The Canadian Payroll Application is for anyone who wants to simplify the process of running payroll.

The Canadian Payroll Application for Dynamics 365 Business Central is a complete payroll solution that is easy to set up and use.

Canadian Payroll helps you pay and manage hourly and salary-based employees.

Simple setup – Canadian Payroll seamlessly integrates with Dynamics 365 Business Central. No need to involve your technical support department.

Perfect for your company – Canadian Payroll grows with your company with support for hourly and salaried staff with multiple pay-period options to choose from.

Save time – Canadian Payroll enables you to track your employee time and payroll information including pay rates and pay types all in one easy-to-use application.

Note: A valid Microsoft Dynamics 365 Business Central User License is required.

Please note that at the time of this writing, we do NOT support a worker working in multiple provinces in Canadian Payroll. If you have an employee in more than one province in a calendar year, a separate Canadian Payroll employee will need to be created for each province. YTD’s and max thresholds will need to be tracked manually.

Step 1: Configuration

The following sections describe the various configuration tasks required to set up Canadian Payroll.

This App leverages Dynamics 365 Business Central Employees and Dynamics 365 Business Central Timesheets. To access these pages, the User Experience Level must be set to “Essential” on the Company Information Page.

The navigation pathway is: Home >Setup & Extensions > Manual Set Up > Company.

Company Information

The Payroll Setup Wizard will attempt to change this for you if the person running the setup has the appropriate permission.

Without this setting, you will not be able to access Employees in Dynamics 365 Business Central, and consequently won’t be able to configure their payroll information, or run payroll for employees.

Note: After the Canadian Payroll extension has been installed, start the Payroll Setup Wizard. If you are running the wizard, but you are not the same person who installed the extension, then make sure you have the ‘PAYROLLPRO’ permission set. This permission set is necessary to complete the following steps.

PayrollPro

Search for User to go into Permission Setup to confirm your setup.

Step 2: Payroll Setup Wizard

The payroll setup wizard will guide you through configuring payroll for the first time.  It must be run before configuring anything else.

In this wizard, you will configure which bank account to use, which G/L accounts to post with, hourly pay codes (if any), and typical payment and payroll run settings. Employee-specific details must be setup individually after the payroll setup wizard is complete.

You can start the wizard in a few separate ways:

  1. If this is a first-time Canadian Payroll setup, a notification will appear on your Role Center page, as well as on all Canadian Payroll pages. Select “Click Here to Setup” on the notification to launch the Payroll Setup Wizard.
  2. Or, on the Assisted Setup page, choose “Set Up Canadian Payroll”, Navigate to Home > Setup & Extensions & Assisted Setup
Assisted Setup

3. or, enter “Payroll Setup Wizard” in the search bar.

Payroll Service Setup

Step 3: Terms and Conditions

To begin the setup, agree to the Terms and Conditions, and enable the checkbox before choosing “Next”.

If this is your first time with Canadian Payroll, or have otherwise not registered previously, then choose ‘I need to sign up for a new account’.

If your company already has an account, choose ‘I already have an account’, and enter the account Registration Code (values for External Reference, User, and Password aren’t required).  If you aren’t sure what these values should be, contact support and they will help provide the details.

Choose Next to continue.

Payroll Setup Wizard

Step 4: Payroll Run Default Settings

Payroll Run default settings are configured next. These values are used for employees who have not been configured for Canadian Payroll.

To change the default Payroll Run settings later, go to the Payroll Service Setup page, or run the Payroll Setup Wizard again. To change Payroll settings for an employee later, select an employee from the Employees page, and go to the Payroll FastTab.

Payroll Setup Wizard

The following table lists each setup question and its description.

Setup Question Description
When are your employees typically paid? Refers to Payment Frequency. Choose the time interval that the company employees are paid at. Options include Monthly, Semi-Monthly, Bi-Weekly, and Weekly.
How many pay periods do you typically have? Refers to Pay Periods Per Year. This value changes when you set the Payment Frequency. Additional values are available by choosing the More button and selecting a different value.
Are they mostly salaried or hourly? Refers to Default Pay Type. Choose a Pay Type based on how employees are usually compensated. Options include Fixed Salary, and By Hours.

If your employees are salaried then you must enter their salary information on the Employee Card.

If your employees are hourly then you must enter the rates either at the employee level or at the hourly pay code level.

How are they typically paid? Refers to the default Bank Payment Type. Choose a value based on what method is used for paying most employees. Options include Computer Check, Manual Check, Electronic Payment, and Electronic PaymentIAT.

Electronic Payment-IAT can be used for workers with international bank accounts, such as employees from the USA.

What payment method should be used? Refers to Payment Method Code. This value is used when transferring payroll details to the Payment Journal. Options include all Payment Method Codes available for your company, which may include codes for cash, cheque, and bank transfers.

Choose a Payment Method that will work with the default Bank Payment type.

Who usually approves time sheets? Refers to Time Sheet Approver User ID. Assign a value based on the User that will usually be approving time that will be used in the payroll worksheet.
Will all your employees be set up? Refers to Auto Employee Setup. Choose ‘All My employees’ to have Canadian Payroll attempt to help maintain some basic records such as the Resource, Vendor, and stubbed Vendor Bank Account for the employee.

If your company has process requirements to document each step or perform each step manually, then choose ‘Manual Configuration’.

For more details, see Payroll Service Setup

Choose Next to continue

Step 5: Hourly Payroll Codes

The next page enables you to set Payroll Codes for hourly employees. To modify an existing pay code, select the row, and edit values for Work Type Code, Paycode, Default Rate, Rate Overrides, and Show in Worksheet, which lets you choose how it is displayed on the Payroll Worksheet page.

