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Document Name
OHAKVE119
Often a company policy exists that pays vacation pay to employees in advance. The payment is non-periodic, however it must be taxed as if it were paid out when the vacation was actually taken. To meet this requirement, the Payroll component calculates a net advance payment. This net payment is simultaneously paid out and put into arrears as a deduction to be taken in the pay period when the vacation is actually taken. In the actual vacation pay period(s), the vacation amount is evaluated and paid, and thus taxed correctly. Function KVADV in the Canada payroll driver performs these tasks. In this step, you make settings which allow this function to perform properly.
Activities
Enter a value of 1, 2 or 3 in processing class 53 (depending on what the vacation pay is based on) for your Net advance pay wage type. You created this wage type in a previous step by copying the SAP model wage type for vacation pay net advance. This wage type will trigger the net advance calculation.
Ensure that all wage types included in advance vacation pay have the value A in processing class 53 (i.e. M001, M002, M003). This will include these wage types in the estimate of vacation pay per pay period.
Ensure that all deduction wage types to be used in the advance pay wage calculation have the value B in processing class 53.
Once the processing classes have been set up for the wage types, function KVADV will automatically generate two new wage types via table T51P1. In the second view you check the entries for your wage types. They should have the same entries as the model wage types:
Indicator Wage Type -> Wage Type AV M240 Vacation Advance Pay -> M241 Vacation Net Advance Pay AW M240 Vacation Advance Pay -> M242 Vacation Adv. Back Pay
Hierarchy 
SAP_HRCCA (Software Component) Sub component SAP_HRCCA of SAP_HR
PY-CA (Application Component) Canada
P07C (Package) HR customizing: Canada
IMG Activity 
Document 
History 
