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Income Taxes window

Setting Up a Federal or Provincial Tax

You can set up and add (activate) an income tax supplied by Sage through payroll tax updates. Supported taxes include federal, provincial and territorial, CPP, QPP, and EI. After you add a tax to your database you can assign the tax to employees, define how the tax calculates for earnings and deductions, and use it in payroll.

Note: You can import taxes from a file as an alternative to adding taxes manually.

Before you start

  • Before adding or changing tax information, make sure you understand the impact the tax settings have on payroll processing.
  • Use the Earning/Deduction Codes window to define earnings/deductions used to calculate your employees’ pay.
  • Determine which income taxes you need and the information you need for tracking and reporting (such as tax ID numbers).
  • Consider the levels of your taxes.
  • Determine the G/L account numbers to which you want tax amounts to post.

If you use cost center overrides, you may want to set up base distribution accounts at the tax level, since you will be overriding one or more of the distribution account’s segments with employee-specific segments. (If you use cost center overrides, tax amounts are distributed to the cost centers in which the taxable wages were earned unless you set the Use Cost Center Overrides For These Accounts option to None on the Payroll G/L Integration setup window.)

A base distribution account has a valid account segment but may use zeros or some other number for the segments that will be overridden on an employee-by-employee basis.

Be sure that the G/L segment codes and accounts, including any base accounts, to which tax totals will post have been added in General Ledger.

To Set Up a Tax

  1. Open Payroll > Payroll Setup > Income Taxes.
  2. Choose the Select Income Tax button to open the Finder list and select the tax.

    Tip: You can also just type the tax code and press Tab on the keyboard. Payroll will verify the code and assume you are adding a new tax.

  3. Add any required tax information.
  4. Click Add.
  5. You can now use the tax in your Payroll system. For example, you can assign the tax to an employee or use the tax when setting up an earning/deduction.

After setting up a tax

Print a listing of taxes you set up, to verify that they are correct and complete:

  • From Payroll Setup Reports , choose Tax Profiles.