Create a Net-to-Gross Txable Benefits Earnings Element for Canada

Canada doesn't support gross-up functionality for Taxable Benefits. However, to calculate taxes on the value of the Taxable Benefit, for example, a gift card, you can process a Supplemental Earnings element with gross-up enabled.

These are the steps involved to create a taxable benefits earnings element with gross-up enabled.

Create a Supplemental Earnings element to process the gift card amount. Define the element for gross-up, flat amount, and to process separately.
Create a Voluntary Deductions element so that the deduction takes back the net pay. This prevents the employee from receiving a payment, in addition to the taxable benefit.
Note: Don't enable Sales Tax for this element. A secondary classification is required, and you can use any of the classifications available.

Payroll processing for the employee results in the following:

The employee’s earnings are grossed-up for the gift card.
Taxes are calculated as per the defined wage basis rules.
The employee's net pay is nil or zero.

This example demonstrates how you can create a nonrecurring, Supplemental Earnings net-to-gross earnings element when an organization wants to give a person a gift card.

How to Create the Earnings Element

Perform these steps to create the element:

Search and select the Elements task in the Payrol area under My Client Groups.

Click Create and then select the values shown in this table in the Create Element window.

Field	Value
Legislative Data Group	CA LDG
Primary Classification	Supplemental Earnings
Secondary Classification	Bonus
Category	Standard

Click Continue.

On the Create Element: Basic Information page select the values shown in this table.

Field or Question	Value
Name	Bonus
Reporting Name	Gift Card
Effective Date	01/01/2013
What is the earliest entry date for this element?	First Standard Earning Date
What is the latest entry date for the element?	Last Standard Earning Date
Does the element recur each payroll period, or does it require explicit entry?	Nonrecurring
Process and pay element separately or with the other earnings elements?	Process separately and pay separately Note: All gross-up earnings elements must be processed and paid separately from other elements.
Process the element only once in each payroll period?	Yes
Can a person have more than one entry of this element in a payroll period?	No

Click Next.

On the Create Element: Additional Details page select the values shown in this table.

Field or Question	Value
What is the calculation rule?	Flat Amount Note: The default value is Flat Amount. Do not change this value. All gross-up earnings must have a calculation rule of Flat Amount.
Use this element to calculate a gross amount from a specified net amount?	Yes

Click Next.
Click Submit.
In the Element Overview pane, select and review each input value.

Create Voluntary Deduction Element

Create a Voluntary Deduction element used to recover the net payment. Respond to the various questions as shown in this table.

Question	Answer
What should happen when there are insufficient funds to cover the deductions? If you enable arrears, a reference is required for each deduction entry.	Take a partial deduction, but do not create arrears.
Does GST apply?	No
Does HST apply?	No
Does PPT apply?	No
Does PST apply?	No
Does RST apply?	No

Enter a Net input value of say $1000 for the Supplemental Earnings element and, similarly $1000 for the Voluntary Deduction amount. Process payroll for the employee. The resulting net pay is 0, and employee and employer taxes are calculated.

The amount for the Supplemental Earning is included on the T4 Box 14, and RL-1 Box A. If you want to include the amount for a Taxable Benefit balance, for example, T4 Other Taxable Allowances and Benefits or RL-1 Other Benefits, you must create a balance feed manually for those balances.

For more information, refer to these topics on the Oracle Help Center:

T4 Slip Box Information
RL-1 Slip Box Information