Hierarchy
SAP_HRCCA (Software Component) Sub component SAP_HRCCA of SAP_HR⤷
PY-CA (Application Component) Canada⤷
PC07 (Package) HR accounting: Canada
Basic Data
| Data Element | PCA_OPTIO |
| Short Description | Option for tax calculation |
Data Type
| Category of Dictionary Type | D | Domain |
| Type of Object Referenced | No Information | |
| Domain / Name of Reference Type | PCA_OPTIO | |
| Data Type | CHAR | Character String |
| Length | 1 | |
| Decimal Places | 0 | |
| Output Length | 1 | |
| Value Table |
Further Characteristics
| Search Help: Name | ||
| Search Help: Parameters | ||
| Parameter ID | ||
| Default Component name | OPTION_TAX_CALC | |
| Change document | ||
| No Input History | ||
| Basic direction is set to LTR | ||
| No BIDI Filtering |
Field Label
| Length | Field Label | |
| Short | 6 | Option |
| Medium | 15 | Option |
| Long | 20 | Option |
| Heading | 2 | Op |
Documentation
Definition
Two taxation options, described below, are recognized in Canada Revenue Agency guidelines.
- Option 1: General tax formula for periodic payments.
The general formula set forth in Option 1 separately determines the various federal and provincial taxes to be withheld from salary, taxable benefits, bonuses, non-periodic payments, pension income, commissions or other periodic payments.
With Option 1, basic federal tax calculation remains the same for all provinces and territories, that is, anywhere within Canada. Basic federal tax calculation also remains unchanged for applicable employees outside of Canada.
- Option 2: Tax formula based on cumulative averaging.
The tax formula set forth in Option 2 is intended for employers whose employees' remuneration fluctuates considerably from one pay period to the next.
With Option 2, the amount of tax to be deducted is based on a projected annual taxable income (including bonuses), which also takes into consideration the amount of tax previously deducted in the year. Option 2 is best applied for employees who are to be taxed within a full calendar year.
Note
Under normal conditions, during tax calculation performed with Option 1, tax is calculated on the basis of per-period earnings. In the event that an employee's salary fluctuates substantially, selecting Option 1 may result in the excess deduction of tax amounts, which in turn may necessitate a subsequent refund to the employee.
History
| Last changed by/on | SAP | 19980505 |
| SAP Release Created in |
