Implementation Checklist: Setting up contributions and deductions with your payroll provider – Common Wealth

When setting up TFSA, RRSP, and DPSP contributions and deductions for employees, it’s essential to consider the following key questions to ensure proper payroll and tax reporting:

Consider these important setup questions…
Contribution Types and Employer Contributions	What types of deductions are being processed? Are you processing deductions for TFSA, RRSP, and/or DPSP contributions?
	Will there be employer contributions, and for which products? Are contributions being made to the TFSA, RRSP, or DPSP plans on behalf of employees?
	Are employer contributions a taxable benefit? TFSA and RRSP: Employer contributions to these plans are considered taxable benefits. Set them up accordingly to ensure proper T4 reporting. DPSP: Employer DPSP contributions are not a taxable benefit for the employee. However, they must be reported in Box 52 (Pension Adjustment) on the T4.
	Will employer RRSP contributions be restricted? Employees may not withdraw employer contributions until retirement or termination of employment unless allowed by the Home Buyers' Plan (HBP) or Lifelong Learning Plan (LLP). If restricted, do not apply EI payroll deductions.
Matching Contributions and Deductions	Are you offering employer matching contributions? Will contributions be matched for both TFSA and RRSP? Ensure proper deductions and tax reporting for CPP, EI, income tax, and CRA slips.
	Is there a maximum employer matching amount? For example, contributions may be matched up to 4% of earnings, capped at $3,000 annually.
Frequency and Calculation of Contributions	How will contributions be deducted? Will contributions be deducted as a percentage (%) of earnings or as a fixed dollar ($) amount from each pay?
	What earnings will be included in the contribution calculation? Will the contributions be based on base earnings, overtime, commissions, or a combination?
	How often will contributions be made? RRSP/TFSA: Will employee deductions and employer contributions be made every pay period (e.g., bi-weekly)? DPSP: Will DPSP contributions be made with each pay or on an annual basis?

By considering these questions, you can ensure that your TFSA, RRSP, and DPSP contributions and deductions are set up correctly, allowing for smooth payroll processing and accurate tax reporting.