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Tax Groups

Occasionally you might find that some payroll earnings need to be taxed differently than others—wages might need to be taxed differently than a bonus or a commission earning for example. Within Avanti, Tax Groups can be applied to earnings and those earnings are then taxed with the Tax Method for that Tax Group.

tax group heirarchy
Figure 1. How Earning Codes and Tax Group connect in Avanti
Tax Groups are powerful because:
  • Make maintaining user-defined tax methods for multiple Earning Codes easy.

  • Enable taxes to be calculated and automatically deducted for all payroll earnings.

  • Allow a user-defined Deduction Code to be used when tax is generated for the Tax Group. (For example, on the payroll register you could show bonus tax amounts separate from income tax by using use a different Deduction Code.)

Assigning a Tax Group to an Earning

Tax Groups are assigned to an earning from the Earning Code for that earning. Multiple earnings can share the same Tax Group, and tax deductions will be generated from those earnings using the same tax method and deduction code.

Let’s go over the steps to add a new Tax Group for bonus earnings:

  1. Open Canadian Payroll > Employer Payroll Tables > Earning Codes.

  2. Find the bonus Earning Code from the Earning Code list and modify it by double-clicking on it.

    Alternatively, modify an earning code by selecting it and pressing Modify.

    The earning code settings will open in a new window. We’ll now attach the Tax Group:

    1. Open the Earning Data tab.

    2. Select the new Tax Group for the earnings drom the drop-down.

    3. Save the changes to the Earning Code by pressing OK.

At this point the Earning Code is ready to be used during pay run processing, and the new Tax Group will be used for any bonus earning with that Earning Code.

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