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Level 1

Help please: I want to set up an employee to have a monthly RRSP contribution deduction + matching employer portion. (Canadian)

I need help to set up payroll items for a monthly RRSP contribution by the employee and also a matching contribution by the company.  This will be deposited into a separate account, not paid to employee

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Best answer 03-11-2019

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Level 6

You may want to discuss with your accountant. I am not su...

You may want to discuss with your accountant. I am not sure, but the Employee portion of the RRSP is an After Tax deduction (deducted from NET Pay). The Employer portion is Taxable Income (I think). This is where the difference may be.

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Level 6

You may want to discuss with your accountant. I am not su...

You may want to discuss with your accountant. I am not sure, but the Employee portion of the RRSP is an After Tax deduction (deducted from NET Pay). The Employer portion is Taxable Income (I think). This is where the difference may be.

View solution in original post

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Level 1

It is a bit complicated as it depends on the type of RRSP...

It is a bit complicated as it depends on the type of RRSP!  In this case, neither portion is taxable, and I seem to have the payroll items set up correctly (now, after some playing around), but the tax deducted is still slightly off compared to the PDOC.  It's a few dollars more than it should, so I'm not going to stress too much about it.  I did discuss with my accountant, but he is not familiar enough with Quickbooks to help me.  It appears to be a glitch in the payroll tax calculation as there is nothing else I can change to make any more difference.  I will be satisfied with this and move on!  I do appreciate your suggestions!
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Level 6

Not a glitch - QB uses the CRA Tax Tables, but calculates...

Not a glitch - QB uses the CRA Tax Tables, but calculates on a specific $ amount rather than a $ range. For instance, if an employee earns $2505.17 on each paycheque, QB would calculate the tax on the exact amount. CRA Tax Table would calculate that on an income range (like $2300 to $2800). Not exactly sure what that range might be - this is just an example.
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Level 6

Create Payroll Items and add them to each Employee's Payc...

Create Payroll Items and add them to each Employee's Paycheque: 

Create a Deduction type payroll Item called RRSP - Employee. Follow the prompts on the screen, making the appropriate selections in each screen.

Create a Company Contribution type Payroll Item called RRSP-Employer, again completing all the selections as you go thru the screens.

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Level 1

Thank you, but I was looking for more specific informatio...

Thank you, but I was looking for more specific information as to how to set up those items so that the correct amount of income tax was deducted.  I've played around and have gotten pretty close to what the amounts show when I use the CRA's Payroll Deductions Online Calculator.  Not exactly, but within a few dollars.
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Level 6

The RRSP matching company contribution, although a taxabl...

The RRSP matching company contribution, although a taxable benefit (and must be be included in income and show up as a taxable benefit in Box 40 of the T4), does not have to have income tax deducted at source if you have a reasonable expectation that the employee will deduct all of the RRSP contributions, both employee & employer portions, on his/her income tax return.  I guess that would also assume that the employee would not be making withdrawals during the tax year from that same RRSP.  As such, you would NOT check the Federal Tax item in that payroll item.

<a rel="nofollow" target="_blank" href="http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/fnncl/rrsp-reer-eng.html">http://www.cra-arc.gc.c...>
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Level 6

I do have a question for all you experts out there . . ....

I do have a question for all you experts out there . . . as the company contributions for Group Insurance and RRSP are taxable benefits, should they not also show up on the PD7A as part of the Gross Pay?  They do not, but they are included in income on the T4 at the end of the year.  I'm just wondering why they wouldn't also be part of the PD7A for reporting of source deductions.  Also, the RRSP - Employee payroll item (deduction) does not give the option to choose deduction on Gross or Net pay.  In my system, it is showing up as being deducted from Gross Pay, although that is not correct.  Anyone?
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Level 1

I'm wondering about this too! I would love some clarifica...

I'm wondering about this too! I would love some clarification on how Payroll Deduction Items flow through to the PD7A and T4 reports. Anyone out there?