Calculating Canadian Withholding Tax
To ensure AccountEdge calculates the correct Canadian withholding tax, confirm you have correctly set up the employee card in the employe's Card File under the Payroll Details tab:
- Go to the top menu bar and choose Lists > Cards. Select Employees at the top.
- Double click on your employee's card to open it.
- Select the Payroll Details tab at the top.
- On the left side select Personal Details and verify the correct Tax Table is selected.
- On the left side select Wages. Verify Pay Basis, Annual Salary/Hourly Rate, Pay Frequency, Hours per Pay Period, and Wages Expense Account are set correctly. Also, verify the appropriate wage categories are selected in the wages box.
- On the left side select Taxes. Verify Federal TD-1 is selected, and the correct value is indicated in the Net Claim box. This value represents the Total Claim Amount from the employee's Federal TD1 form. Also verify the appropriate tax categories are selected for a particular employee.
- Verify the Provincial TD-1 button is selected. Verify the that the correct value is entered in the Net Claim box. This value represents the Total Claim Amount from the employee's Provincial TD1 form.
- Beginning with the 2013 version of AccountEdge Pro for Canada, employees claim code amounts can be determined from the Payroll Tax Tables. You can tick the box to Use Basic Personal Amount for Net Claim on the Taxes section of the employees' Payroll Details, which will enter the Basic Personal Net Claim amount for an employee, based on information in the payroll Tax Tables. If you need to use a different Net Claim amount, do not tick the box, and enter the appropriate amount.
- A Claim Code is determined from the employee's TD1 Claim Amount information. You can find this information on the CRA's website.
- TD1 documentation and forms can be found here for English and here for French.
- There is an online payroll withholding tax calculator available at http://www.cra-arc.gc.ca/esrvc-srvce/tx/bsnss/pdoc-eng.html.