Note: All pay codes are mapped to one General Ledger Account, which in our example is 62100 – Wages Expense Account.

Payroll Codes

To create a new Payroll Code, choose an empty row, and enter new values for the record. For more details see “Adding a New Paycode ” document.

The following table provides information on the fields and requirements for Payroll Pay Codes Configuration.

Field Description
Paycode Case sensitive paycode to use.
Work Type Code The Work Type is used on NAV time sheets.
Default Rate This rate will be used to calculate the gross wage for hourly employees if no specific rate has been defined for a pay code.
Rate Overrides A lookup to specific rates.

To define employee specific rates, choose the ‘Employee Rates’ action.

Show in Worksheet When set to ‘Hidden’, the pay code will not be available as a column in the payroll worksheet and can only be viewed in the sidebar or edited in the ‘Income Details’ action on the Payroll Worksheet.

When set to ‘Show Hours’, an editable column on the worksheet will show available hours.

When set to ‘Show Wages’, a read-only column on the worksheet will show the calculated wages by the pay code.

When set to ‘Show Hours and Rates’ an editable column for hours will be visible on the worksheet, and a read-only value showing the breakdown for the wages for that pay code.

Global Dimension Code 1 The default Global Dimension 1 Code to use. This is typical “Department” by default.
Global Dimension Code 2 The default Global Dimension 2 Code to use. This is typically “Project” by default.
Expense Account Expense account for the wage type
EI Benefit Income Whether the pay type is EI Insurable
CPP Benefit Whether the pay type is CPP Pensionable
Income Type Which type of income the pay code is: Wages, Pension, Vacation Pay, Bonus, Retroactive Pay or Commission
Information Type T4, RL1 or Not Applicable
T4 Other Information Whether and which Other Information Code should apply to the Pay Type
T4A Other Information Whether and which Other Information Code should apply to the Pay Type
Available for Calculation Automatic or Unavailable
RL1 Box The RL1 Box for the values to report to, if applicable
RL1 Other Information The Other Information code that applies to this type if applicable
QPP Pensionable Whether QPP applies to the Pay Type
QPIP Insurable Whether QPIP applies to the Pay Type

The Pay Code, Income Type of Wages, Pension, Vacation Pay, Bonus, Retroactive Pay, and Commission are all taxed differently when passed through the tax engine as per the following table.

Income Type Tax Method
Wages Normal as per CRA
Pension as per CRA
Vacation Pay Normal as per CRA
Bonus Bonus Tax Method
Retroactive Pay Bonus Tax Method
Commission If TD1X form has been completed

Choose Next to Continue.

Step 6: Accounts and Deductions

G/L account, Bank account, and Deduction settings are shown next.

In completing the Payroll Setup Wizard, the Expense and Liability accounts must be defined for the General Journal to be posted without errors.

Canadian Payroll automatically has pre-defined Deductions such as CPP, EI, Income Tax Federal, Income Tax Provincial, PPIP, QPIP, RPP, and WCB.

In this example, the Employer portion of CPP and EI are expenses to the 62500 Payroll Taxes Account and the Employee Portion of CPP, EI, Federal, and Provincial Taxes are allocated to the Liability Account 23300.

Bank Accounts

The following table lists each setup question and its description.

Field Description
Pay From Bank No. Choose the bank account to pay your employees from.

This is mandatory information, and will be used on the Payroll Worksheet to estimate net balance, and will be used in the Payment Journal as the bank account to pay from.

Important: When you change the Pay From Bank No., then it will also change the Bank on the Payroll Associated General Journal Batch.

Accrual Account No. Choose the wage liability account.  Note that this must match the account defined for the vendor posting group that is defined on the employee associated vendors.

When you change this value, the default Payroll vendor posting group will automatically get updated.

 Wage Expense Paycode Choose a Paycode that is associated with the expense account that should be used for wages.

The following is a table with the definitions of the fields that are required.

Field Description
Code The code to use.
Description A configurable description for the deduction.
Type The type of deduction.

For special mandatory deductions, such as CPP and EI, there will only be one entry.

Category Whether this is a deduction, taxable benefit, reimbursement, or other payment.
Expense Account No. Optional.

Which expense account to use.

When you define this field then the employer amount will be summed and transferred to journals.

If you omit this, then no expense entry will be created in the general journal when transferring payroll to journals.

Liability Account No. Optional.

This defines which liability account to use.

When you define this field then a liability journal entry that sums the employee amount and the employer amount will be created when transferring payroll to journals.

Show in Worksheet When set to ‘Hidden’, the deduction will not show on the worksheet, but will still be calculated.

When set to ‘Visible’, the deduction will show on the payroll worksheet.

Global Dimension 1 Code The default Global Dimension 1 Code to use. This is typically “Department” by default.
Global Dimension 2 Code The default Global Dimension 2 Code to use. This is typically “Project” by default.
Employee Custom Calc Amount Only applicable when the ‘Type’ field is set to ‘Custom’.

The employee amount on the deduction detail entry will be calculated as

(Gross Pay * Employee Custom Calc Percentage) + Employee Custom Calc Amount

Employee Custom Calc Percentage
Employer Custom Calc Amount Only applicable when the ‘Type’ field is set to ‘Custom’

The employer amount on the deduction detail entry will be calculated as

(Gross Pay * Employer Custom Calc Percentage) + Employer Custom Calc Amount

Employer Custom Calc Percent
Applies To Provides the ability to restrict this deduction to everybody, specific profiles, common employee groupings or specific profiles
Applies to Reference Who the deduction applies to is specified
Information Return Whether the deduction type should be included in a T4 or T4A
T4 Other Information Code Whether and with T4 Other Information Code applies to the deduction type
T4A Other Information Code Whether and which T4A Other Information Code applies to the deduction type
EI Benefit Whether the deduction type is included in EI Insurable earnings
CPP Benefit Whether the deduction type is included in the CPP Pensionable earnings
CRA Number The Canada Revenue Agency number
RL1 Box The RL1 box for the values to report to, if applicable
RL1 Other Information The Other Information Code or Box that applies to the type
QPP Benefit Whether QPP applies to the benefit type
CPP Benefit Whether CPP applies to the benefit type
Benefit Totalling Whether the Benefit applies automatically, to the Employee and the Employer, or just the Employee or the Employer.

