When the CRA is unable to collect an amount owing with an employee to pay their debt, they may request funds from the employer called a garnishment. A garnishment will inform you that some or all money is now payable to the government. This article will outline how to create this as a payroll category and set it up so that it is either a percentage of gross pay, a percentage of net pay, or a flat dollar amount. 

Note: This article is not a payroll guide. You are encouraged to seek out the Canada Revenue Agency or the advice of your tax professional for information about garnishments and its relevance to your organization.

Setting Up a Garnishment (Percentage of Gross Pay)

1. Navigate to Payroll Setup > Payroll Categories.
2. Click the “+ New” button in the upper left corner of the page.
3. Select “Permanent Deduction” from the classification menu.
4. Enter a "Code", "Name", and "Paystub Abbreviation" that’s appropriate. If you do not want this payroll category to appear on your employees’ paystubs, toggle off "Paystub Abbreviation" and do not enter any values into the field.
5. Navigate to the Formula tab of the payroll category setup page. 
6. Enable the formula and ensure the activated dropdown field is set to 'Amount'. 
7. Include all earnings that are considered in the garnishment percentage in the formula box. Ensure that you're separating the earnings with a "+", as to sum all earnings into the formula.
8. Enter the "*" and click the orange "ASSIGNED AMOUNT" button. 

       9. Enter "/100.00" using the calculator to make the assigned rate a percentage.

      10. Click the save icon on the upper right corner of the page.

      11. Navigate to Payroll Employees > Assign Payroll Category, or Payroll Setup > Assign Payroll Categories. Assign your newly-created payroll category to the applicable employees. Ensure that you enter the percentage in this area as well under "Amount".    

Setting Up a Garnishment (Percentage of Net Pay)

1. Navigate to Payroll Setup > Payroll Categories.
2. Click the “+ New” button in the upper left corner of the page.
3. Select “Permanent Deduction” from the classification menu.
4. Enter a "Code", "Name", and "Paystub Abbreviation" that’s appropriate. If you do not want this payroll category to appear on your employees’ paystubs, toggle off "Paystub Abbreviation" and do not enter any values into the field.
5. Activate the toggle for the "Maximum". This will enable you to select an option from the corresponding dropdown menu to the right of it. 
   
6. From the dropdown menu, select '% of Net Pay'.

      7. Navigate to the Formula tab of the payroll category setup page. 

      8. Enable the formula and ensure the activated dropdown field is set to 'Amount'. 

      9. Include all earnings in the formula box. Ensure that you're separating the earnings with a "+", as to sum all earnings into the formula. 

     10. Click the save icon on the upper right corner of the page.

     11. Navigate to Payroll Employees > Assign Payroll Category, or Payroll Setup > Assign Payroll Categories. Assign your newly-created payroll category to the applicable employees. Ensure that you enter the percentage in this area as well under "Maximum". 

Setting Up a Garnishment (Flat Dollar Amount)

1. Navigate to Payroll Setup > Payroll Categories.
2. Click the “+ New” button in the upper left corner of the page.
3. Select “Permanent Deduction” from the classification menu.
4. Enter a "Code", "Name", and "Paystub Abbreviation" that’s appropriate. If you do not want this payroll category to appear on your employees’ paystubs, toggle off "Paystub Abbreviation" and do not enter any values into the field.
5. Ensure the "Basis" is set to 'Salary'. 

       6. Click the save icon on the upper right corner of the page.

       7. Navigate to Payroll Employees > Assign Payroll Category, or Payroll Setup > Assign Payroll Categories. Assign your newly-created payroll category to the applicable employees. Ensure that you enter the amount in this area as well under "Amount".