Payroll - Closing the year for 2019/Rate changes 2020

Payroll - Closing the year for 2019/Rate changes 2020

Payroll - Closing the year for 2019/Rate changes 2020

Table of Contents

  1. Introduction

  2. Step 1: Run QPP/CPP year-end test check

  3. Step 2: Year-end closing procedures

    1. Step 1: Verifying the setup of your system deductions

    2. Step 2: Creating a Backup

    3. Step 3: Purging the payroll option at the time of closing

      1. Activate the switch to allow for payroll information to be purged

      2. Closing Procedure

        1. If the user is purging

        2. If the user is not purging

  4. Step 3: Update of tax tables and major system deductions. 

    1. Updating the Canada tax table

    2. Updating the Ontario tax rate

    3. Updating the Quebec tax rate

    4. Updating the British Columbia tax rate

    5. Updating the Nova Scotia tax rate

    6. Health and services contribution rates for 2020 

  5. Step 4: System Deductions Adjustments

    1. For Quebec Payroll

    2. For Ontario Payroll

  6. Step 5: Tax Table File-2.

Introduction

The following wiki provides a step-by-step explanation on how to close the payroll year-end, and prepare for a New Year. Please note that the steps must be executed in the exact order indicated.

It is also important to note that steps 2,3, and 4 must be completed before starting the new year. For the user's convenience, there are complete instructions for preparing T4's and Relevé 1's available in February. The instructions are available for XML filing if the user has over 50 employees.

 As of 2018, only employers whose total payroll for a year exceeds 2$ million will be required to participate in the workforce skills development for the year.

Step 1: Run QPP/CPP year-end test check

The following program calculates the amount of QPP/CPP that should have been deducted during the year and will then provide a report that compares it with the actual amount deducted. It is important to note that this program will NOT write any information into the files. This procedure may be run at any time, and can be run over and over, but for the most accurate results, it MUST be run while you are entering the last pay of the year (i.e., after Input Pay and before Post Payroll).

In the main JSI menu, go to:

  • Wages

  • Adjustments

  • Deduction Year-end Test

 

Select the appropriate deduction, QPP or CPP, from the browser. 

The default pay period ranges should already be set to 19-01 to 19-52.

Q.P.P. should be pre-selected (in Quebec, C.C.P. if outside Quebec)

Click "Print."

The Printout will display the employee number, name, and one of three messages:

1. You have under-deducted by x amount"

  • This message occurs when the amount that was actually deducted is LESS than the amount that should have been deducted.

  • The necessary adjustments should be made to both the employer and the employee portions to include this amount.

  • If the employee is no longer employed, you must remit the employer portion in the next remittance. 

2. "You have over-deducted by x amount"

  • This message occurs when the amount that was actually deducted is GREATER than the amount that should have been deducted.

  • First verify the amounts manually (by running a detailed payroll register by employee and doing this calculation as it appears in the Employer's Guide to Payroll Deductions). If correct, the employees can be refunded immediately if they are still employed.

  • The employer's over-contribution can be applied towards the next remittance.

3. "Calculations are correct."

Correcting instances for scenarios 1 and 2:

If a discrepancy of up to 0.10 (cents) occurs, this is due to rounding and does not need to be corrected. In all other situations, go back to the current pay in progress and edit the deductions (#4) for the employees affected. (See note below)

Note: These calculations are based on 52/26/24 or 12 pays only.  If the employee has worked less than a full year, has had multiple pays in one pay period, or exceeded the 52 weeks, it will throw off the calculations.  If you have an employee with a very large difference, run the payroll register for that employee only and verify the reasons why and confirm if the QPP calculated is correct or not. Make the necessary corrections as needed.

  • When modifying the payroll for these adjustments, do not forget to edit both the employee and the employer sides and do not recalculate the payroll.

Step 2: Year-end closing procedures

This procedure must be run after all 2019 entries are complete, and before any entries are made for the new year (once the year is closed, it is complicated to go back to do more entries; reporting, however, is not a problem).

It is important to note that if the user is not going to be entering the last pay for 2019 until after January 1 2020, make sure that the user changes the year back to 19 when the user starts the input pay procedure. The reason for this is because the system will automatically default to 20 as of January 1, 2020, so it must be changed back.

Step 1: Verifying the setup of your system deductions

If this is the first time you are running a year-end for Wages, please verify that the Year-End reset flags are set properly for all of the deductions. If this is not your first year-end, then this step can be skipped and you can move to step 2; the "Backup Section".

Verifying year-end flags can be achieved by going to:

  • Wages

  • System Setup

  • System Deductions

Enter the appropriate deduction Number/Name.

Click on "Details."

Year End Reset:

  • Select no if considering deductions that have a maximum amount and whose calendar year does not run from January 1 to December 31, such as Canada Savings Bonds, Employee Loans and Garnishments.

  • All other deductions should be set to "yes."

One Time Deduction:

  • Select "No".

Result Type (+/-):

  • Select  +

Click on "Update".

Step 2: Creating a Backup

Once the system deductions are set up, it is important to do two data backups. Label both backups "Payroll year-end 2019" and put one away on site and one off site.

