Question

You have been asked by the Payroll Manager, Linda Laporte, to create a short job aid to assist the payroll practitioners with reconciling the Revenu Québec (RQ) account. Your organization is a monthly remitter. In your own words, outline suggested reconciliation methods including the forms, tools and reports that would be used in the process.

Answer 1

For payroll reconciliation, the payroll practitioners should obtain the payroll as prepared (generated from) by the Revenu Quebec account.

Validating Transactions

After obtaining payroll, the accountant or clerk has to review the entries for accurateness and validate such things as payroll tax entries, withholdings, employee contributions and overtime to make certain that transactions occurred correctly. The accountant verifies that the correct payroll posted to this account as part of reconciliation.

The payroll accountant or clerk can open a spreadsheet and take all the data from the Revenu Quebec account and reconcile:

The income tax deductions as per the declarations of the employees against the same in RQ Account

For 2018, the income tax rate applicable to the first taxable income bracket, which includes taxable income of not more than $43,055, has been decreased from 16% to 15%. All other income tax rates remain unchanged. The income thresholds for all the brackets have been indexed. Specifically: • the 15% rate applies to taxable income of $43,055 or less (previously $42,705); • the 20% rate applies to taxable income of more than $43,055, but not more than $86,105 (previously $85,405); • the 24% rate applies to taxable income of more than $86,105, but not more than $104,765 (previously $103,915); • the 25.75% rate applies to taxable income of more than $104,765.

Gratuities and retroactive pay

The rate for source deductions of income tax on gratuities and retroactive pay remains 8%

Other deduction or reconciliations:

Acquisition of fondaction shares: If an employee authorizes you to withhold an amount from his or her remuneration for the purchase, after May 31, 2018, of class A or class B Fondaction shares, you will have to adjust the way you calculate the employee’s source deductions of income tax for each pay period in which an amount is withheld. If you use the Source Deduction Table for Québec Income Tax (TP-1015.TI-V) to calculate source deductions of income tax, you must subtract from the employee’s remuneration an amount equal to 75% (rather than 100%) of the amount withheld for the purchase, after May 31, 2018, of class A or class B Fondaction shares. If you use the formulas in guide TP-1015.F-V to calculate source deductions of income tax, you must subtract from the income tax payable for the year an amount equal to 15% (rather than 20%) of the amount withheld for the purchase, after May 31, 2018, of class A or class B Fondaction shares.

Emergency services volunteer: The tax-exempt financial compensation paid to an emergency services volunteer has been increased from $1,140 to $1,150 for 2018

Disability assistance: For 2018, if you make disability assistance payments to a beneficiary of an RDSP who is resident in Canada, you must withhold income tax at a rate of 15% from the taxable portion of the payments that exceeds $18,346 (previously $14,280) for the year.

Reduced rate of contributions to health services fund for small and medium sized business: For 2018, if you are an employer in the primary and manufacturing sectors, and more than 50% of your total payroll is related to activities in these sectors (see the note below), your contribution rate will be determined as follows:

If your total payroll is less than or equal to $1 million, your contribution rate will be 1.50%.

If your total payroll is between $1 million and $5 million, your contribution rate (W) will be determined using the following formula: W (%) = 0.81 + (0.69 × S)) where S = total payroll $1,000,000

If your total payroll is $5 million or more, your contribution rate will be 4.26%. In other cases, your contribution rate will be determined as follows:

If your total payroll is less than or equal to $1 million, your contribution rate will be 2.3%.

If your total payroll is between $1 million and $5 million, your contribution rate (W) will be determined using the following formula: W (%) = 1.81 + (0.49 × S) where S = total payroll $1,000,000

If your total payroll is $5 million or more, your contribution rate will be 4.26%

Reconcile the following slips with the RQ Accounts:

the RL-1 slip if you paid a salary or wages or any other remuneration for which you are required to file an RL-1 slip;

the RL-2 slip if you paid a retirement pension or retirement income;

the RL-25 slip if you made a payment under a profit-sharing plan;

the RL-1 summary (form RLZ-1.S-V, Summary of Source Deductions and Employer Contributions) if you: – filed the RL-1 slip,

– filed the RL-2 slip or RL-25 slip to report amounts from which you withheld source deductions of Québec income tax,

– withheld Québec income tax, QPP contributions or QPIP premiums,

– paid the employer QPP contribution, the employer QPIP premium or the employer contribution to the health services fund,

– paid the contribution related to labour standards,

– participated in workforce skills development and, consequently, have to inform us of your total payroll and the total amount of your eligible training expenditures,

– paid the employer contribution to the WSDRF

Other reconciled areas include verifying the accurateness of earnings. This involves double-checking overtime, hourly and salary wages for correctness. The figures from individual checks are compared against earnings and payroll registers to guarantee these accounts are in agreement. When you add together the tax accounts, the various withholding accounts and all accounts associated with payroll together, the transactions for the period must equal the payroll.