Types of Deductions, Reimbursements, and Other Earnings.

Type Description Category EE / ER
CPP Canada Pension Plan Deduction EE & ER
QPP Quebec Pension Plan Deduction EE & ER
EI Employment Insurance Deduction EE & ER
RRSP Registered Retirement Savings Plan Deduction EE
RRSP Registered Retirement Savings Plan Benefit ER
Income Tax Federal Federal Income Tax Deduction EE
PPIP Provincial Parental Insurance Plan Deduction EE
Income Tax Provincial Provincial Income Tax Deduction EE
Custom Custom Deduction EE / ER
WCB Workers Compensation Board Deduction ER
Union Dues Union Dues Deduction EE
Alimony/Family Alimony/Family responsibility Deduction EE
RPP Registered Pension Plan Deduction EE
RPP Registered Pension Plan Benefit ER
QPIP Quebec Parental Insurance Plan Deduction ER
RCA Retirement Compensation Arrangements Deduction EE
CIP Cooperative Investment Plan Deduction EE
QC Remote Travel Quebec Remote Travel Deduction EE
Security Security Options Benefit Benefit ER
Security Security Options Benefit Deduction EE
Health Health Deductions Deduction EE
EI Reduced Employment Insurance Reduced Rate Deduction EE & ER

Categories of Deductions, Reimbursements and Other Earnings.

Category Description
Deduction Deduction by either employee or employer
Information Non-monetary
Benefit Benefit either Insurable for EI Calculation or non-insurable for EI calculation
Reimbursement Non-taxed amount
Other Payment Non-taxed amount

Example setup for Mandatory Deductions 

Code Desc. Type Category Expense Acct Name Liability Acct Name
CPP Canada Pension Plan CPP Deduction Payroll Taxes Payroll Taxes Payable
EI Employment Insurance EI Deduction Payroll Taxes Payroll Taxes Payable
ICTAXF Income Tax – Federal Income Tax Fed Deduction Payroll Taxes Payable
ICTAXP Income Tax – Provincial Income Tax Prov Deduction Payroll Taxes Payable
PPIP Provincial Parental Insurance Plan PPIP Deduction Payroll Taxes Payroll Taxes Payable
QPIP Quebec Parental Insurance Plan QPIP Deduction Payroll Taxes Payroll Taxes Payable
QPP Quebec Pension Plan QPP Deduction Payroll Taxes Payroll Taxes Payable
WCB WCB Workers Compensation Board Deduction Workers Compensation Expense Workers Compensation Payable

For more information, see “Additional Deductions setup “.

Choose “Next” to continue.

Step 7: Confirmation

The final page of the Payroll Setup Wizard displays a message confirming that the setup process is complete and that you need to configure Payroll details for all employees on the first Payroll Run.

Setup Successful

Choose Finish to close the wizard.

Step 8: Payroll Service Setup

If you want to configure Canadian Payroll manually, navigate to the Payroll Service Setup page. From there, you can define the same settings that are set using the Payroll Setup Wizard, in addition to advanced settings not included in the wizard.

To start the Payroll Service Setup, search for “Payroll Service Setup” in the Search Bar.

Payroll Service Setup

Step 9: Payroll Setup

The Payroll Setup FastTab contains the main settings for Canadian Payroll. These include the default settings applied to new employees. To change Payroll settings for an individual employee, go to the Employees page, and choose an Employee record. On the Employee Card page, define new settings under the Payroll FastTab.

Payroll FastTab

The table below lists each field, and its description.

Field Description
Default Pay Frequency Refers to the pay frequency that applies to most employees. Options include Monthly, Semi-Monthly, Bi-Weekly, and Weekly. This value determines the available options for Pay Periods Per Year.
Pay Periods Per Year Refers to how many payroll runs occur per year for most employees. This value is used to calculate Pay Periods for Payroll Runs. Options are based on the value of Default Pay Frequency. For example, a Default Pay Frequency of Bi-Weekly enables you to choose either 26 or 27 Pay Periods Per Year.
Default Pay Type Indicates how most employees are paid. Options include Fixed Salary, and By Hours.
Auto Employee Setup Indicates how Payroll Setup options are applied to new employees. If the value is set to ‘All My Employees’, then all new employees will have their Payroll settings set to the default values. Vendor and Resource records will also be automatically generated for new employees. If the value is set to ‘Manual Configuration’, then each employee must have their Payroll settings configured individually.

For more information, see Employee Configuration.

Payment Method Code Refers to the method of payment used for most employees. This value is used for Journal and Ledger entries. Options include all Payment Method Codes available for your company, which may include codes for cash, cheque, and bank transfers.
Vendor Config Template Indicates which Vendor configuration template will be used to generate Vendor records for employees, if Auto Employee Setup is set to ‘All My Employees’.

A default vendor configuration template called ‘VPAYROLL’ is automatically created.

Bank Payment Type Refers to the form of payment used for most employees. This value is used in Payroll Runs to check if payment requirements have been met for the employee, before posting is allowed. Options include Computer Check, Manual Check, Electronic Payment, and Electronic Payment-IAT.

