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Administrator Guide
Last Updated: 2024-07-26
Concept: Pay and Tax Calculation in Predecessor and Successor Companies (CAN)

Concept: Pay and Tax Calculation in Predecessor and Successor Companies (CAN)

Predecessor Payment Status
Successor Payment Status
Payroll In Progress
Not Started.
You must complete all payments in the predecessor company before you add workers to the successor company.
Payroll Complete
You can start off-cycle pay input for successor company workers.
Enter predecessor year-to-date values in the successor company for CPP/CPP2, QPP/QPP2, EI, QPIP, and QPIP (ER).
Successor Payment Status
Successor Company Process
Off-Cycle In Progress
Canada Revenue Agency sent approval. Payroll with the predecessor company is complete.
Verify your predecessor entries in the successor company.
Off-Cycle Complete
Predecessor values are verified in the successor company and are used in the calculation.
Annual limits in the successor company consider the predecessor values entered.
K-2 credits are accurate when considering predecessor values in the calculation of CPP/CPP2, QPP/QPP2, EI, and QPIP.
Example:
Company A (predecessor) acquires Company B (successor) on 07/01/2024. Both companies are in Workday.
  • Obtain a Canada Pension Plan or Employment Insurance Act ruling from the Canada Revenue Agency.
  • Complete all payroll in Company A prior to Company B obtaining values for CPP/CPP2, QPP/QPP2, EI, QPIP, and QPIP (ER).
  • Create a manual (off-cycle) pay input with payroll input for your worker in Company B with these pay components before you calculate on-cycle pay input for your workers in Company B:
    • Predecessor Credit Allowance (when applicable)
    • Predecessor Deducted Amount
    • Predecessor Taxable Wages
  • Enter the YTD values for:
    • CPP/CPP2
    • QPP/QPP2
    • EI
    • QPIP
    • QPIP (ER)
  • Verify your pay input:
    • Confirm the annual maximum limits for the pay components have not exceeded the annual limits.
    • Confirm the credit allowance has been prorated and entered correctly. (July 1 payroll, semi- monthly. The worker has a CPP credit allowance of $145.82 X 12 = $1749.96)
    • Confirm there are no negative values entered for your worker.
    • Confirm the Amount fields are 0.
  • Complete the Off-Cycle payroll.
  • Run an on-cycle pay calculation for Company B so that it is
    In Progress
    .
  • Verify the year-to-date values for the workers who have predecessor values.
When the Company B payroll is
In Progress
:
  • The values paid, deducted and remitted in the predecessor company are included in the tax calculation with the successor company.
  • Workday recalculates taxes considering the taxable wages and tax limits from Company A, the predecessor company.
  • K-2 credits are applied accurately because all values are considered.
When the Company B payroll is
Completed
:
  • The values paid, deducted and remitted by the Predecessor Employer remain the responsibility of the Predecessor Employer.
  • Your worker will receive a year end tax form from the Predecessor employer and the Successor Employer. The YTD tax data will not merge.
  • The predecessor and successor employer will complete year end forms; PIER reporting; and ROE filing as separate legal entities.
  • The remittance reports will provide the tax data and remittance information for your Successor employer, and will not include Predecessor amounts.
  • The Year End data and reporting will provide tax data for the Successor employer, and will not include Predecessor amounts.