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Hi, Just wondering why my payroll CPP and EI values are not correct for 2019? Agexpert appears to not have used the correct percentages? Thought I would double check the numbers on the T4's this year. Now I am wishing I had not.
Good morning Laura!
Unfortunately, without actually seeing your numbers, I won't be able to guess what is happening. But, here is what happens in general terms.
The first thing you want to check is the version of your program. If you are running old software, then you will not have the newest payroll rates. Since you are a payroll user, I am assuming you are on the most recent version - but it is a possibility we have to rule out :)
OK, now to the boring part. When we do periodic payroll, the formulas are making an assumption about gross pay for the year. This is especially a problem when we see hourly workers, who might not work the same amount all of the time. This can cause outages on the T4 because of these assumptions that are being made.
So, when we calculate CPP and EI on periodic payroll, what happens is that we have to gross up the gross wage in the period to what the equivalent of that wage would be annually. Here's a simplified example of where that can go wrong.
You hire an employee, and agree to pay him on a monthly basis. In the first month, he receives 2,000. Based on the facts, he has to have 89.69 deducted in CPP:
2000 * 12 = 24,000 - 3,500 = 20,500 * 5.25% = 1,076.25/12 = 89.69
But, he decides the job isn't for him and quits, so this is the only pay he receives. At T4 time, an adjustment will have to be made because he made less than 3,500, and is exempt from CPP, even though the original calculation assumes he will work more than just the single month.
This is a long winded way of saying that there is a lot of "depends on this" and "depends on that", which is really the nature of payroll. This is often the case with hourly employees. They have high periods and low periods, and some adjustments may be necessary in order to smooth out the assumptions at the end of the year.
If your numbers seem to be really out of whack, I would suggest giving me a call here at 1-800-667-7893 and we can really dig into your numbers to determine what is happening.