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Determining an Employee's Gross Earnings

Accounting Manual 18–3

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Confidential ACCPAC International

manually requires the use of the tables in the applicable

Revenue Canada booklets.

An employer must keep two types of payroll records: their own

and their employees'. The employer, of course, needs to know

what their expenses and payables are as a result of paying their

employees. Therefore, the employer keeps records so that the

company’s financial statements correctly account for the

amount paid, and to be paid to the employees.

Because the employer deducts money from the employees'

paycheques, they must keep fully detailed records of each

amount deducted from each employee's paycheque. The

employer needs the deduction information to be able to

complete and issue T4 slips to each employee at the end of each

calendar year, and to be able to answer any questions the

employees may have regarding the composition of their

paycheques. Both the employer's and the employees' records

should be updated each time a set of payroll transactions have

been completed.

Determining an Employee's Gross Earnings

An employee's gross earnings for a pay period are the total

amount of compensation that the employee receives during that

pay period; a pay period being the period of time between an

employee's paycheques. Revenue Canada restricts you to using

1, 10, 12, 13, 22, 24, 26, or 52 pay periods per year.

The most common components of gross earnings include:

Regular Pay

Overtime Pay

Salary

Commissions

Taxable Benefits

Vacation Pay paid out

_________

Gross Earnings