Gross up in Canada Payroll

[Former Member]

Hi,

I have a query. I want to know how the GRSUP function work in Canada Payroll.

[former_member182083 · Accepted solution]

Hello,

Gross up is the net amount you want to pay for the employee, the taxes for that is borne by the employer so that employee get the guaranted amount.

Say example you want to pay 1000$ for an employee, you enter this amount in Infotype 15 for the Wage type. SAP has delivered Model WT M350 - Regular Net gross up , M360 - Bonus Net Gross up. You can copy this model WT to your name space and use in IT 15.

First system will calculate total taxEICPP+ etc for the Regular amount excluding the Gross up amount, then it will calculate the total taxEICPP+ etc including the Grossup amount, the difference in Tax is added to the Gross up amount and the same iteration is followed till the tax difference becomes zero, By this way system determines what is the total amount needs to be paid to the employee so that employee gets net guaranted amount (Since tax is borne by the employer)

Gross / net iteration (results table)

Step Gross Deductions Difference

Increase of deductions

0 0.00 3,927.11 <-- Total Tax excluding the Gross up for the regular amount

1 1,000.00 4,416.64 489.53 <-- Diff in tax due to addition of 1000( 4416.64 - 3927.11 => 489.53)

2 1,489.53 4,656.28 239.64 <-- This diff amt 489.53 added to 1000 and tax diff is again calc

till becomes Zero

3 1,729.17 4,773.60 117.32

4 1,846.49 4,831.03 57.43

5 1,903.92 4,859.14 28.11

6 1,932.03 4,872.91 13.77

7 1,945.80 4,879.64 6.73

8 1,952.53 4,882.94 3.30

9 1,955.83 4,884.56 1.62

10 1,957.45 4,885.35 0.79

11 1,958.24 4,885.73 0.38

12 1,958.62 4,885.92 0.19

13 1,958.81 4,886.01 0.09

14 1,958.90 4,886.06 0.05

15 1,958.95 4,886.08 0.02

16 1,958.97 4,886.09 0.01

17 1,958.98 4,886.10 0.01

18 1,958.99 4,886.10 0.00

I hope it clarifies the Gross up calculation process.

With regards,

S.Karthik

[xavier_joseph]

Hi Karthik,

What if an employer wants to report and deduct  withholding tax  but report only CPP/QPP and EI ( /1*)? In the USA it is possible via tax model configuration but how do we achieve the same for Canada?

Thanks

Xavier