A July tax update for Dynamics GP Canadian payroll users has been announced. Read below for all the details you may need to know. This article has been updated with new information.
Mid-Year Tax Update for Dynamics GP Canadian Payroll
- There are no Federal changes.
- Federal labour-sponsored funds tax credit (LCF) and Provincial labour-sponsored funds tax credit (LCP) have additional formulas to allow calculation of these funds on an annual basis.
- Manitoba Changes:
- An increase to the basic personal amount effective January 1, 2023, from $10,855 to $15,000.
- Since employees have received a lower basic personal amount for the first six months of the year, Manitoba is offering the option to use $19,145 as a prorated basic personal amount for the remaining six months, for those employees. All other employees can use the amount of $15,000.
- Quebec Changes:
- Tax Rates for the first two taxable income brackets will drop.
- 15% to 14% for taxable income up to $49,275.
- 20% to 19% from taxable income over $49,275 but less than $98,540.
- The amount for other dependents will increase from $4,810 to $5,154, and the amount for a child under 18 enrolled in vocational training or post-secondary studies (per term) will increase from $3,301 to $3,537.
This means only companies with employees in Manitoba or Quebec will need to consider installing the tax update.
These changes give you the following choices:
- Install the tax update which will update all existing Manitoba employees to $19,145.
- Do not install the update but manually update the Tax Credit control settings and Manitoba employees who started in January to $19,145 and all other employees to $15,000.
- Do not install the update but run a script to update these employees to the required amounts.
Since there could be some complex calculations to know what the actual tax credit should be for the remainder of the year, we are recommending #1. Install the tax update to be sure the calculations are correct and to ensure the Year End tax update is not affected by numbers that may be entered incorrectly.
Depending on your employee’s annual income, you will need to decide if this amount is material. The difference in tax deducted for the 6 remaining months in 2023 is between $246 and $492.
- Install the update and allow the system to deduct correct taxes.
- Do not install the update, and have the employee reap the difference at tax time.
You will need to update any employees who are claiming the increased tax credit for other dependents and children under 18 enrolled in vocational training or post-secondary studies.
- Here is the link to the latest update: https://learn.microsoft.com/en-us/dynamics/s-e/gp/mdgp2018_patchreleases_377
- You can review the latest changes from the CRA release of the T4127 document. Payroll Deductions Formulas, 118th Edition, Effective July 1, 2023: https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4127-jul/t4127-jul-23e.pdf
- This update also includes some quality fixes. You can review these fixes from this Microsoft Blog: (+) Microsoft Dynamics GP 2023 Mid-Year Update Released! – Microsoft Dynamics GP Community
If you are in need of assistance with your Dynamics GP tax update, please contact us.
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