Electronic Payment-IAT can be used for workers with international bank accounts, such as employees from the USA.

 Salary Regular Wages Paycode(s) If salaried employees use time sheet, enter which paycodes they use in this field. See Paycodes for more information.

Ex: SALARY1|SALARY2|SALARY3

 EI Reduced Rate If the company has an EI reduced rate, enter the rate here. This is used to calculate EI for employees set to EI Reduced Rate.
 Transmitter Number
An 8 digit code, starting with ‘MM,’ that is provided by the CRA for submitting information returns electronically. ‘MM555555’ is acceptable to use for one return. If the company does not have a transmitter number, the payroll processor can call 1-800-665-5164 to acquire one from the CRA.
 Submission Nos.  A number series used for electronic filing of information returns. The number series must start and end with a code that is exactly 8 characters long.

Step 10: Posting

The Posting FastTab contains settings used by Canadian Payroll when it posts Journal entries to the General Ledger. Also included are settings for handling Dimensions.

Posting

The table below lists each field, and its description.

Field Description
Pay From Bank No. Choose the bank account to pay your employees from.

This is mandatory information, and will be used on the Payroll Worksheet to estimate net balance, and will be used on the Payment Journal as the bank account to pay from.

Important: When you change the Pay From Bank No., then it will also change the Bank on the Payroll associated General Journal Batch.

Payment G/L Template Name Choose the payment journal template to use, to choose the payment journal batch with.
Payment G/L Batch Name Refers to the Payment Journal Batch used to transfer employee payment to.

The payment batch chosen must match the same bank account that is chosen on the Pay From Bank No.

G/L Template Name Indicates the General Journal Template used to filter the G/L Batch Name.

The default is ‘GENERAL’.

G/L Batch Name Indicates the General Journal Batch used to identify all Payroll expense and liability entries (such as wage expenses, a breakdown of CPP, EI, etc.).

A default general journal called ‘PAYROLL’ is created automatically, but is not mandatory to use.

Payment Journal Posting Dimension Behavior Refers to how Canadian Payroll treats Dimensions when transferring entries to the Payment Journal.

Choose ‘Copy From Paystub’ to instruct Canadian Payroll to copy dimension from their paystub to the Payment Journal.

Choose ‘Default’ to instruct Canadian Payroll not to copy Dimensions from pay stubs. The default Dimension handling process for Dynamics 365 Business Central is used instead.

For more information, see Dimensions.

Detail Dimension Behavior Refers to how Canadian Payroll treats dimensions when creating detailed income and deduction entries on the paystub.

Choose ‘Use Type Setup’ to use the Dimensions from the Deduction Type or Hourly Paycode Type when creating the detailed entries for Income and Deductions.

Choose ‘Use Paystub’ to copy Dimensions from the Paystub, rather than from the type.

For more information, see Dimensions.

Detail Post Dim Behavior Refers to how Canadian Payroll treats Dimensions when transferring to the General Journal.

Choose ‘Default’ to indicate that no Dimensions will be copied from Income details or Deduction details.

The default Dimension behavior for Dynamics 365 Business Central is used instead.

Choose ‘Use Detail’ to copy Dimensions from the Income and Deduction from the Paystub. This will affect how many records get created in the general journal, as values are grouped differently for each setting.

For more information, see Dimensions.

Wage Paycode Expense account that is tied to the wage pay code.
Accrual Account No. Indicates the G/L account used to record payments against. Changing this value will attempt to automatically change the account defined in the ‘PAYROLL’ vendor posting group.
Accrual Account Name Indicates the name of the G/L account set for the Accrual Account No. field.
Posting Date Gen. Journal Indicates that date to post the General Journal
Posting Date Payment Journal Indicates the date to post the Payment Journal
Payment Journal Posting Dimension Behavior Payment posting Dim Behaviour

Step 11: Service Connectivity

The Service Connectivity FastTab contains settings related to your connection to an online Payroll provider.

Service Connectivity

The table below lists each field, and its description.

Field Description
Provider Name Refers to the name of the Payroll provider. Currently, this field can only be set in the Payroll Setup Wizard, and only Canadian Payroll is supported.

Do not change this value unless instructed by support.

Service URL Base Indicates the location of the remote service that calculates taxes. It is set during the Payroll Setup Wizard process.

Do not change this value unless instructed to by support.

Quebec Service URL Base Indicates is the location of the service that calculates taxes for Quebec. This is set during the Payroll Setup Wizard process.

Do not change this value unless instructed to by support.

Process Payroll URL Do not change this value unless instructed to by support.
External Reference Do not change this value unless instructed to by support.
Time Sheet Approver User ID Indicates the default User who is responsible for approving time sheets.   This will be set as the approver user id for any new resources that are automatically created.
 Log Request This field is used for troubleshooting issues with tax calculations.

This should be set to ‘Do Not Log’ unless otherwise instructed by support.

 Log Response This field is used for troubleshooting issues with tax calculations.

This should be set to ‘Do Not Log’ unless otherwise instructed by support.

Step 12: Credentials

The Credentials FastTab contains fields for providing authentication information for an external Payroll provider.

Credentials

The table below lists each field, and its description.

Field Description
Name (Primary) Refers to the Username of the primary user of the external Payroll provider.

Do not change this value unless instructed to by support.

Password (Primary) Refers to the Password for the primary user of the external Payroll provider.

Do not change this value unless instructed to by support.

Name (Secondary) Refers to the Username of the secondary user of the external Payroll provider.

Do not change this value unless instructed to by support.

Password (Secondary) Refers to the Password for the secondary user of the external Payroll provider.

