The purpose of this article is to provide the Payroll Processor with instruction on how to process a Commission Payment using Canadian Payroll.
The TD1X form is a Statement of Commission Income and Expenses for Payroll Tax Deductions. This form is completed if the employee will receive commission income or a combination of commission income and salary or wages, and they want the employer to adjust their tax deduction considering the commission expenses.
In doing this the employer will not deduct any taxes from the Commission Income.
In this example, the employee is getting a $2,000.00 Commission payment on sales for the previous month.
A – The employee HAS completed a TD1X form.
Step 1: Navigate to the Payroll Worksheet.
Once you have performed the functions of Get Hours, Check for Issues, Calculate Gross proceed to the next step.
Step 2: Add Bonus or Commission
When clicking on the Add Bonus or Commission Icon, a new window will open.
Step 3: Define the Commission criteria
- Enter the Commission payment amount in “Amount”,
- Enter a “Memo” for what the Commission is regarding. This memo will show up in the Income Details, and on the printed Pay stub,
- Set “Days since Previous Commission”, for this example, the last commission was 30 days ago, therefore enter “30”,
- In the “Who received the bonus/commission?” put in the filters for either a specific employee, or group of employees that should receive this commission,
- Choose “OK” to close this window.
Note: Only employees that are in the current Payroll Run will receive the Commission.
Step 4: Income Details
Notice that the Gross Pay on the Payroll Worksheet is now Bolded. that is because there has been a change to the “Gross Pay”. To view the amount, proceed to the Action Tab and click on “Income Details”.
The same information that shows in “Income Details”, appears in the Payroll Income in the Fact Box.
The employee will not be taxed on the Commission as they have completed the TD1X form.
B – The Employee has NOT completed a TD1X form.
Step 1: Payroll Worksheet
If the employee has NOT completed a TD1X form, use the following procedure to pay the employee the Commission.
From the Payroll Worksheet, highlight the line for the employee who is being paid the Commission. Click on the Income Detail Icon.
Step 2: Income Type
Enter the commission into Income Details, using the Income Type of Wages. Enter the reason for the commissions into the Memo section.
Step 3: Calculate Taxes
When the function of “Calculate Taxes” is completed the taxes are calculated on all of the applicable earnings.
The Employee Earnings Statement shows the two amounts, including a memo to identify the commission.
Continue with the Payroll Process.