Box 52 for Canadian Payroll Pension Adjustments

When an employer provides a Registered Pension Plan (RPP) or Deferred Profit Sharing Plan they must report the pension adjustment for the year in Box 52.  If the employee contributed to the RPP, enter any deducted amounts into Box 20.  The employee portion should also be included in Box 52.

Note:  Your scenario may not fall within the parameters as described here.  Please refer to CRA handbooks to determine how you should be reporting on the T4.

Scenario:

The users would like the following displayed on the T4:

  • T4 Box 20 = $ 9.90 (Employee Portion)
  • T4 Box 52 = $ 21.45 (Both the Employee’s $9.90 and Employer’s $11.55 portion)

Note:  If the amount is based on other income codes, set this up accordingly.

1. Create the Employer Portion Benefit code (BX52ER)
This Benefit code is used to update the T4 Box 14 with the Employer’s portion.

  • Income Tax Applicable (and all other applicable fields) = YES
  • Auto Select = Yes
  • This code can be set up to Calculate Rate On (Dollars) if it is based on other paycodes
  • The Debit Account should be your payroll expense account

Note:  All other setups, such as Distribute and Allow Transaction Entry can be determined by the user.

Box52 1
  • Select Amounts and enter the amount on the Benefit Other Amounts Window.
    Note: In this case I am entering 11.55, which is the employer portion.
Box52 2
  • Add this code to the employee card.
    Notes: This code should be set up to calculate the same as the Employee portion if it is matching.
    This code can be set up to calculate if it is based on other paycodes.
    This amount can be added/adjusted in the employee window.

2. Create the Offset Deduction code and add it to the Benefit code from #1 (BX52ER)
This Benefit code is used to update Box 52 of the T4 box with the Employer’s portion. (Box 52)

  • The Credit Account should be your accrual account
  • Further Identification = Pension Adjustment
  • Before tax deduction fields should all be set to YES
  • T4 Extra Box field = 52
  • Auto Select = YES
Box52 3
  • Link this to Benefit code #1 BX52ER
    Note:  You do not need to add this offset code to the employee card.

3. Create the Employee Deduction Code (BX20EE)
This Deduction code is used to update Box 20 with the employee’s portion of the pension plan (Box 20)

  • Further Identification = Pension
  • Before Tax Deduction = YES
  • T4 Primary Box Number = 20
  • The Credit Account should be the accrual account.
Box52 4
  • Select Amounts and enter the amount on the Benefit Other Amounts Window.
    Note: In this case I am entering 9.90 which is the employee portion.
Box52 5

Note:  This amount can be added/adjusted in the employee window.

  • Add this code to the employee card.

4. Create a Dummy Employee Benefit Code (BX52EE)
This Benefit code will facilitate the offset code for populating Box 52 of the T4 for the Employee’s portion.
Note:  For the Debit Account I have used a suspense or non-functioning account.  This account will be zero as the offsetting deduction will zero it out.

  • Income Tax Applicable = NO
  • Auto Select = YES
Box52 6
  • Select Amounts and enter the amount on the Benefit Other Amounts Window.
    Note:  In this case I am entering 9.90 which is the employee portion.
Box52 7

Note:  This amount can be added/adjusted in the employee window.

  • Add this code to the employee card.

5. Create the dummy offset deduction code (BXEEOF)
This Offsetting deduction code will update Box 52 with the Employee Portion from the Benefit code set up in #4 (BX52EE) (Box 52)

Box52 8
  • Before Tax Deduction = NO
  • Further ID = Pension Adjustment
  • T4 Extra Box = 52
  • Select Amounts
Box52 9
  • Enter T4 Box 50 Pension #
  • Link this Deduction code to the Benefit code from #4

Note:  You do not need to add this offset code to the employee card.

Results:

Box52 10

Reminders:

  • Any fields not specifically listed, such as ‘Allow Transaction Entry’ or ‘Distribute’, can be determined by the user.
  • Amounts can all be added/adjusted on the employee card.
  • This example shows static amounts, but amounts can be calculated using other ‘Calculate Rate On’ selections.
  • Remember to enter no amounts for Offsetting Codes.
  • When asked to select Pension, Pension Adjustment or N/A for Further Identification, ensure it is selected exactly as shown.
  • You do not need to add a Pension ID number if you are not required to. However, if you are using a Pension ID you must add it to a code that has Box 52 selected as the T4 Extra Box number or it will not show up.  The Pension ID # will show up on the T4 window after the first time it is used and Masters are updated.
  • Setting these codes up mid-year is not retroactive. You will need to go into the employee cards and update the T4 amounts for Box 52 and Box 20.
  • If you have different tax rules, you can adjust accordingly.
  • If the codes are CPP, EI or WCB applicable, use the Tax example and select the same.

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