An Overview of Canadian Payroll in SAP ERP HCM

  • by Vani Appaji, Certified SAP HCM Consultant
  • April 20, 2016
Learn how various statutory contributions and deductions for Canadian payroll can be configured in the SAP ERP HCM payroll system.
Learning Objectives

By reading this article, you will:

  • Learn about various statutory contributions and deductions of Canadian payroll regulations
  • Gain an understanding of the base and contribution wage types for Canadian SAP payroll
  • Learn how to calculate the statutory deductions for Canadian payroll
  • Learn about the configuration of statutory contributions and deductions for Canadian payroll in the SAP ERP HCM payroll system
Key Concept

Various technical wage types, cumulating classes, and data from tables are used in the calculation of statutory contributions and deductions for Canadian payroll in an SAP payroll system. These calculations often can be somewhat complex due to their interdependent natures.

There are many documents on the Canadian government’s website that explain payroll deductions. This article covers how these payroll deductions can be achieved in a Canadian SAP payroll system. I give a brief overview of the different payroll deductions; however, since these are already well documented by the respective government agencies, I do not go into detail. The main focus is how these can be done in the SAP system and what options the SAP system offers to keep users compliant with Canadian payroll regulations. My purpose is to consolidate all the information in one location, some of which is not clearly documented elsewhere.

Note
SAP usually releases new wage types at the end of the year, via Support Packages, although in some situations they may be released mid-year. SAP offers educational sessions and updates for companies and also uploads this information on its SAP Service Marketplace website: https://websmp201.sap-ag.de/.

Every country has its own rules and regulations for personal income tax and statutory contributions. In Canada, a lot of information about this is provided by the Canada Revenue Agency (CRA) and other government agencies. Here I show how to execute these Canadian legislations in the SAP ERP HCM payroll system.

In Canada there are a total of 13 provinces and territories. Apart from Quebec, all the other provinces have similar statutory contributions and deductions. In this article I cover the details for the most important statutory contributions and deductions for the 12 provinces and territories, and for Quebec, with special emphasis on how these are configured in the SAP ERP HCM payroll system.

I cover the following Canadian-specific payroll contributions, deductions, and concepts:

  1. Canadian Pension Plans (CPPs)
  2. Canadian employment insurance
  3. Provincial Paternal Insurance Plan (PPIP)/Quebec Paternal Insurance Plan (QPIP) calculations
  4. Canadian health taxes
  5. Canadian employer tax levy/contribution to the Financing of the Commission des normes du travail (CNT—for Quebec only)
  6. Canadian compensation tax
  7. Canadian  manpower levy/contribution to the Workforce Skills Development and Recognition Fund (WSDRF)
  8. Canadian withholding tax
  9. Canadian infotypes in the SAP system

Vani Appaji

Vani Appaji is currently working for a public-sector company as an SAP HCM Support Specialist and is based in Toronto, Canada. She has over eight years of experience as an SAP HCM consultant, specializing in Payroll and Time Management.

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