  • In order to do this, take the regular backup from the night before, use a ZIP function from windows.  Another method would be to contact the IT personnel working in the organization to confirm how your backup currently works and what can be used.

  • Note: The backup should be created before any purging is done. Thus, if you will be purging the payroll information, it is advised to create the backup before doing the purge. This way, the payroll information will still be saved.

 Step 3: Purging the payroll option at the time of closing

Normally it would be advised to purge the data from previous years. It is recommended however, that the company holds (4) four years of payroll information in the system. If the user has four years or older of payroll figures on the system, the user can purge the data if desired.

Activate the switch to allow for payroll information to be purged

In the JSI main menu, go to:

  • Utilities

  • System Setup

Click on the "Options" tab, located in the top left-hand corner.

Select "2" under "Transaction Purging."

 

Closing Procedure

The system is now prepared to purge the payroll data during the 'Closing Procedure' function.

In the JSI main menu, go to:

  • Utilities

  • Closing Procedure

Confirmation is required to acknowledge Purging is ON. 

 

Click "Yes" to continue.

If the user is purging

Ensure that "Year-End Closing" is selected, and the "Wages Purging [Year]" is set to the date that the purging will start at.

  • In this example, the date that the purging will start at is 2007.

Note: All JSI users must be off the system at this time.

Note: Repeat the purging and closing procedure for each additional company installed on your system.

Click "Proceed". 

If the user is not purging

  • the following screen will be shown.

Please note the "No Data Purging" reference, located in the middle of the screen.

Select "Year-end Closing" and "Wages."

Note: All JSI users must be logged out of JSI at this time as indicated on the screen.

Click "Proceed."


Step 3: Update of tax tables and major system deductions.

In the JSI main menu, go to:

  • Wages

  • System Setup

  • Tax Table File -1

  • Tax Table File -2


On the following pages are the required changes to Canada (Federal),
Quebec, Ontario, British Columbia and Nova Scotia taxation tables. 

The deduction rates for EI/UIC, QPP/CPP, and QPIP will also need to be
changed for the New Year.

  • These instructions follow later in the document.

Updating the Canada tax table

Begin with "Canada" as the first tax table code to update.

  • Click "Modify" to change the old 2019 rates and update to the new 2020 rates. 

Enter both the 2020 Claim Amounts and the bracket values. 

     

Click 'Modify' to gain access to the screen.

Click 'Update' once completed.

Updating the Ontario tax rate

Move to "ON" (Ontario) as the second tax table code to update. 

Change the old 2019 rates and update to the new 2020 rates. 

Enter both the 2020 Claim Amounts and the bracket values.

 

Click on 'Modify' to gain access to the screen. 

Click 'Update' once completed.

Updating the Quebec tax rate

Choose "QC" (Quebec) as the next tax table code.

Change the old 2019 rates and update to the new 2020 rates.

Enter both the 2020 Claim Amounts and the bracket values.


From the Guide: 2.4 Changes to deductions codes

We are implementing a new method in 2020 for determining the deduction code amounts. Under the new method, the interval between the amounts (indexed for 2020) is reduced to $1,000. This means you may have to change an individual’s deduction code for 2020, if the individual’s deduction code in 2019 was a code other than A. If the individual’s deduction code in 2019 was a code other than A, you may have to change the code so that the total amount of the personal tax credits (indexed for 2020) claimed on the copy of form TP-1015.3-V, Source Deductions Return , the individual gave you corresponds to the code for 2020. You can also have the individual complete a new copy of form TP-1015.3-V for 2020.

Click on "Modify' to gain access to the screen.

Click 'Update' once completed.

Updating the British Columbia tax rate

Choose "BC" (British Columbia) as the next tax table code. 

Change the old 2019 rates to the new 2020 rates. 

Enter both the 2020 Claim amounts and the bracket values.

Click 'Modify' to gain access to the screen.

Click 'Update" once completed.

            

Updating the Nova Scotia tax rate

Choose "NS" (Nova Scotia) as the next tax table code.  Change the old 2019 rates to the new 2020 rates for the thresholds only (bottom numbers). 

NOTE: From the CRA tax website:  “Due to the Nova Scotia legislative changes to the Basic Personal Amount (BPA), the Claim Code chart cannot be produced with ranges, as was previously done.  Accordingly, the Nova Scotia Claim Code Chart will not be produced with this edition as the BPA will be unique to each employee’s annual income. The Nova Scotia Claim Code chart income range is $1,600 between all claim codes once the BPA has been calculated. For example. If Nova Scotia’s BPA is $11,481 for a particular employee, then the claim code 2 range would be $11,481 - $13,081 and so forth up to claim code 10.

Click on 'Modify' to gain access to the screen.

Click "Update" once completed. 

