SAP HCM Canadian Development

1. SAP HCM Canadian Development Kim LaPierre; SAP Canada

2. Learning Points • HCM Canadian Development • Legal Change Process • 2010 Development Update • Upcoming Events

3. Legal Change process • Yearend Changes – December • SYNCH HRSP available in the month of June. • Base CLC/HRSP available in October, which acts as a prerequisite for Year end changes. • November CLC for CSST changes (specific to 2010 only) • 1st set of changes released by December 1st. Changes typically include Forms, Tax engine and customizing. • Incase further changes are published, Changes are released by 15th of December. • January CLC will contain consolidated Year End Changes • Additional information http://service.sap.com/hrcanada

4. Legal Change process • Midyear Changes - June • Base HRSP / CLC delivered in April, which acts as the prerequisite for midyear tax changes. • Mid Year Tax Changes released in June. • July CLC for Canada will contain consolidated Mid year Changes.

5. 2010 Development update • HST for Ontario and British Columbia • SAP analyzed customer use of HST, GST and PST in payroll processing of benefit contributions. • Many customers use delivered functionality as a "model” • Changes released to customers were documented “guidelines” with specific examples to SAP standard delivered constants and payroll rules • Tax changes in first half of 2010 • Segregation of taxes for Retiring Allowances and other items reported on the T4A in preparation for the move of Retiring allowance boxes to the T4 • July 1st Mid Year Tax Changes

6. 2010 Development update • Employment Equity update • HRSDC replaced the Employment Equity Computerized Reporting System (EECRS) reporting system with Workplace Equity Information Management System (WEIMS) • SAP released changes to the extract file from RPLEAK00 to conform to the new file specifications • Prescribed Interest Rate • SAP released a note (1414844) in January 2010 with the Federal Government prescribed interest rate. As the rate did not change throughout the year, no subsequent note was delivered. • Starting in 2011, SAP will deliver a quarterly note, even if the rate remains unchanged.

7. 2010 Development update • Change to Bonus Tax Calculation (Change #1) • In January 2010, CRA added a note to the T4127 guide indicating that if the estimated Annual remuneration of the employee is $5,000 or less the tax is calculated as 15% of the bonus (10% for Quebec. • SAP has updated the tax formula to follow this direction from CRA. The change will be delivered with the yearend base HRSP.

8. 2010 Development update • Change to Bonus Tax Calculation • In the Bonus tax calculation section of the T4127 guide, there is a formula (Step 2) that is used to calculate Estimated annual earnings • A = [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B1 – F4) • the guide also indicates that “if there is no current I, use the most recent I” • Two problems exits with this CRA guidance. • If there is no current “I” actually means if “I” is zero or is less than the usual amount • …use most recent “I” • CRA have indicated that this is not necessarily the most recent “I” but is the average or usual or typical “I”.

9. 2010 Development update • Change to Bonus Tax Calculation (change #2) • If there is no current “I” actually means if “I” is zero or less than usual • Currently, SAP provides functionality to configure wage types to be used for estimation of gross in case of missing regular pay for salaried employees. The WT's can be configured in table T51P1 with indicator R3 . If the sum of the WT's is zero, the basic pay from IT0008 is used in estimation. • As of January 1, 2011 even if the sum of R3 wage types is only a percentage (configurable) of earnings in IT0008, the IT0008 amount can be used in estimation. The constant KTHPE can be configured in T511K to achieve this. For example, if you wish to use IT0008 value for estimation when current earnings are less than 20% of IT0008 earnings, set KTHPE to 0,20.

10. 2010 Development update • Change to Bonus Tax Calculation • …use most recent “I” • In some cases however, even this value may not be very accurate. For example the most recent 'I' may again be zero or a very small percentage of regular earnings. • To overcome the above problem, as of January 1, 2011, provision has been made to use the average year-to-date values instead of the most recent.

11. 2010 Development update • Change to Bonus Tax Calculation (#3) • …use most recent “I” • CRA provides the below formula for calculation of annual taxable income using the YTD bonus calculation method: • A = [(IYTD - FYTD - F2YTD - U1YTD) + (PR × (I - F - F2 - U1)) - F1 - HD]* + (B - F3)** + (B1 - F4)** • In the above formula, in case of missing regular pay, the values of I, F, F2 and U1 will be replaced by their respective YTD average values. To enable this, constant KAVGF in table T511K should be set to 1,00. • If this new YTD average process is not used (KAVGF flag not set to 1.00) then the existing IT0008 income estimation process will be used

12. 2010 Development update • CSST • To be released in November via a CLC • Changing from Annual remittance to CSST based on estimated earnings to Pay Period remittance to MRQ based on actual earnings • Introduction of a new Periodic Payment Rate (blended rate) for employers with multiple rates • Post yearend reconciliation of amount paid by using the Periodic Payment Rate and what would have been paid if you used the actual rates. • SAP will provide • new T511K literals to store the Periodic Payment Rates • Additional functionality in KFTAX to calculate CSST • New technical wage types • Changes to the TPZ-1015.r • Changes to be delivered via a CLC in November 2010.

