Wage Basis Rules for Involuntary Deductions for Canada

The processing rules for Canadian involuntary deductions vary for each province and for each type of involuntary deduction.

The application provides the provincial rules for all predefined primary and secondary classifications. Wage basis rules define how earnings contribute to the subject wages for the different involuntary deduction types.

Use the Component Group Rules task in the Payroll area to create and view wage basis rules.

The calculation of an involuntary deduction can be based on one of these factors:

• Gross pay: Includes all earnings (excluding Nonpayroll payments).

• Net pay: Includes Gross pay minus the following statutory deductions:

  • Canada Pension Plan

  • Quebec Pension Plan

  • Employment Insurance

  • Quebec Parental Pension Plan

  • Federal Tax

  • Provincial Tax

  • Payroll Tax

• Net pay less specific deductions: Includes Gross pay minus the following statutory and specific deductions:

  • Canada Pension Plan

  • Quebec Pension Plan

  • Employment Insurance

  • Quebec Parental Pension Plan

  • Federal Tax

  • Provincial Tax

  • Payroll Tax

  • Specific pretax deductions

How to View Predefined Wage Basis Rules

To view the wage basis rules predefined at the provincial and federal level:

1. From the area in My Client Groups, select the Component Group Rules task.

2. On the Component Group Rules page, select a Canadian Legislative Data Group and click Search.

3. In the tree structure, expand the Involuntary Deductions node. You can resize the Calculation Component Group Overview pane to view the tree.

4. Expand the Wage Basis Rules node.

5. Expand the Related Deductions node. You can see the three secondary classifications of Garnishments, Maintenance and Support, and Tax Levy.

6. Select the appropriate classification and select a Province node to view province-specific rules.

A table of all wage basis rules display, organized by province and deduction type.

The deductions column has different meanings for earnings and deductions:

• For earnings, they identify the classifications that contribute to the disposable income for that deduction type.

• For deductions, they identify the classifications that are subject to disposable income and don't reduce the disposable income for calculations of the indicated involuntary deductions.

The following applies to the wage basis rules:

• A check mark indicates that the earning contributes to the disposable income for the involuntary deduction calculation.
• Absence of a check mark indicates that the earning does not contribute to the disposable income for that involuntary deduction calculation.
• For Pretax Deductions primary classifications, a check mark indicates that the deduction does not impact the disposable income.
• For Pretax Deductions primary classifications, absence of a check mark indicates the disposable income is reduced by the pretax deduction amount prior to the involuntary deduction being calculated.

While Garnishments and Maintenance and Support have rules defined by province, Tax Levies apply to all provinces and therefore have no province context.

Province Override

By default, the employee’s home address determines the province used by the wage basis rules. However, you may override the default province in the employee’s involuntary deduction calculation card.

How to Create Wage Basis Rules

When you create a new secondary classification, earnings or deduction, you can also define wage basis rules for it:

1. From the Payroll area, select the Component Group Rules task.

2. On the Component Group Rules page, select a Canadian Legislative Data Group and click Search.

3. Select the Component Group Involuntary Deductions.

4. Under the Component Group Rules pane, navigate in the tree structure to the Related Deductions node for the appropriate deduction type.

5. Select the Wage Basis Rules node. A table of all wage basis rules displays, organized by province and deduction type.

6. Select Actions and click Create. The Create Wage Basis Rule page appears.

7. Enter the information required for new wage basis rule as listed in this table.

   Field	Comments
   Effective Start Date	It's recommended to use either the implementation date or the earliest date a pay period exists.
   Year End Forms	Select the year end form for reporting this deduction or earning.
   Province	Select the Province for which you're defining the wage basis rules, example, Ontario. Note: Although the UI doesn't denote this field as required, this information is necessary for creating the provincial tax rules.
   Primary Classification	Select the Primary Classification as Involuntary Deductions.

8. Click Submit.