Health and services fund contribution rates for 2020

2.7 Contribution to the health services fund

The table below shows the health services fund contribution rates for 2020. The total payroll threshold for the reduced contribution rate is $6,000,000 for 2020. Health services fund contribution rates (%) for 2020



Total Payroll (TP)



$1,000,000 or Less

$1,000,001 to 5,999,999

$6,000,000 or greater

Employers whose total payroll is more than 50% attributable to activities in the primary and manufacturing sectors

1.25

1.1280 + (0.522 x TP/1000000)^1

4.26

All employers other than public sector employers and employers whose total payroll is more than 50% attributable to activities in the primary and manufacturing sectors

1.65

0.640 + (0.062 x TP/1000000)^1

4.26

Public sector employers     


4.26


1. The contribution rate must be rounded off to two decimal places. If the number in the third decimal place is 5 or more, round up the number in the second decimal place.

Check the Guide for Employers Source Deductions and contributions 2020 for more details.


 Step 4: System Deductions Adjustments

For Quebec Payroll

Note: The deduction rates for EI/UIC are different for Quebec and Ontario. Only Quebec employees have deductions for QPIP.

CPP Reform. Effective January 2012, Canada Pension Plan (CPP) changes affect employees who are in the age bracket of 60 to 69 years of age, and are working and receiving CPP or Quebec Pension Plan payments. For more information, see "Canada Pension Plan Contributions" in Guide, T4001 Employers’ Guide- Payroll Deductions and Remittances. 

In the JSI main menu, go to:

  • Wages

  • System Setup

  • System Deductions

Select the deduction to be modified by clicking on the browse button.

Once selected, click on "Details" button.

E.I./U.I.C.:

Click "Modify" to change the old 2019 rates and update to the new 2020 rates.

Make the necessary changes to

  • "Dollar Rate"

  • "Yearly Max."

  • "Insurance Max. $"

Click 'Update' once completed.

                             

RRQ/ QPP:

Follow the same procedure as E.I, except select RRQ/QPP as the deduction to be modified.

Make the necessary changes to

  • "Dollar Rate"

  • "Yearly Max."

  • "Insurance Max. $"

Note: The QPP rates are not the same as the Canada CPP this year.


Note: The 5.55 % contribution rate includes the changes for this year.  (5.40% for the base contribution and 0.15% for the first additional contribution) 

Click 'Update' once completed.

                                      

RQAP/QPIP:

Follow the same procedure as E.I, except select RQAP/QPIP as the deduction to be modified.

Make the necessary changes to

  • "Dollar Rate"

  • "Yearly Max."

  • "Insurance Max. $"

  • “Employers’ Rate” (new 2020)

Click 'Update' once completed.

                                                

C.S.S.T.:

Follow the same procedure as E.I, except select C.S.S.T as the deduction to be modified.

According to your Company's rate for C.S.S.T., make the necessary changes to

  • "Dollar Rate"

  • "Yearly Max."

Click 'Update' once completed.

                                              

For Ontario Payroll

In the JSI main menu, go to:

  • Wages

  • System Setup

  • System Deductions

Select the deduction to be modified by clicking on the browse button.


E.I./U.I.C:

Click "Details".

E.I./U.I.C:

Click "Modify" to change the old 2019 rates and update to the new 2020 rates.

Make the necessary changes to

  • "Dollar Rate"

  • "Yearly Max."

  • "Insurance Max. $"

Note: Ontario EI rates are higher than Quebec rates because the Quebec employees also have to pay QPIP deductions.

Click 'Update' once completed.

      

CPP: 

Follow the same procedure as E.I, except select CPP as the deduction to be modified.

Make the necessary changes to

  • "Dollar Rate"

  • "Yearly Max."

  • "Insurance Max. $"


 Note: The CPP rates are not the same as the Quebec QPP this year.

Click 'Update' once completed.

                   

Step 5: Tax Table File-2.

In the JSI main menu, go to:

  • Wages

  • System Setup

  • Tax Table File -2


There are now six Federal deductions within this table.  Select one at a time and enter the new 2020 rates. 

In 2014, there was an additional tax code added for the Province of BC.  If you do not have BC on your list, it is not a problem.

*NOTE : There are no Federal reductions for NS. 

Select ' BC-TAXRED'; B.C. Tax Reduction

     

Change the 2019 rates and update to the new 2020 rates. 

     

Click on 'Modify' to gain access to the screen. 

Click "Update" button once completed. 

Select 'FED-CEC'; Canada Employment Credit.

Change the 2019 rates and update to the new 2020 rates.

Click on 'Modify' to gain access to the screen.

Click 'Update' button once completed.

Select 'FED-LCF'; Federal Labour Sponsored Funds Tax Credit. 

         

The LFC started phasing out this deduction and after 2016 the rate was changed to 0%. 


If you have set up the Provincially registered labour-sponsored venture capital corporations (LSVCC) then please refer to the guide for further instructions.



        

Click on "Modify" to gain access to the screen. 

Click "Update" button once completed.

Select 'ON-SURTAX'; Ontario Surtax

       

Click "Modify" to change the 2019 rates and update to the new 2020 rates.

Click on "Modify" to gain access to the screen. 

 

Click "Update" button once completed.

             

Select "ON-TAXRED"; Ontario Tax Reduction

     

Click "Modify" to change the 2019 rates and update to the new 2020 rates. 

Click on 'Modify' to gain access to the screen. 

Click 'Update' once completed.



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