With the transition from T4A to T4 Eligible and non Eligible retiring allowances, I notice that after i changed the code to line 66 and 67 respectively, it was reported in box 66 and 67 under other information in the T4.

My concerns are that the box 14 of the T4 still includes the amount of box 66 and 67 respectively, but according to revenue Canada see http://www.cra-arc.gc.ca/E/pub/tg/rc4120/rc4120-e.html

"Code 66 - Eligible retiring allowances

Enter the amount of retiring allowances (also called severance pay) that was paid in the year and is eligible for transfer to an RPP or RRSP, even if not transferred. Do not include this amount in box 14. See "Retiring allowances" for more information.

Code 67 - Non-eligible retiring allowances

Enter the amount of retiring allowances (also called severance pay) not eligible for transfer to an RPP or RRSP. Do not include this amount in box 14. See "Retiring allowances" for more information.

Code 68 - Status Indian (exempt income) - Eligible retiring allowances

Enter the amount of retiring allowances (also called severance pay) that was paid to a Status Indian in the year and is eligible for transfer to an RPP or RRSP, even if not transferred. Do not include this amount in box 14.See "Retiring allowances" for more information.

Code 69 - Status Indian (exempt income) - Non-eligible retiring allowances

Enter the amount of retiring allowances (also called severance pay) that was paid to a Status Indian in the year and is not eligible for transfer to an RPP or RRSP. Do not include this amount in box 14. See "Retiring allowances" for more information."

But the Accpac system is including these amounts in line 14.

Moreover, the accpac system is now including another box 24 and box 26 on the T4 .

Any explanations

Thank you

 Did you change the T4 reporting in the Employee Tab of the Payroll Earnings and Deductions Set-up to either box 66 or 67?

It works for us.

Let me be more specific.  We set up a new earnings code for this type of severance.  We coded the T4 reporting to box 67, we entered the payment as a manual cheque, and it works fine for us.  I assume you have updated the to teh most current payroll (we are on 5.5H).

 Hi Jim,

Thank you for your quick reponse, the first thing I did was to change the T4 reporting in the earnings and deductions under payroll setup. it actually reported it under box 67 fine, but my concern is that it never deducted the amount in box 67 from box 14.

e.g Mr X was paid $4000 non eligible retiring allowances in 2010, his annual income for the year 2010 was $5000.

what accpac reported was in box 14, $9000, box 67, $4000 but the CRA says do not include the non retiring allowance in box 14.

so, box 14 should be $5000 not $9000.

 I am using accpac 5.6 tax update 5.6D

Looks like, although you are on a different version, you are at the current release level.  Further on what we did:

1) Made a manual payment (during the year using AP) to cut the cheque.  We did it this way because we needed to issue the cheques during the year, and realized that Sage had not provided for the proper procedure to withhold taxes.  We made many follow ups with Sage during the year to make sure the year end T4 process would handle the new requirements.  Finally with v5.5H they were able to verify that the correct process was in place.  At the point we continued on with....

2) Ran the update to 5.5H

3) Set up a new EARNINGS CODE called RETIREMENT ALLOWANCES as a FLAT earning with the T4 set for BOX 67

4) Entered the manual cheque into payroll using teh manual cheque posting routine.

Sorry I'm not telling you what you need to do, just trying to show you what we did, maybe it will help resolve your issue.

 Hi Jim,

I have gone through the processes listed in your post, from 1 to 4 created a new employee in my test environment, paid the employee and also paid the employee severance allowance at stated in your post, the system is still adding the employee total income in box 14 of the T4.

But the requirement states that box 14 should not include amount entered in box 66 or 67.

Please go back to your report to find out if the amount was not included in box 14, else the person may be getting more tax than required.

Thank you,

Adibles

That was the first thing we looked at. 

I personally just now went back to all the detail and verified that the retireing allowance is NOT included in box 14.

Our T4s are correct.  

In your test, did you pay using a manual cheque or system generated cheque? 

Does the documentation included with your update to 5.6D say the following:

 See below  copy of what is included in 5.5D

The  following  changes  have  been  made  regarding  the  retiring  allowances  on  the  T4  form  for  tax  year  2010:  

1. • Retiring  allowances  will  now  be  reported  on  the  T4  form  and  not  the  T4a  form.   

1. Important! You  must  manually  determine  the  taxes  for  these  amounts.  

2. • The  following  boxes  are  now  available  in  the  drop‐down  list  for  Earnings.  

1. − Box  66  –  Eligible  retiring  allowances  
2. − Box  67  –  Non‐eligible  retiring  allowances  
3. − Box  68  –  Status  Indian  (Exempt  Income)‐ Eligible  retiring  allowances  
4. − Box  69  –  Status  Indian  (Exempt  Income)‐ Non‐eligible  retiring  allowances  

3. • Box  26  was  updated  to  comply  with  the  federal  guidelines.  Refer  to  the  website  for  more  information.
4. • The  T4  forms  (plain  paper  reports  and  laser  reports)  have  been  updated  to  the  new  layout  for  tax  year  2010.   
5. • To  support  the  cancelled  T4  XML  format,  a  Cancelled  option  was  added  to  the  Report  Type  drop‐down  list  in  T4  Electronic  Filing.  Using  this  option,  T4s  Electronic  Filing  function  will  generate  an  XML  file  for  cancelled  T4  forms.

When you entered the transaction, did you do so with a manual cheque or a system generated cheque? 

Hi Jim,

I entered the cheques thruogh the manual chaques, the first click the print check, the second unclick the print check.

the same result

Not sure how to help at this point without looking side by side at the screen shots.  I don't mind sending you screen shots of our set up if you provide me with your email address.  The only other thing I can think of is that you are running 5.6 and I'm on 5.5, but I would expect other users would be having the issue also if it was version based.

Hi Jim

I can also show you my screen shot adiblesventures@yahoo.com, thanks for your assistance.

Retiring allowances are a bit of an unusual situation, and the behaviour isn’t completely intuitive, but it is consistent with how Accpac otherwise handles box 14. Here are the key points:

·         From Accpac’s point of view, anything that is taxable (has INCTAX attached to the earning at the time of payment) goes in box 14.

·         Retiring allowances are a special situation, in that they are not taxable the way normal earnings are, but are instead subject to a special withholding using a “lump sum” withholding rate (see http://www.cra-arc.gc.ca/E/pub/tg/rc4120/rc4120-e.html#retiring_allowances).

·         Accpac’s January 2011 tax update documentation states that retiring allowances reported in Box 66/67 are supported, but that “you must manually determine taxes for these amounts.” In other words, you must manually calculate the tax withholding using the lump sum rate and enter it on a timecard.

Given these conditions, in order to process retiring allowances properly in Accpac, you must not attach the INCTAX code to the retiring allowance earning code so that:

·         The amount does not get included in box 14, and

·         The amount won’t have regular income tax withholding calculated on it. (You would instead manually calculate the lump sum withholding and enter it on a timecard.)

If you have already paid the retiring allowance with INCTAX attached, removing it from the retiring allowance earning setup will not correct the T4, since the earning was taxable by Accpac at the time it was paid, and is still flagged as such in the payroll journal. (You should still remove INCTAX so that any future retiring allowance payments are handled correctly.) To correct the T4, you will need to enter a transaction history adjustment for INCTAX for that employee, reducing the “No Ceiling Wage” and “Earnings Before Deductions” by entering the amount of the retiring allowance as a negative amount in those columns.