Changes to Canadian Payroll for Dynamics GP

Canada Revenue Agency will be announcing some required changes to Canadian Payroll for Dynamics GP users. There is not a lot of concrete information out yet, but we will update this blog as more information becomes available. What we do know is that the changes will involve the T4, T4A and possibly R1 and R1A. These changes should roll out with the year-end tax update service pack.

Box 45 – Dental Benefit

A Box 45 requirement will be added for the 2023 T4, and T4A. This should also affect R1s, but we haven’t been able to confirm that yet. With the new expansion of the Federal Dental Care Program, your T4 tax forms will identify if you qualify for this benefit.

“The government plans to require all employers to report on whether their staff have benefits as part of their T4 tax forms, to prevent anyone with existing insurance from being able to access the new federal plan.” (Global News, March 28, 2023)

Box 16A – Additional CPP

Each year there is a YMPE (Yearly Maximum Pensionable Earnings) set. This amount is reduced by a $3,500 annual exemption and then CPP is calculated at the current rate of 5.95%. This amount will continue to be shown in Box 16.

In 2024, there will be a second amount YAMPE (Yearly Additional Maximum Pensionable Earnings). The amount between the ceiling YMPE and the second ceiling YAMPE will be calculated at the new rate. The rate is 4%, and this amount will be recorded in Box 16A.

This will also affect R1s. Quebec residents, please visit Revenue Quebec’s website for more information on the new enhanced QPP and what your obligations are as an employee or employer.

Enhanced CPP/QPP and How This Works

Note: This example does not include rates for Quebec.

2024 expects to see the first ceiling, YMPE, set at $69,000. The second ceiling, YAMPE, is calculated at [YMPE * 7% + YMPE] for 2024, and [14% * YMPE + YMPE] for subsequent years.

Example

• An employee earns $100,000.
• If in 2024 the YMPE is set at $69,000 and YAMPE is set at $73,830 (7% * $69,000 + $69,000).

Contribution Calculations

Box 16 – First CPP contribution is calculated as always: ($69,000 – $3,500) * 5.95% = $65,000 * 5.95% = $3,897.25.

Box 16A – The additional CPP amount: ($73,830 – $69,000) * 4% = $4,830 * 4% = $193.20.

Because this employee has earned more than the second ceiling (YAMPE), this employee pays the maximum amount of $4,090.45.

Employer Portion

The employer portion will continue to match the employee contribution. In this example the employer will contribute $4,090.45.

Note: This will also affect R1s and R1As. The calculations will be the same with updated rates from Revenue Quebec. Please visit the Revenue Quebec’s website for more information on the new enhanced QPP rates and what your obligations are as an employee or employer.

If you have any questions about Canadian Payroll in Dynamics GP, feel free to get in touch with us.