Guide: Year-end checklist tool

This guide covers how to use the year-end checklist to:

• identify possible discrepancies in pensionable and insurable earnings data
• identify missing details from your employees/contractors
  • missing SINS (and those entered as 000-000-000)
  • missing home addresses

We will also cover how you might correct any discrepancies you identify in your pensionable and insurable earnings data.

Before you start

IMPORTANT
This tool is a supplemental resource for reviewing payroll data, not a substitute for ensuring accuracy yourself. You assume responsibility for the values entered and any resulting errors in calculations or reports. Wagepoint does not and can not guarantee that values are correct or fully compliant, as accuracy depends on the data entered.

How does the Year-end checklist calculate potential discrepancies?

The Year-end checklist calculates potential discrepancies based on:

1. The data you have entered into Wagepoint throughout the year

• • This means that the calculations are only as accurate as the values entered.

2. The formulas below

• • This means that unique or uncommon situations may not be covered by the standard formula.

Canada Pension Plan (CPP) discrepancies

The formula used for CPP discrepancies is:

• Pensionable Earnings  -  CPP Basic Annual Exemption (using a pro-rated exemption value on a pay group basis when the report is produced before the last payroll of the year has been run) x CPP Rate for the Year = CPP Contributions.

Note: Pro-rated exemption value refers to the current pay period # of the pay group based on the pay group frequency, thus is may not produce accurate results for employees who have not received a payment for every eligible pay period of the year. Calculations may not be accurate if:

• • The employee turned 18 or 70 during the year.

  • The employee was hired or terminated during the year.

  • The employee is casual or part-time and earned less than the CPP pay period exemption amount for a pay period.

  • The employee did not receive a payment for any of the pay periods that have already occurred.

  • The employee was paid for a pay period in advance by way of an extra (off-cycle) payroll.

Be sure to verify the CPP data for any employee that falls into one or more of these scenarios.

Second Additional Canada Pension Plan (CPP2) discrepancies

The formula used for CPP2 discrepancies is:

• Pensionable Earnings above the Annual Maximum Pensionable Earnings (YMPE) up to the Additional Annual Maximum Pensionable Earnings (YAMPE) x CPP2 Rate for the Year = CPP2 Contribution.

Employment Insurance (EI) discrepancies

The formula used for EI discrepancies is:

• Insurable Earnings x EI Premium Rate for the Year = EI Premiums.

 

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Use the Year-end checklist

Part 1: Navigate to the Year-end checklist

1. In the navigation bar, go to Payroll > Year-end.

2. Under Year, use the drop-down menu to select the appropriate year.

3. Under CRA payroll account number, use the drop-down menu select the relevant account number.

4. Under Year-end checklist, click Go to checklist

 

Part 2: Review Insurable and pensionable earnings

The accuracy of the calculations in this checklist depends on the information you’ve provided during the year. The data in this tool is not intended to replace the employer’s responsibility to review their payroll records.

5. Under CPP amounts and EI amounts, review the table for any discrepancies. If there are no discrepancies, skip to Part 3.

 

Within the table, you’ll find the following information related to any detected discrepancies:

• Full name

• Status: Overpayment or Underpayment

• Type: CPP, CPP2, or EI

• Pensionable earnings or Insurable earnings

• Amount paid

• Expected amount

• Discrepancy

6. Decide how and when you will address any identified discrepancies. More details about addressing discrepancies can be found below.

Part 3: Review Employee and contractor information

6. Under People with missing SIN, note any individuals with missing SIN. This tool will also identify any individuals who have had 000-000-000 added as their SIN.
To add SIN for any listed individuals:

1. 1. Under People with missing SIN, locate the relevant individual and click Edit SIN.

   2. In the Edit SIN window, enter the individual’s SIN.

   3. Click Save.

     

 

7. Under People with missing home address, note any individual who are missing a home address.

To add the home address for any listed individuals:

1. 1. Locate the relevant individual, and click Edit home address.

   2. In the Add home address window, enter the individual’s home address.

   3. Click Save.

   

 

 

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Address discrepancies in pensionable and insurable earnings

Once you’ve identified a discrepancy in your pensionable and insurable earnings payroll data, you will want to address the discrepancy.

To do so, you’ll need to:

1. Identify and understand the discrepancy

2. Choose an appropriate correction method, based on discrepancy type and timing

3. Utilize your correction method

1. Identify and understand overpayments and underpayments

Utilize the year-end tool to highlight instances where the Amount paid and the Expected amount are different. The Discrepancy represents the difference between these two data points.

• If the Amount paid is higher than the Amount expected, then you will see an Overpayment.

• If the Amount paid is lower than the Amount expected, then you will see an Underpayment.

Note: Minor discrepancies sometimes occur as the result of rounding differences. Typically, variances of +/- $1.00 do not get addressed by the CRA.

 

2. Choose an appropriate correction method

Next, you’ll need to choose an appropriate correction method to address the discrepancy. Depending on the type of discrepancy (overpayment or underpayment) and the time of year, you have different options.

During the calendar year

Address underpayments using one of these options:

1. Edit the taxes in the payroll process, so that the employee pays more tax on a remaining payroll of the year.

2. Use the Adjustments Tool. You can add additional tax amounts for an employee using the Adjustments Tool, however any additional remittances as a result of the adjustment(s) will need to be submitted to the CRA outside of Wagepoint.

Address overpayments using one of these options:

1. Edit the taxes in the payroll process, so that the employee pays less tax on a remaining payroll of the year. This option requires that there are enough funds left to be reduced.

2. Use the Adjustments Tool. You can reduce tax amounts for an employee using the Adjustments Tool, and any refunds as a result of the adjustment(s) can be processed as a tax credit if there is enough time and funds to be processed within the remainder of the calendar year, or refunds can be requested from the CRA directly.

3. Do not make any changes. The CRA will refund the employee for any overcontributions when they file their income taxes, and issue a credit to the employer after they submit their year-end forms.

After the calendar year

Address overpayments by

• Not making any changes. The CRA will refund the employee for any overcontributions when they file their income taxes, and issue a credit to the employer after they submit their year-end forms.

Address underpayments by:

• Editing the T4 forms directly in the year-end workflow. However, this will not update payroll reports. You will need to (1) take care of any collection of funds directly from the employee outside of payroll, and (2) submit any additional remittances to the CRA as a result of the edits outside of Wagepoint.

If you receive a Pensionable and Insurable Earnings Report (PIER), visit the CRA website to understand what to do next.

 

3. Making the correction

Using the Adjustment tool

If you’ve identified any overpayments in pensionable and insurable earnings, you will need to take care of any money movement outside of Wagepoint. However, if it is still within the same calendar year, you can use the Adjustment tool to update Year-to-date values in your reports.

Prefer written instructions? Click here for a step-by-step guide to year-to-date adjustments.

Edit taxes within the payroll workflow

If you’ve identified any underpayments or overpayments in pensionable and insurable earnings and you have not yet run your last payroll of the year, you can edit taxes within the payroll process. This can be done within a regular payroll or an extra payroll.

To make changes to taxes within the payroll workflow:

1. Begin the Run payroll workflow as usual.

2. On Step 3: Taxes, locate the relevant employee and click More.

 

3. In the slide-out window, adjust the relevant tax amounts under Employee paid.

4. • Use the “Revert to” button to revert to the original calculated amount.

   • The Employer paid portions will update automatically based on the values entered under Employee paid.

4. Use the check-box to indicate that the amounts entered are accurate. You are responsible for verifying the accuracy of any changes.

5. Click Save and Close.

6. Continue the payroll workflow as usual.