Setting up RRSPs with the payroll function

AgExpert Analyst can't adjust deductions at the source or reduce taxable income due to an RRSP contribution. Deductions are always calculated on the gross pay plus the taxable benefit. Employers have the option to manually reduce the deductions at the source, but they aren't obligated to do so.

Example: An employee’s gross wages are $2,000.00 and the employer and employee are each contributing $20.00. The software will automatically calculate the taxes on $2,020.00. The employer may choose to instead manually calculate the taxes on $1,980.00.

1. Set up an RRSP deduction:

• Go to Payroll>Deductions and click Add.
• Enter RRSP as the Deduction Name.
• Select "This deduction requires a remittance."
• Select Custom Deduction as the CRA Source.
• Click Save.

If there's no employer match for RRSP contributions, enter only the RRSP deduction. If there's an employer match for RRSP contributions, enter the RRSP deduction and a taxable benefit.

2. Set up a taxable benefit:

• Go to Payroll>Benefits and click Add.
• Enter RRSP - Employer Portion as the Benefit Name.
• Select Cash benefit.
• Select Taxable.
• Select "40 - Other taxable allowances and benefits" in the T4 box.
• Click Save.

3. Next, assign the payroll deductions and benefits (where there's an employer match) to specific employees.

• Go to Payroll>Employees.
• Select the employee's name and click Edit.
• Select the Pay Types, Benefits and Deductions tab.
• Click the binoculars button to select benefits for the employee and select RRSP - Employer Portion. Click OK. Enter the amount the employer is contributing for the pay period.
• Click the binoculars button to select deductions for the employee and select RRSP. Click OK. Enter the combined amount that the employee and employer are contributing for the pay period.

Process payroll as normal. Contact your accountant or refer to the Canada Revenue Agency website if you require further information.

Last updated on August 22, 2014 by FCC AgExpert