How to Set Up First Nation Exemptions in Dynamics GP Canadian Payroll

For anyone using the latest version of Dynamics GP (currently GP 18.5) you might be interested to know how to set up First Nation exemptions in Canadian payroll. Follow these steps below to properly set this up for your organization.

Update the TD1 Values on the Employee Card:

1. From the HR & Payroll page, go to Cards > Employee > TD1 Values

  • If the Employee is CPP Exempt click the field Employee Pays CPP/QPP to switch to No.
  • If the Employee is EI Exempt click the field Employee Pays EI to switch to No.
  • Make sure all other fields are set appropriately.

Note: You will still require a T4 or T4A. Make sure the field is set to Yes.

Screenshot in Dynamics GP of employment card.

2. Click the Tax Credits button.

  • Ensure the Jurisdiction is CA (Federal).
  • Click the Update box to release the fields.
  • Click the Employee Pays Income Tax to switch to No.
  • Click Save.
Screenshot of GP showing Employee Pays Income equals no.

3. Select the Jurisdiction to match the Taxable Province field.

  • Repeat the steps for the Federal Jurisdiction.
Screenshot of GP showing matched jurisdiction.

At this point taxes and CPP will not be calculated for this employee. The problem is, it still includes this amount in Box 14 of the T4.

  • Setups for T4 Boxes: This is the difficult part if you have a lot of codes being used by this employee.
  • Box 14 should no longer reflect this non-taxable amount. Instead, it must be in the other information section, under code 71 – Indian (exempt income) – Employment.
  • To accomplish this, you will have to create new non-tax applicable codes to mirror the tax applicable codes. For example, I have a regular hourly paycode that is Income Tax, CPP and EI applicable. All values that are entered into the Quick transaction entry window using this code will be reflected in Box 14.
Screenshot in GP of Payroll Income Paycode setup,

I then created a second code (similar to the first) but with all the necessary flags turned off and T4 Extra Box Number entered as 71.

Note: If they still pay EI, WCB or Prov. Health Tax, then set these flags to Yes.

Screenshot of GP showing T4 Extra Box Number entered as 71.

If you have any questions about doing Canadian payroll in Dynamics GP, please connect with us.

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