Extra Income Tax Deduction
Extra Income Tax deductions are often requested by employees who would like to have additional tax deducted at source, thereby increasing their year-end tax return. This article will overview the main method of adding Extra Income Tax deductions to employees within Avanti.
Setting an Employee’s Extra Tax Deduction
The recommended way to add additional tax to an employee is through the ‘Additional Tax’ field on the Employee Profile. This can be found by going to Canadian Payroll>Employee Profile>Employee Profile>Tax Factors. This will deduct a flat dollar ($) amount per pay.
Creating a Deduction Code for Extra Tax
If you do not already have a deduction code eligible for recording ‘Additional Tax’, you can create one through the ‘Deduction/Benefit Codes’ screen, found under Canadian Payroll>Employer Payroll Tables>Deduction/Benefit Codes. This will allow you to track all additional tax deductions under one deduction/benefit code. When inserting the new code, The ‘Type’ must be ‘Federal Income Tax’ in order to be selected in the next step.
Note: Please ensure the deduction code is active and on the employees’ profile for it to be deducted properly.
Selecting a Deduction Code for Extra Tax
When additional tax is taken from an employees’ pay, the tax must be recorded under a deduction code (similar to Income Tax, EI, or CPP). This code can be set within the ‘Provincial Taxes’ window, found under Canadian Payroll>Taxation & Assessment Tables>Provincial Tax.
The ‘Extra Tax Deduction Code’ will be the code that the ‘Additional Tax’ from the previous section records on.
Note: This step will have to be done for each province that you wish to set an Extra Tax Deduction Code on.