Do not change this value unless instructed to by support.

Primary Token Refers to the access token for the service.

Do not change this value unless instructed to by support.

Secondary Token Refers to the access token for the service.

Do not change this value unless instructed to by support.

Step 13: Advanced

The Advanced FastTab contains settings available for troubleshooting and support with Insight Works support professionals.

Do not change these values unless you have been directed to by a support team professional.

Advanced

The table below lists each field, and its description.

Field Description
Credential 1 Key Do not change this value unless instructed to by support.
Credential 2 Key Do not change this value unless instructed to by support.
Token Key Do not change this value unless instructed to by support.
Secondary Token Key Do not change this value unless instructed to by support.
Registration ID If you have an existing Registration ID, it can be entered here, or in the Payroll Setup Wizard.
Last Registration Check Indicates the last time the Registration Status was checked.
Last Registration Status Indicates the last known Registration Status.
Registration Base URL Refers to the location of the Canadian Payroll Registration remote service. This is set during the Payroll Setup Wizard process.

Do not change this value unless instructed to by support.

Changing this value without assistance may make your payroll worksheet inoperable.

Default Experience Tier Assists with ensuring the company Experience Tier is set to the right level. This value should only be edited when requested by support.
Max Paystubs The Maximum number of paystubs permitted per payroll run.
Max Payroll Run Employees The Maximum number of employees permitted per payroll run.
Max System Employees The Maximum number of active employees permitted per payroll run.
Max Calculations The maximum number of calculations permitted per payroll run.
Global Registration Message The latest general payroll registration message.
Global Event Message The latest registration event message.
CPP Max Earnings The most recently retrieved maximum CPP Pensionable Earnings.
QPP Max Earnings The most recently retrieved maximum QPP Pensionable Earnings.
QPIP Max Earnings The most recently retrieved maximum QPIP Pensionable Earnings
Max Earnings Updated The last time the maximum pensionable earnings were retrieved.
RL1 Authorized Whether the software is authorized to generate RL1 Slips.

Payroll Account Identifiers

Payroll Account Identifiers

Click on the icon “Payroll Account Identifiers”, which is found on the Navigation Tab, of the Payroll Service Setup.

Note: To add the CRA numbers, you must first add then in “Company Information. This can be done as soon as the rest of the setup is completed.

Search for “Company Information” and click on the appropriate link.

Company Information Search

In the General Section, add the CRA number in the “Federal BIN No.” field.

Federal BIN No.

To add the Payroll Account Identifiers, click on the Icon and another screen appears.

Click “New”, to add the identifier. These are required to produce, ROE’s, T4’s, T4A and RL1 returns.

CRA Number

Step 14: Employee Configuration

It is mandatory to complete the Payroll Setup Wizard before configuring employee payroll configuration information. Refer to the Dynamics 365 documentation “How to Register Employees” for basic employee setup.

To configure an employee for Canadian Payroll:

  1. Navigate to the Employee List page, by typing Employee List in Search
Employee List
  1. Select an employee, and choose the ‘Edit’ action. Or “New” to add a new employee
  2. The Employee Card will open, which displays various details for the chosen employee.

For the Employee record to be compatible with Canadian Payroll, ensure that the following conditions are met:

Field Description
First Name Mandatory
Last Name Mandatory
Address Mandatory
Email (or Private E-Mail) Recommended
Birth Date Mandatory for tax calculations
Employment Date Mandatory
Postal/ZIP Code Mandatory
Province Mandatory
Phone (or Private Phone No.) Recommended
Social Insurance No. / Social Security No. Recommended
Status Must be ‘Active’
Resource No. Mandatory

If the Payroll Service Setup is set to automatically configure employees, then a Resource will automatically be created and defined here.

If you are not using the automatic feature, then you must manually create a Resource, and associate that Resource here.

Pay Frequency Mandatory
Pay Periods Per Year Mandatory
Pay Type Mandatory

If Pay Type is Fixed Salary, refer to Salaried Employee Configuration.

If Pay Type is Hourly, refer to Hourly Employee Configuration.

Bank Payment Type Mandatory

If Bank Payment Type is set to ‘Electronic Payment’ or ‘Electronic Payment-IAT’, then a vendor bank account for the employee is required. To specify bank account information, choose the Bank Account action in the Navigate tab. This action on also available in the Home tab of the Employees page.

Payment Method Code Mandatory
Employment Province Mandatory
TD1 Claim Code Mandatory

The Federal TD1 code for the employee.

TD1P Claim Code Mandatory

The Provincial TD1P code for the employee.

Vendor No. Mandatory

This is the vendor that will be used in the Payment Journal when you pay your employees.

If the Payroll Service Setup is configured to have Automatic Employee Configuration, then this will automatically be defined.

CPP / QPP Deduction Set to ‘Deduct’ by default

If the employee is exempt from CPP deductions, then choose ‘Do not deduct’.

EI Deduction Set to ‘Deduct’ by default

Choose “Reduced” if employee is eligible for Reduced Premiums

If the employee is exempt from EI deductions, then choose ‘Do not deduct’.

PPIP QPIP Set to ‘Do not deduct’ by defaults.

Set to ‘Deduct’ if you need to deduct PPIP and QPIP entries.

Specific Hourly Rates Optional.

Specific hourly rates defined for this employee.

This is required for employees that have a different pay rate than the default for the paycode. The default rate will be used otherwise.

Use the ‘Hourly Rates’ action to define hourly rates.

Annual Taxable Income Mandatory for salaried employees, define this to be their yearly salary.

Their Gross Pay Per Salary Period will automatically be updated when you change this value.

