2741042 - FAQ: Tax calculation in Payroll Canada

This article describes some topics that are a common source of questions in the context of Canadian Payroll.

This KBA can be help you address your concerns without the need of raising a case to SAP Support.

SAP certifies that the tax calculation in the system follows the specifications from the CRA publication T4127.
You can find current T4127 Payroll Deduction Formulas at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/t4127-payroll-deductions-formulas-computer-programs.html

Topics approached in this KBA:

1. Tax calculated is too high
2. Differences in comparison with PDOC calculation
3. Bonus calculation with less or no regular earnings
4. Income tax calculated when moving full bonus amount to RRSP
5. Gross-up calculation is too high
6. Different calculation methods used for income tax vs. CPP and EI.

• Human Capital Management (HCM)
• SAP R/3
• SAP ERP Core Component
• SAP ERP
• SAP enhancement package for SAP ERP
• SAP enhancement package for SAP ERP, version for SAP HANA 

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