Quick Tip: Continue Correct Legal Deductions in Canadian Mergers or Acquisitions

  • by Stephane Routhier, Solution Architect, EPI-USE America
  • August 25, 2009

New regulations from the Canada Revenue Agency (CRA) allow you to continue with existing Canada Pension Plan (CPP) and Employment Insurance (EI) employer and employee contributions after a merger or acquisition between companies takes place. Not only is this helpful because you don’t have to change the contributions, but you also don’t have to handle employee data as if the merged company were a new employer.

In the SAP ERP HCM system, employee and employer contributions to the CPP and an EI start over after mergers or acquisitions, which can result in excess contributions for the year for merged enterprises. You can configure SAP ERP HCM to keep the existing CPP and EI employer and employee contribution amounts that have already been deducted. Prior to implementing this configuration, I advise you to confirm with the CRA that the solution applies to the specific circumstances for your organization.

I will show you the steps to make the configuration to keep your existing contributions. Performing these steps correctly gives you the ability to not have to reset the amount deducted for legal deduction (e.g., CPP, Quebec Pension Plan, EI) when an employee is transferred to a different legal entity. The system would only take out the difference between the amount already withdrawn for each legal deduction up to the associated annual maximum.

Stephane Routhier

Stephane Routhier is a Solution Architect with EPI-USE America. He is an experienced SAP HCM/Payroll/Time consultant with over 18 years of expertise implementing solutions for Fortune 100 and 500 national and international clients in a variety of industries. He has focused on U.S. and Canada deployments. Stephane has actively contributed to the SAP HR community as a writer and conference speaker.

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