Gross Pay Per Salary Period Mandatory for salaried employees, define this to be their gross pay per salary period.

Their Annual Taxable Income will automatically be updated when you change this value.

Salary Hours Per Period Mandatory for salaried employees that do not track all of their insurable hours in timesheets.

Step 15. Validate for Payroll

The “Validate for Payroll” action will attempt to do an initial validation against the minimum required setup fields for an employee.

Validate for Payroll

Hourly Rates: The hourly rates action will start a configuration page to allow you to define specific rates for pay codes for an hourly employee.

Bank Account: This will open the payroll bank account for the employee.

The bank account is connected to the vendor that is associated with the employee.

If your payroll service setup has Automatic Employee Configuration, then your vendor and a stubbed bank account will be created. A bank account is necessary to pay an employee electronically.

Change Year to Date: This will allow you to view current Year to Date totals for a given employee (not including any in-progress stubs). If you are migrating your payroll configuration this will allow you to enter current Year to Date totals from your previous system.

Record of Employment: This will allow you to create a Record of Employment for the employee. The employee must have a Status of “Inactive” or “Terminated” or you will receive a warning when you try to use this icon. This action will allow you to produce the required XML to be uploaded to the ROE Web page at Canada Revenue Agency.

Employee Variables: This will allow you to define the variables for your employee. Such as Vacation Accrual rates, specific deduction rates, etc.

Resource: This will allow you to navigate to the Resource Card for this employee.

Step 16. Hourly Employee Configuration

To configure an hourly employee navigate to the Employee’s card page, and edit the employee. ( by clicking on the link for the employee from the Employee List)

Employee Record

Scroll to the Payroll FastTab.

Set the Pay Type to ‘By Hours’.

Optionally set any specific rates with the “Hourly Rates” action.

Specify Hourly Rates

If no specific hourly rates are defined for an employee, then the default hourly rate for the pay code will be used when calculating gross wages.

Step 17. Time Capture for Hourly Employees

Time capture for hourly employees can be performed using the Time Sheets feature of Dynamics 365 Business Central, or by manually entering hours for an employee on the Payroll Worksheet page.

To configure Time Sheets for a Resource, refer to the Microsoft Documentation for Dynamics 365 Business Central “How to: Set Up Time Sheets”.

When you use the Payroll Worksheet to get hours from time sheets, the following rules apply:

  1. Only approved hours will be used.
  2. Only hours for resources associated with employees that are on your payroll run will be considered.
  3. The work types used on the time sheet must have appropriate mappings to pay codes.

Refer to Hourly Paycodes for setup required for hourly pay codes.

Step 18. Salaried Employee Configuration

Hours per pay period

The hours per pay period information is required to accurately produce the Record of Employment.

To configure a salaried employee:

  1. Navigate to the employee’s card page
  2. Go to the Payroll FastTab.
  3. Set the Pay Type to ‘Fixed Salary’.
  4. Under Salary, set values for either Annual Taxable Income or Gross Pay per Salary Period. The field you did not set will automatically calculate its value based on the value of the field you did set.
  5. Enter the Salary Hours Per Period

The following are examples of Pay Types, the corresponding number of pays per year, and hours per pay period.

The hours per pay period information is required for Records of Employment.

When the action “Get Hours” is performed on the Payroll Worksheet, the Salary Hours Per Pay will be configured for preparing a Record of Employment when required.

 

Step 19. Deductions, Reimbursements, and Other Earnings

Deductions allow you to set amounts that can be automatically subtracted from an employee’s paystub, such as income tax, or health insurance. Deductions for each employee can be viewed from the Payroll Worksheet page by choosing Deductions from the Actions tab. Benefits, Reimbursements, and Other Payment categories can be used for special pay cases that are not a part of regular income. These can be mapped to T4 Other Information codes if required. The Information category can be used for special accrual cases that do not fall under pay or deductions. Benefits, Reimbursements, Other Pay, and Information can be viewed from the Payroll Worksheet page by choosing Other from the Actions tab.

To access EDR Types:

  1. In the search bar, search for “Payroll Deduction, Reimbursements, and Other Earnings”
  2. Or from the Payroll Worksheet page choose “Deduction Setup”
Deduction Types

There are certain deduction types that are mandatory and are only allowed to have one configuration type, such as CPP and EI. If you remove these deduction types, they will automatically re-create.

To have a Deduction Type appear as a column in the Payroll Worksheet, set Show in Worksheet to ‘Visible’. Up to 10 Deduction Types can be shown on the Payroll Worksheet at once. More than 10 deductions can be applied.

However, you must use the Deduction Details action on the Payroll Worksheet to see the specific details.

To navigate to this screen go to the Actions Tab, and click on Deductions.

Deductions

And the following appears,

Payroll Paystub Deduction Details

The fields and descriptions are as follows:

Field Description
Code The deduction code to use.
Description A configurable description for the deduction.
Type The type of deduction.

For special mandatory deductions, such as CPP and EI, there will only be one entry.

Category Whether this is a deduction, taxable benefit, reimbursement, or other payment.
Expense Account No. Optional.

Which expense account to use.

When you define this field then the employer amount will be summed and transferred to journals.

If you omit this, then no expense entry will be created in the general journal when transferring payroll to journals.

Liability Account No. Optional.

This defines which liability account to use.

When you define this field then a liability journal entry that sums the employee amount and the employer amount will be created when transferring payroll to journals.

Show in Worksheet When set to ‘Hidden’, the deduction will not show on the worksheet, but will still be calculated.

When set to ‘Visible’, the deduction will show on the payroll worksheet.

