When entering transaction history adjustments for CPP or EIR1, what is the difference between ceiling wage and no ceiling wage?
Both CPP and EI have maximum pensionable and insurable earnings each year. This is the reason for the ceiling / no ceiling wage columns. When adjusting Box 24 (insurable earnings) or Box 26 (pensionable earnings) in the T4s, the values in these fields become important.
Entering values in the 'no ceiling wage' column does not impact the T4. Entering values in the 'ceiling wage' column will update the appropriate boxes on the T4, and may also be accompanied by a warning message when saving the transaction history entry. Let's look at a specific example.
An employee has maxed out on pensionable earnings, but a portion of the year's payroll was entered in another system, so an adjustment must be made to bring everything into Sage in order to print an accurate T4 slip. The employee is missing $20,000 of salary that must be entered, and the current YTD values in Sage are: CPP deductions - 1,971.86 and pensionable earnings - 41,539.20. Adding the 508.09 to bring him up to the max of 2479.95 (for 2015) is done by entering that value in the Employee Extended Amount column. Here are the options for entering the pensionable earnings:
- Entering the full 20,000 in the 'no ceiling wage' column will have no impact at all on Box 26
- Entering the full 20,000 in the 'ceiling wage' column will result in an error message when trying to save the transaction history entry, 'warning, wage base entered for tax base CPP is greater than the maximum of $53,600 for this tax'. This is a warning only, and the entry can be saved. Box 26 is updated to the maximum amount of 53,600, even though the totals are actually 61,539.20.
- Entering the full 20,000 in both columns 'ceiling wage' and 'no ceiling wage' will have the same result as entering the full amount in the 'ceiling wage' column alone
- The 'most correct' solution then, is to split the 20,000 into both the columns, entering the difference between the existing amount and the maximum in the 'ceiling wage' column and entering the difference between the 20,000 and the 'ceiling wage' amount and entering that balance in the 'no ceiling wage' column, as in this screenshot:
This results in no warning being displayed, and the maximum amount of pensionable earnings will be displayed in Box 26.
Note: in this example, no value is entered in the Employer Extended Amount column. This field does not impact the T4, but will have an impact on the CRA Remittance report. Therefore, if correct values are needed for remittance purposes, ensure that the correct employer amount is also entered. Keep in mind that any transaction history entry does NOT affect the general ledger, it only updates payroll ytd values.