E1: 77: Pay Types For "Pay In Lieu" and Vacation Pay Together Causes Canadian Federal Income Tax To Calculate Incorrectly (Doc ID 3002926.1)

Last updated on FEBRUARY 07, 2024

Applies to:

Symptoms

If payroll has a "Pay In Lieu" pay type and Vacation pay type in either an interim payment or pre-payroll cycle payment, the Canadian Federal Income Tax calculates incorrectly.  If you remove the "Pay In Lieu" pay type it works correctly.

Steps To Duplicate

1. Create Pay Type for "Pay In Lieu":
   1. Pay Type    = 740
   2. Print method= Y
   3. Pay Ty Category = R
   4. Pay Source    = 7
   5. Pay Ty Multi    = 1.00
   6. Auto Pay Method = B
   7. Canadian Leg/Reg screen ensure Bonus (annualized) payment (PB=7)
   8. EI Allocation ensure Allocate Earnings to the Current Pay Period is checked
   9. PDBA Setup - Tax Exemptions set Tax Type 01 = CI (Exempt hours)
2. Create Pay Type 802 Vacation Pay Type:
   1. Print Method = Y
   2. Pay Type Category=A
   3. Pay Source=F
   4. Pay Ty multiplier=1.00
   5. Auto Pay Method = N
   6. Canadian Leg/Reg Screen ensure the radio button "None Of The Above" is set
   7. EI Allocation ensure Allocate Earnings To the Current Pay Period is checked
   8. Tax Exemptions set Tax Type 01 = CI (exempt hours)
3. Update a test Canadian Employee (P0801) National & Fiscal Data Tax Area work and residence to 700030000
4. Create an Interim Payment (P07210i) and enter 2 pay type lines:
   1. Row 1 for Pay Type 740 "Pay In Lieu" for 11,106.00 lump sum
   2. Row 2 for Pay type 802 vacation pay for 384.62 lump sum
5. Click the purple calculator
6. Notice Canadian Federal Income Tax is under $1,000 (too low)
7. Cancel and remove the 2nd row Pay Type 802 Vacation pay, tab down to refresh
8. Click the purple calculator again
9. Notice on the pay stub the Canadian Federal Income Tax is now calculated correctly over $4k

Changes

Cause

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