T4's difference in EI & Pensionable earnings

Sage 50 Accounting - Canadian Edition

Sage 50 Accounting - Canadian Edition
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T4's difference in EI & Pensionable earnings

  • Has anyone else run across this? After I printed my T4's for the two companies I do books for, while ensuring all info was complete and accurate I noticed that on several T4's there was a difference between the Gross payroll & the EI insurable and CPP pensionable earnings.  I went back into the detailed report for each employee, but cannot figure out why the difference. Any ideas?  Thanks for any input.    

  • Hi Jacke,

    Please read THIS article on possible reasons why this may be happening. The article will also go over how to match the gross income to the pensionable and insurable earnings in the program.

    I hope this helps.

  • Hi Andrew, thanks for getting back to me, but this did not answer the question at all.  The discrepancy in EI insurable and CPP pensionable earnings is greater than what would be caused by rounding.  Also, the employees affected have not reached their maximum contributions.  AND the difference is significant in all cases, i.e. $86.57 in employee TK but only $6.62 in employee RM and it is reporting their EI insurable is higher than their Gross earnings.  How can that be possible?  Out of 9 T4's SA is not reporting any insurable earnings in 7 of them, and 2 are over stated, CPP pensionable earnings are showing in 2 only [2 different employees] and it too is incorrect.  I took over these books mid year and have not been able to completely reconcile and confirm everything previous, but I have no idea why this would be so out of whack.  Any ideas what to look for?  Thanks for any help you can be. 

  • Hi Jacke,

    Were any manual adjustments done to the gross and amounts? As per the article I attached in my earlier post this can cause mild fluctuations especially if the amounts were maxed. Also was the calculate taxes manually button ever checked off in Paycheques? This can also cause fluctuations as well. Also check the following:

    1. Confirm Settings for Payroll (Setup, Settings, Payroll, Incomes)
      1. Confirm Calc Tax, Calc EI, Calc CPP/QPP selected for all income types
      2. Confirm all accounts are linked (Incomes and taxes)
    2. Confirm the Following information in the Employee record
      1. Personal Tab

                                                                   i.      Birth Date (if CPP not calculating)

    1. Taxes Tab

                                                                   i.      Tax Table

                                                                 ii.      Federal and Provincial Claim Amounts

                                                                iii.      Deduct EI/Deduct CPP checkboxes checked

                                                                iv.      No amount in Additional Fed. Tax box

    1. Income Tab

                                                                   i.      Pay Periods per year

    1. Confirm Release and Version (Help – About Simply Accounting)

    I also suggest you go through your Employee Detail Reports found in Reports/Payroll/Employee and click detail before displaying the report. If you took over these books in mid year and you're not sure what was done for payroll by the previous bookkeeper, I suggest you go through these reports as manual adjustments, taxes being calculated manually, etc may most likely be causing your discrepancy. If in doubt test in a sample company to see if its calculating correctly. If it is, then it is most likely a setting in your payroll and/or manual adjustments, taxes being calculated manually, etc that is causing your issue.

    I hope that clears it up.

  •  

    Dec 12, 08 978.75 978.75 1,065.32

  •  Sorry, hit the enter key too quickly.  My last post shows the paycheque for Dec 12th for TK. As you can see, the EI insurable and CPP pensionable are not the same as the gross earnings. I didn't prepare this paycheque. Do you have any idea what would have caused this to happen?  Thanks Andrew

  • Hi Jacke,

    Some more things you can check on:

    • Paycheck adjustments improperly posted
    • Was the employee pay period changed at anytime during the year
    • Are they using the BENEFIT field, and the benefit field is not in listed in the employee detail report
    • Was the employee paid a bonus without any deductions?
    • Was the company setup during the year and the historical YTD figures incorrectly posted to history

    Do you have any benefit incomes setup? Or do you have any additional payroll incomes that were used for these employees where calc EI or calc CPP was not checkmarked? You can check this in Setup/Settings/Payroll/Incomes. Also check the Deductions as well in your settings. Check to see if calc after EI or calc after CPP is checked off. The reason why you need to check this is if a payroll income was created and calc EI and/or calc CPP was not checked off, the gross will include the amount entered in for the new payroll income but it will not calculate insurable and/or pensionable earnings.

     

    Have you checked your Employee Detail reports? This is another important step you need to do to see what happened during the year especially since you took over mid year and you're not sure what took place before you took over these books. Also read over THIS article as it goes over things you need to check within your settings. Another reason why you need to check your reports is to see if a manual adjustment was done in the past. This could effect the Year to Date totals for Insurable Earnings and Pensionable earnings.

     

    Have you tested in a sample company or in a test copy of your company? Can you reproduce in a sample company? If you can't reproduce in a sample company it is most likely something within your settings and/or the reasons mentioned above. I hope this clears it up.

  •  Did you ever find the answer to this Jacke? Andrew? I have gone through everything in this email without finding the answer.

    I have just set up a new company and my insurable earnings are completely whacked. They are all showing much higher than gross, regardless of if the employee has benefits or not. I can't find for the life of me where Simply is coming up with this crazy number. I have entered exactly one manual paycheque for each employee. No combination of numbers seems to calculate to it. Help?

  •  OH MY LORDY! I FIGURED IT OUT! When you enter a manual cheque, the system calculates the Insurable earnings backwards, ie. based on whatever EI was deducted. So if the wrong EI was deducted, the system doesn't care and adjusts the insurable earnings accordingly.

    So, now that I know how it came up with the number, I have to fix it mid-year for each employee. <sigh> I need the correct Insurable earnings to show up NOW, not just at T4 time. Oh well, at least I know what it did.