Global Dimension 1 Code The default Global Dimension 1 Code to use. This is typically “Department” by default.
Global Dimension 2 Code The default Global Dimension 2 Code to use. This is typically “Project” by default.
Employee Custom Calc Amount Only applicable when the ‘Type’ field is set to ‘Custom’.

The employee amount on the deduction detail entry will be calculated as

(Gross Pay * Employee Custom Calc Percentage) + Employee Custom Calc Amount

Employee Custom Calc Percentage
Employer Custom Calc Amount Only applicable when the ‘Type’ field is set to ‘Custom’

The employer amount on the deduction detail entry will be calculated as

(Gross Pay * Employer Custom Calc Percentage) + Employer Custom Calc Amount

Employer Custom Calc Percent
Applies To Provides the ability to restrict this deduction to everybody, specific profiles, common employee groupings or specific employees.
Applies to Reference Who the deduction applies to is specified.
Information Return Whether the deduction type should be included in a T4 or T4 A return.
T4 Other Information Code Whether and which T4 Other Information Code applies to the deduction type.
T4A Other Information Code Whether and which T4A Other Information Code applies to the deduction type.
EI Benefit Whether the deduction type is included in EI Insurable earnings.
CPP Benefit Whether the deduction type is included in the CPP Pensionable earnings.
CRA Number The Canada Revenue Agency Payroll Identifier Number
RL1 Box The RL1 box for the values to report to, if applicable.
RL1 Other Information The Other Information Code or Box that applies to the type.
QPP Benefit Whether QPP applies to the benefit type
CPP Benefit Whether CPP applies to the benefit type
Benefit Totalling Whether the Benefit applies automatically, to the Employee and the Employer, or just the Employee or the Employer.

To review how the default dimensions defined on the deduction type affect detail entry, see Dimensions for more details.

Step 20. Hourly Pay codes

To configure hourly pay codes, search for the “Payroll Hourly Code and Work Type Configuration” page.

Payroll Paycode Configuration

If you are going to use Dynamics 365 Timesheets to enter hours, then you must also supply the work type mapping. The work type code is not needed if you only have salaried employees, or if you do not want to use timesheets in Dynamics 365 Business Central.

If a work type maps to more than one hourly pay code, then the first mapping that is found will be used when the hours are transferred to the Payroll Worksheet.

You can have up to ten different hourly pay code hours and rates shown as columns on the Payroll Worksheet by setting the value of Show in Worksheet. Choose from ‘Hidden’, ‘Show Hours’, ‘Show Rates’, or ‘Show Hours and Rates’ to specify how you want the hourly pay code to be displayed.

The following table describes each field related to hourly pay codes in Canadian Payroll.

Field Description
Paycode Case sensitive paycode to use.
Work Type Code The Work Type is used on NAV time sheets.
Default Rate This rate will be used to calculate the gross wage for hourly employees if no specific rate has been defined for a pay code.
Rate Overrides A lookup to specific rates.

To define employee specific rates, choose the ‘Employee Rates’ action.

Show in Worksheet When set to ‘Hidden’, the pay code will not be available as a column in the payroll worksheet and can only be viewed in the sidebar or edited in the ‘Income Details’ action on the Payroll Worksheet.

When set to ‘Show Hours’, an editable column on the worksheet will show available hours.

When set to ‘Show Wages’, a read-only column on the worksheet will show the calculated wages by the pay code.

When set to ‘Show Hours and Rates’ an editable column for hours will be visible on the worksheet, and a read-only value showing the breakdown for the wages for that pay code.

Global Dimension Code 1 The default Global Dimension 1 Code to use. This is typical “Department” by default.
Global Dimension Code 2 The default Global Dimension 2 Code to use. This is typically “Project” by default.
Expense Account Expense account for the wage type
EI Benefit Income Whether the pay type is EI Insurable
CPP Benefit Whether the pay type is CPP Pensionable
Income Type Which type of income the pay code is: Wages, Pension, Vacation Pay, Bonus, Retroactive Pay or Commission
Information Type T4, RL1 or Not Applicable
T4 Other Information Whether and which Other Information Code should apply to the Pay Type
T4A Other Information Whether and which Other Information Code should apply to the Pay Type
Available for Calculation Automatic or Unavailable
RL1 Box The RL1 Box for the values to report to, if applicable
RL1 Other Information The Other Information code that applies to this type if applicable
QPP Pensionable Whether QPP applies to the Pay Type
QPIP Insurable Whether QPIP applies to the Pay Type

Pay Code Income Types

The Pay Code Income Types of Wages, Pension Vacation Pay, Bonus, Retroactive Pay, and Commission are all taxed differently when passed through the tax engine.

Income Type Tax Method
Wages Normal as per CRA
Pension as per CRA
Vacation Pay Normal as per CRA
Bonus Bonus Tax Method
Retroactive Pay Bonus Tax Method
Commission If TD1X form has been completed

Employee Specific Rates

Specific Hourly rates are assigned to each Hourly employee upon hiring and can be changed at any time.

The Employee Specific Rates can be found by navigating to Payroll Employees > and then click on the link fort he applicable Employee. Then click on the Hourly Rates Icon.

Hourly Rates

Step 21. Dimensions

You can view or edit dimensions, such as area, project or department, that you can assign to sales and purchase documents to distribute costs and analyze transaction history. Default dimensions can be defined on:

  1. Deductions
  2. Hourly Pay codes
  3. Employees

Default Dimensions for Hourly Pay codes can be set by navigating “Payroll Hourly Code and Work Type Configuration” page and choosing Dimensions from the Action tab.

Default Dimensions are for Deductions can be set by navigating to the Configure Deduction Types page and choosing Dimensions.

When pay stubs are created, the Dimensions from the Employee are copied to the pay stub from the Employee record.

