Canada garnishment calculations

For Canada garnishments, Payroll:

  1. Finds the garnishment rule. How does Payroll decide which Garnishment Rule to Use for each Garnishment?
  2. Calculates available wages using the following logic:

    Gross Pay - (Taxes + Excluded Pay + Excluded Deductions)

  3. Calculates the wages exempt from garnishment (protected income) based on the formula assigned to the garnishment rule.
  4. Subtracts the wages exempt from garnishment from available wages to calculate the amount that is available for the garnishment.

    If the application has already calculated another garnishment for the employee, it is also deducted in this step of the calculation using the following logic: Available Wages - (Exempt Wage Amount + Calculated Garnishments)

  5. Calculates the garnishment deduction amount (this includes one-time deductions that are not refunds) using the calculation type defined on the garnishment deduction.
  6. Subtracts garnishment, court-ordered arrears, and fees deduction amounts from the amount available for garnishment (in that order). The application calculates the garnishment amount based on the arrears option defined for the deduction code.

    If the multiple garnishment rule applies, the garnishment is calculated based on the multiple garnishment rule.

    If partial amounts are withheld for garnishments, the application will follow the arrears value defined for the garnishment deduction for creating one-time deductions for the remaining balance.

Example Canada

Grace Whitby has a Manitoba garnishment for 300.00. She does not have any dependents. Her gross pay is 3,000.00, with 1,000.00 in withholdings.

A garnishment rule is defined for Manitoba. The garnishment rule uses formula 63. The exempt wages must be the greater of 70% of available wages or 250 but cannot exceed 90% of available wages.

The garnishment deduction code is defined as a flat amount. The arrears option is Net to Zero - Yes.

The following steps show how the garnishment is calculated:

  1. The application finds a garnishment rule for the Governing Tax Authority Manitoba and Type 8-Garnishment.

  2. Available Wages = 2,000.00

    Gross Wages Less Taxes + Excluded Pay + Excluded Deductions Equals Available Wages
    3,000 - 1,000 = 2,000

  3. Exempt Wage Amount = 1,400.00

    2000 * 70% = 1,400 (basic exempt amount)

    2000 * 90% = 1,800 (maximum exempt amount)

    250 = minimum exempt amount

    250 < 1,400 < 1,800

    Therefore, 1,400 is the exempt wage amount

    Note: If a previous garnishment was calculated for Caroline, that garnishment amount would also be subtracted in step 4.

  4. Amount Available = 600

    Available Wages Less Exempt Wages Equals Amount Available
    2,000 - 1,400 = 600

  5. Garnishment Deduction Amount = flat amount of 300; therefore,

    Garnishment Amount = 300.00

The amount remaining is positive (600.00 - 300.00 = 300.00), so the garnishment is paid in full. Any court-ordered arrears and additional fees are deducted from the remaining 600.00.