by Peggy
(Alberta, Canada)
How to Report Earned But Unpaid Income At Yearend
I'm new at payroll and need major help. I use Simply Accounting (now Sage 50). My client (a corporation) has one employee that started November, 2012. The money that the employee earned in November was paid on December 7th. The employee's earnings for December, 2012 were paid by advance (no deductions) on December 15th. The balance of December, 2012 wages were not paid until January 7, 2013. I'm not sure why the employer pays him late. My client uses CRA's Payroll Deductions Online Calculator (PDOC) to do the payroll. I have just been provided with the backup documentation so I can do the 2012 T4 slip.
I've entered the November paycheque - no problem. I've entered the December 15th advance - no problem. When I enter the January 7th cheque - there is a problem as the year to date calculations in the taxes section have started over. After much searching and reading, I've determined that income is reported in the year it was PAID which means this January 7th cheque is now part of 2013 earnings (even though it relates to December earnings). So only the November income plus the December advance will be on the T4 - is that right? I need to explain all this to my client as well so need to get it straight. When using CRA's PDOC, should the "date the employee is paid" be input as the last day of the month that the income was earned even if not paid on that day?
When I print the PIER report in Sage 50, the errors I get are Note 3. Too much CPP has been deducted. I can make an adjustment for this. The second error is Note 5: Discrepancies may be due to total paycheques not matching pay periods per year. My client chose pay period frequency as Monthly (12 pay periods a year). Since the employee only started November, there will not be 12 pay periods so do I need to be concerned about this note?
For 2013, now that there is already 1 pay period out of the 12 "used up", will I need to ensure that in 2013, only 11 more are used? I know, these all sound like crazy questions, but with no experience at this, I have to ask.
I'd appreciate any input and advice. Thank you in advance.
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