The detailed income entries for the pay stub and detailed deduction entries for the pay stub can either inherit the dimensions from the paystub, or use the dimensions defined in the pay code or deduction. This behavior is determined by the Detail Dimension setting.

When payment journal lines are created with the Transfer to Journals action on the payroll worksheet, then dimensions can either be copied from the paystub for the employee or the standard Dynamics 365 Dimensions behavior can be used.   The behavior is dictated by the Payment Journal Posting Dimension Behavior setting.

Dimensions

When you click on Dimensions from the Payroll Worksheet page, the following new window appears.

Edit Dimensions

Payroll Service Setup – Dimensions

In Payroll Service Setup, ensure that the following three fields are configured as shown.

Field Value
Payment Journal Posting Dimension Behaviour Copy from Paystub
Detail Dimension Behaviour Use Paystub
Detail Post Dim Behaviour Use Detail

The next step is to make sure that the dimensions are set up in the Dimensions section of the General Ledger Setup.

General Ledger Setup

On the Employee Card, the applicable Dimension has attached the employee.

Dimension Department

After the dimension are set up when a new payroll is created the dimension will copy from the Employee Card onto the Payroll Worksheet.

Payroll Worksheet

Note: This will copy from the Employee Card, however, it can be changed manually on the Payroll Worksheet.

Deductions, Income Details, and other benefits, reimbursements,etc, will copy those dimensions from the payroll worksheet when they are automatically created.

Deductions

When the function “Transfer to Journals” is completed, the payment journal will also get the dimension value.

The General Journal will also be further defined by the dimension.

Step 22. Security

Canadian Payroll provides configuration options that ensure that sensitive payroll information will only be shown to the right people. This is done by:

  1. Filtering Employee Paystubs
  2. Filtering employment payment information by hiding Vendor Ledger Entries, and Detailed Vendor Ledger Entries.

Employees are only permitted to see their own Paystubs, which is related to the Timesheet Owner User ID field of the Resource that is set for the given employee. However, any user that has the ‘PAYROLLPRO’ or ‘SUPER’ permission set, or is otherwise able to create and write pay stub details will also be able to view any employee paystub.

A user must have the ‘PAYROLLPRO’ Payroll Processor Permission Set to view Vendor Ledger and Detailed Vendor Ledger Entries. These records are automatically assigned the Reason Code “PAYROLL”. When Canadian Payroll encounters an entry with this Reason Code, it checks if you have Payroll Processor permissions. If not, you are not permitted to view the record.

Step 23. Employee Access and Employee Portal

For employees to access their payroll information with Canadian Payroll the following criteria must be met:

  1. Their User records must have the Payroll Employee (‘PAYROLLEMP’ set) permission
  2. The employer must have a valid Dynamics 365 Business Central User License.
  3. The employee’s User ID must be associated with the “Time Sheet Owner User ID” field on the appropriate resource card for the employee.

Step 24. Initial Year to Date entries

If you are transferring payroll records for an employee from another system to Dynamics 365 Business Central, you may have to specify initial values their Year to Date (YTD) Income, and Deductions.

To manually change an employee’s YTD entries, navigate to the Employees page, and select an Employee record. On the Employee Card page, choose Change Year to Date. From the new page, you can specify new YTD Income and Deduction entries, as well as modify any existing entries.

Change Year to Date

A new window will appear allowing you to make modifications.

Modifications

Note: Modifying Year to Date entries will affect the Year to Date entries on any open Paystubs for the employee.

Year to Date modifications cannot be performed in bulk; each Employee record must be changed individually.

Step 25. Custom Calculations

Custom calculations can be used for Custom EDR types. To create a custom calculation, navigate to Payroll Deduction, Reimbursement, and Other Earning Type Configuration. Choose the All Calculations action in the Actions tab.

  • Enter a code for the calculation under No.
  • Enter a more detailed description under Description.
  • Select Edit
  • Keep Calculation Logging set to Do Not Log unless otherwise indicated by support.
  • Use the type and indentation to build a formula
  • Ex: (4 + 5) * 3
Custom Calculation
  • Types of Sum, Difference, Multiply, Average, Divide, Absolute Value, Min, Max, and Round do not require an Input variable or a Value. Instead they apply the operation to items below that are indented by 1 from the operation type.
  • The Type of Constant requires an amount under the Value column.
  • The Type of Variable requires a variable under the Input column.

Step 26. Operational Checklist

The following subsections include information about performing daily, monthly, and annual procedures, as well as other related tasks.

Daily

No procedures related to Canadian Payroll are required to be performed daily.

If you are using D365 Time Sheets, then you should approve hours before payroll is processed.

Monthly

Validate employee configuration records. To make sure that Canadian Payroll settings are correct for an employee, go to the Employees page, and choose an Employee record. After the Employee Card page is shown, check the Payroll FastTab to view the employee’s payroll information.

Ensure that employee active status, pay rates, address information, and tax information is correct.

Annually

Validate payroll configuration. To ensure that your Canadian Payroll settings are up-to-date, go to the Payroll Service Setup page, and review your selected settings.

Ensure that employee active status, pay rates, address information, and tax information is correct.

Related Tasks

Payment processing for employees must be performed when you are processing payroll in the Payroll Worksheet. Payment Frequency can be monthly, semi-monthly, bi-weekly, or weekly, or any combination of those frequencies.

A default frequency is set on the Payroll Service Setup, however, can be changed for each employee on the Employee Card page.

When auditing payroll, or performing financial audits, please ensure that the auditor has access to the ‘PAYROLLEMP’ permission set or a permission set that will show the vendor ledger entries and detailed vendor ledger entries.