July 3, 2005 at 1:41 pm #11386HMahParticipant
In nv1 we set the Vacation Earned account as subject to EI, CPP & Tax (using the E=AV. When using a Vacation held account it then showed the actual amounts owed (since the deductions were taken off).
When employees wanted vacation pay they could get all or part of what was in the Vacation held account. Payments were coded to this account if a cheque was written or the pay cheque could be edited to add a transaction (again coded to Vacation held). The advantage of this method was you always had a running balance of what was owed an employee (for the employee they got the Full amount since the deductions were paid on each cheque). Disadvantage you are paying the Rec Gen costs on each cheque (as is the employee).
How can this be handled in nv2?July 4, 2005 at 10:15 pm #12849MSchapplerModerator
See the NewViews 2.02 Manual > Payroll > Canada Payroll > Using Payroll > Managing Vacation Pay for detailed information on this subject.
MartinJuly 6, 2005 at 3:49 am #12854BHalpinParticipant
I seriously doubt if it’s legal to take deductions on an employee’s check for moneys that they have not actually been paid (accrued vacation pay in this instance.)
Yes, it might be “nice” to be able to write a “straight check” to an employee for their vacation pay, but being nice, and following CRA rules/laws are often two different things.
Bob HalpinJuly 6, 2005 at 6:24 pm #12856HMahParticipant
Technically you may be correct, however, Rev Canada and the auditors are both aware of the practice being followed. The only question was whether we reported the earnings correctly when preparing T4’s. In fact because Holiday Pay is included as part of Gross Rev Canada includes the amount when assessing EI and CPP at year end.
So the question is can they process holiday in the same manner in nv2 as they have being in nv1?
ie: 4% holiday added to the gross, deductions taken, 4% Holiday Held (accured) deducted from gross. When employees want their Accured Vacation we write a cheque to the Vacation Held account, or Edit the current pay cheque (before printing) by adding an amount coded to Vacation Held?
Post Edited (07-06-05 14:32)July 7, 2005 at 11:33 am #12858BHalpinParticipant
All employee earnings accounts have the settings “Subject to tax/ei/cpp/etc.” and all deduction accounts have the settings “Reduces tax/ei/cpp/etc.”
These replace the arcane E= codes in NV1 which offered extremely limited control over the effect of a given earning or deduction on subsequent calculations.
In your case, you would
– set the vacation pay earned accounts to “Subject to tax/ei/cpp” to “yes”
– set the vacation pay withheld (accrued) accounts to “Reduced tax/cpp/ei) to “no”
– set the vacation pay paid accounts to “Subject to tax/cpp/ei” to “no”.
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