Set a maximum tax percentage

Tip: You must open a pay period to use this feature / functionality. Click the Pay Period menu and click the Enter button for the pay period you want to work with. The Payroll and Process menus become available.

If an employee is getting a lump sum payment on one payroll, you can apply a maximum tax percentage for both Federal and Provincial tax calculations.

The lump sum could be a vacation payout, bonus, or commission. The amount may significantly inflate the employee's earnings for the pay period.

The percentage you enter is the uppermost percentage that would be calculated on the earnings for the current payroll only, though the system may calculate a lower percentage that can be used.

Use this option to limit the tax taken on a one-time earning which would otherwise be calculated in a higher tax bracket even though the employee's annual pay would not require the higher tax level.

Tasks

Set a one-time maximum tax percentage for an employee

1. Click the Pay Period menu and click the Enter button for the pay period you want to work with.
2. Open the Statutory Deductions page. From the Payroll menu, select Regular Payment > Statutory Deductions.
3. Select the employee from the Employee List.

4. Scroll down to the Tax Options -This Pay Only, Federal section and select the Percentage entered is to be treated as a maximum Federal tax ceiling option, and then enter the maximum percentage of tax that you want to be active for the current payroll.

   The value is for this pay only, and is cleared after the payroll is processed.

5. Click Save.

   If required, apply a maximum tax percentage to the Provincial tax calculation as well.