13. 2010 Yearend Update • Payroll yearend Master Note (1505886) has been published • This note informs you of legal changes that relate to Year End 2010 processing within Canadian Payroll. The Country Legal Changes (CLC) contain functionality that affects Year End Reporting for 2010, Year End Adjustments, Audit (Reconciliation) Reporting, and taxation changes that take effect on January 1, 2011. • The yearend master note is updated as required throughout the yearend season. • For additional information on Year End 2010 for Canada Payroll, consult SAP Service Marketplace at www.service.sap.com/hrcanada then click on the link for yearend on the left hand side.

14. 2010 Yearend Update • Yearend Support • Requests for assistance logged through OSS with component (PY-CA-YE) • SAP Canadian development team will monitor OSS and will pick up these messages directly • If your OSS support is normally picked up by a third party (SMB market), please insert the following text at the beginning of your message. • As this message is related to Canadian payroll yearend support, and since SAP Canada is monitoring OSS for messages using component PY-CA-YE, the processing for this message will be picked up by SAP as part of the Canadian Yearend support program

15. 2010 Yearend Update • Canadian Payroll yearend training • The following information contains the current schedule for SAP payroll yearend training. As this schedule is subject to change, please refer to the SAP Education webpage for the most up to date schedule. This information can be found at: www.sap.com/services/education • HR707 – Canadian Yearend Reporting • December 13 – 14, Toronto • December 16 – 17, Ottawa

16. 2010 Development update • T4A Redesign • Move Retiring Allowance (box 26 and 27 of T4A) to the T4 • Redesigned T4A slip • New Box 48 “fees for services” on T4A

17. 2010 Yearend Update • Cancelled RL-1 and RL-2 slips • MRQ has mandated that software vendors must support “Cancelled” RL slips in order to be certified. • SAP has satisfied the business need in the past by producing “zero value amended” RL slips. • As of payroll yearend 2010, SAP is providing the cancelled RL slip functionality which will include: • The creation of a new extract file, • Yearend workbench changes and • A change to the slip itself • Printing Annule • Remainder of slip is unchanged from original

18. 2010 Yearend Update • Wage Loss Replacement programs • Federal court ruling has determined that some WLRP are not subject to CPP. • CRA still discussing with HRSDC • CRA will be releasing a Q&A guide shortly • This ruling allows for retroactive recalculation for non-pensionable earnings. • While no system changes will be required from SAP, if your WLRP is deemed to be not subject to CPP, you will have to make some configuration / procedural changes to accommodate this.

19. Future Development • Web ROE • Convert extract file to XML • Update extract file to conform to new specification • CPP Changes (Bill C51) • Elimination of a need for an interruption in employment to collect CPP benefits • Change to the penalty for early collection of benefits • Introduction of enhanced benefits if you continue to contribute beyond age 65, while continuing to work. • Option to elect whether to contribute to CPP while working between the ages of 65 and 70. • If you have concerns or thoughts on any issues that might arise with this update, please let me know as I am on a CPP Action Task Force with the Canadian Payroll Association, working with CRA, Service Canada and HRSDC.

20. Future Development • Report on Hiring (ROH) • Develop the file extract to conform to the XML specifications

21. Upcoming Events • Canadian Yearend 2010 Webcast • Update on legislative payroll changes, • Yearend training and • Upcoming Canadian HCM and Payroll development. • When: November 17, 2010 at 2pm ET. • Speaker: Kim LaPierre

22. Upcoming Events • Canadian ASUG Chapter meetings • Western Canada Chapter • November 16, 2010 • Where: Suncor Inc in Calgary, AB • Ottawa Chapter • BW/BI/BOBJ/Crystal Reporting theme • November 3,2010

23. Upcoming Events The 2010 SAP World Tour is the premier event for Canada’s business leaders. This one-day forum features a timely and engaging series of presentation tracks focused on visionary ideas, innovative strategies, and customer testimonials. Montreal | Le Westin Montreal | October 21, 2010 Vancouver | Four Seasons Hotel | October 26, 2010 Toronto | Allstream Centre | October 28, 2010 REGISTER NOW: www.sap.com/canada/wt2010

24. Activities • Semi-annual 2 day meeting in Ottawa with federal government • Semi-annual Steering committee meeting with CRA and Service Canada • Ad hoc meetings with Service Canada and CRA • Liaison between SAP customers and government agencies • Participation in various FGRAC subcommittees • Web ROE usability • ROE guide rewrite (delivered) • CRA – Tax simplification • Publication Readability • Service Canada data requirement inventory and Reporting rationalization • CPP Legislative changes The Role • Vice Chair of the FGRAC (Federal Government Relations Advisory Council) • SME with CPA for • Legislative change review • CPA training material review SAP’s work with CPA – Federal government relations

25. ] • Thank you for participating.

26. ROE Enhancement • ROE functionality and report being enabled to conform to the “Summary Chart of insurable earnings and hours” as mentioned in the ROE Guide. • Enhancement will allow wage types for Insurable earnings to be assigned to the period FOR which they are paid or the Period IN which they are paid Year 2010 ReviewRoad Ahead....

27. 2010 Yearend Update • Wage Loss Replacement programs • Federal court ruling has determined that some WLRP are not subject to CPP. • CRA still discussing with HRSDC • CRA will be releasing a Q&A guide shortly • This ruling allows for retroactive recalculation for non-pensionable earnings.