How To Set Up Benefits
What you need to know:
After creating an employee profile, you can configure additional payroll components, such as benefits. Benefits may include group insurance, medical and dental coverage, meal allowances, vehicle allowances, and other employer-provided benefits. These benefit settings help ensure payroll is calculated correctly, and that employee compensation is reported accurately.
Benefits are maintained separately for arm's length and non-arm's length employees. Most employees are usually considered arm’s-length unless they are an owner or an owner’s family member. Non-arm's-length employees include the business owner and their immediate family (for example, a spouse, parent, child, sibling, grandparent or grandchild).
Benefits created for one employee type are not automatically available for the other. When adding a benefit to an employee’s profile, only the benefits associated with that employee’s type will be displayed.
What you need to do:
Determine whether the employee receives any taxable or non-taxable benefits.
Identify which benefits are cash or non-cash, and whether they should be included in ROE earnings.
Decide if the benefit needs to be added to an employee T4 and/or RL-1 form.
Confirm if you need to add arm’s length and non-arm's length pay types.
How to (Step by Step):
To set up benefits within Settings:
Click Payroll.
Select Employees.
Click Settings.
Select Benefits.
Click Add.
Enter Name.
Tip: When adding a benefit, you are creating a benefit type available for all employees of the same type, so choose a generic name rather than one specific to an employee.
Select if the benefit should be included on ROE earnings.
Tip: This would typically be used if it was a cash benefit but consult with your accountant if you are unsure.
Indicate if the benefit is a Cash benefit.
a) If the benefit is a cash benefit, use the drop-down menu to select the Expense account the benefit is to be applied to.
Select the button if the benefit is Taxable.
a) If the benefit is taxable, use the drop-down menu next to Include on T4 box? to indicate the T4 notation.
Note: Consult with your accountant if you are unsure if the benefit is taxable.
For Quebec residents:
a) Select the appropriate Include on HSF? setting.
b) Use the drop-down menu to select the appropriate Include on RL-1 Box? option.
Click Save.
To set up benefits within an Employee profile:
Click Payroll.
Select Employees.
Choose an employee.
Select Employment.
Click Add in the Benefits section and select Add new benefit.
Enter Name.
Tip: When adding a benefit, you are creating a benefit type available for all employees of the same type, so choose a generic name rather than one specific to an employee.
Select if the benefit should be included on ROE earnings.
Tip: This would typically be used if it was a cash benefit but consult with your accountant if you are unsure.
Indicate if the benefit is a Cash benefit.
a) If the benefit is a cash benefit, use the drop-down menu to select the Expense account the benefit is to be applied to
Select the button if the benefit is Taxable.
a) If the benefit is taxable, use the drop-down menu next to Include on T4 box? to indicate the T4 notation.
Note: Consult with your accountant if you are unsure if the benefit is taxable.
For Quebec residents:
a) Select the appropriate Include on HSF? setting.
b) Use the drop-down menu to select the appropriate Include on RL-1 Box? option.
Use the drop-down menu to select an Expense account.
Click Save.
Select the new benefit.
Click Save.
References and Additional Resources
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