Calculates the taxable benefit based on the actual cost to the employer.

For example, if the employer pays 1 CAD for every 1,000 CAD of coverage, and the employee has 50,000 CAD of coverage, the system multiplies 1 CAD by 50 to arrive at 50 CAD, which it uses in the following step.
Subtracts employee-paid, after-tax contributions to the coverage.

The law stipulates that if an employee contributes to the total cost of coverage, then you must subtract the amount of the employee contribution from the total cost of coverage. The resulting amount is considered the taxable benefit—the amount that is included in the employee’s taxable gross. The system uses only after-tax deduction classifications; it ignores before-tax deductions. The system does not take into account one-time paysheet adjustments, but rather recalculates these at the end of the year.

The system adds the resulting amount added to the employee’s taxable gross in the Paycheque record. View this amount using the Paycheque Deductions page. It appears as the taxable benefit under the appropriate group-term plan type and deduction code.

Example

Suppose a Canadian employee has three plans:

Plan Type	Benefit Plan	Coverage Amount	Premium
20	Life	100,000 CAD	Employer-paid premium: 50 CAD Employee-paid premium: 50 CAD 1 CAD per 1,000 CAD
21	Supp Life (supplemental life)	150,000 CAD	Employer-paid premium: 50 CAD Employee-paid premium: 100 CAD 1 CAD per 1,000 CAD
25	Dep Life	50,000 CAD	Employee-paid premium: 50 CAD (All employee-paid—no taxable benefit)

The system calculates imputed income as follows:

Determine total life insurance coverage for plans subject to taxable benefits:
- Life: 100,000 CAD.
- Supplemental Life: 150,000 CAD.
Determine the percentage of total for each plan:
- Life: 40 percent.
- Supplemental Life: 60 percent.
Calculate the taxable benefit based on the actual cost to the employer:
- Life: 60 CAD x frequency factor / number of days in contract.
- Supplemental Life: 300,000 CAD / 1,000 CAD x 1.17 CAD = 351.00 CAD.
Subtract employee-paid, after-tax contributions to the coverage:
- 20 Life: 100 CAD − 50 CAD = 50 CAD.
- 21 Supplemental Life: 150 CAD − 100 CAD = 50 CAD.

The employee’s Paycheque Deduction record displays:

Plan Type	Benefit Plan	Deduction Classification	Premium
20	Life	After-Tax	50 CAD
20	Life	Taxable Benefit	50 CAD
21	Sup (supplemental)	After-Tax	100 CAD
21	Sup	Taxable Benefit	50 CAD
25	Dep	After-Tax	50 CAD

Page Used to Set Up Group-Term Life Insurance in Canada

Page Name	Object Name	Navigation	Usage
Deduction Table - Tax Class	DEDUCTION_TABLE2	Set Up HRMS, Product Related, Payroll for North America, Deductions, Deduction Table, Tax Class	Specify deduction classifications and sales taxes applicable to deduction codes that are used for group-term life insurance.

Selecting Deduction and Tax Classifications for Group-Term Life Insurance

Access the Deduction Table - Tax Class page.

When you enter the page, select a life insurance plan type.

Deduction Classification

After-Tax and Taxable Benefit are the deduction classification options. All group-term life plans must have a taxable benefit deduction classification when employer paid for the system to calculate imputed income amounts and consider them income eligible for federal and provincial tax purposes:

For employee contributions to the group-term life insurance, define an after-tax deduction classification.
For employer contributions to the group-term life insurance, define a taxable benefit deduction classification.

Canadian Sales Tax

In Ontario and Quebec, premium contributions are subject to provincial sales tax on insurance (PSTI). For these provinces, define a sales tax type of PSTI, which is associated with both after-tax and taxable benefit deduction classifications.

The employee’s province of residence on the Contact Information page in the Personal Data component (PERSONAL_DATA) determines the provincial rate that the system uses when calculating the employee portion of a deduction that is subject to PSTI. The system uses the province in which the employee works to determine and calculate the provincial rate for the employer portion. All other sales tax types use the employee’s work location to determine the provincial rate.

See Also

(CAN) Understanding Canadian Deductions

Specifying Deduction and Tax Classifications