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One blog post closer to clean books.
Each blog post from the Castle team is packed with practical tips, real-world experience, and clear answers to common bookkeeping questions. Whether you're sorting expenses or planning for tax time, you'll find guidance to help you run your business with clarity and confidence.
Terms of Service
Welcome to Castle! These terms of service outline the rules and regulations for the use of our bookkeeping services.
By accessing this website and using our services, you accept these terms and conditions in full. Do not continue to use Castle services if you do not accept all of the terms and conditions stated on this page.
Castle offers professional bookkeeping services including transaction categorization, reconciliations, financial reporting, GST/HST filing, and other related services as agreed upon with the client.
2. Billing and Payments
All services provided by Castle are billed on a recurring basis unless otherwise
agreed upon. Payments are due upon receipt of invoice. We accept payment via credit card, debit card, and electronic funds transfer.
3. Cancellation and Refund Policy
Clients may cancel services at any time by providing 30 days’ notice in writing or via email. Refunds for prepaid services will be prorated based on the remaining unused portion of the services.
4. Privacy Policy
Our privacy policy outlines how we collect, use, and protect your personal information. We do not sell or share your information with third parties without your consent, except as required by law.
5. Liability
Castle will perform all services with reasonable care and skill. However, we do not accept liability for losses resulting from acts of nature, third-party errors, or misuse of financial information or reports by the client.
6. Amendments
Castle reserves the right to amend these terms of service at any time. Amendments will be effective immediately upon posting on this website.
7. Contact Us
If you have any questions about this privacy policy or our privacy practices, please contact us at:
Castle
316 1st Ave NE
Phone: 587-872-0602
Email: info@bookwithcastle.com
One blog post closer to clean books.
Each blog post from the Castle team is packed with practical tips, real-world experience, and clear answers to common bookkeeping questions. Whether you're sorting expenses or planning for tax time, you'll find guidance to help you run your business with clarity and confidence.
How to Handle Vacation Pay, Bonuses, and Retroactive Adjustments Without Breaking CRA Rules
1. Understanding Vacation Pay Options
In Canada, vacation pay is usually 4 % or 6 % of gross earnings depending on years of service.
You can either:
- Pay it each pay period (added to every cheque), or
- Accrue it and pay it out later when the employee actually takes vacation.
Both are fine — but whichever method you pick must be consistent and clearly shown on pay stubs.
Best practice:
If the employee is salary-based, accrue it; if hourly, pay it each period. Wagepoint, QuickBooks, and other platforms can track both automatically once you set the rate.
2. Paying Out Accrued Vacation
When an employee takes time off or leaves, you must pay out any unused vacation balance.
That payout is treated like regular income — subject to CPP, EI, and income tax.
In Wagepoint, use the built-in “Vacation Payout” earning type so it’s taxed correctly and the balance resets.
Avoid simply writing a cheque outside the system; it throws off both CRA records and your T4 totals.
3. Handling Bonuses the Right Way
Bonuses are considered supplemental income, and CRA expects tax withheld accordingly.
You have two choices:
- Add it to a regular pay run – deductions are based on the employee’s total pay.
- Run a separate bonus pay run – CRA recommends using the bonus method, withholding at the employee’s current tax rate or higher if it’s a large amount.
If you’re unsure, add the bonus to a regular pay run — that ensures CPP/EI caps and tax rates are calculated properly.
4. Correcting Retroactive Pay
If you forgot to adjust a wage rate, or missed hours from a prior period, you’ll need a retroactive adjustment.
Never edit an old pay run once submitted to the CRA. Instead, create a new run with the difference only.
Label it clearly (“Retro pay for Sept 1–15”) so your books and the employee’s record both make sense later.
CRA treats that top-up as income in the pay period it’s paid, not the one it was earned — so you don’t need to refile old remittances.
5. Keep the Paper Trail
Document every change — why the adjustment was made, which period it relates to, and the approval or request that triggered it.
This helps if CRA or your accountant ever reviews your T4 summaries.
Final Thought
Bonuses and vacation payouts are great problems to have — they mean people are being rewarded or taking time off.
The key is to record them cleanly and consistently.
At Castle Bookkeeping, we handle these adjustments every month for clients, ensuring CRA deductions, ROEs, and year-end slips stay perfectly aligned.
Next up in the series:
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