Tax Option 1 vs 2

HRP uses tax option 2.  This can sometimes be confusing for new customers coming off of software that uses Tax Option 1.

See Chapter 4 in the following  document from cra:

https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas/t4127-jan/t4127-jan-payroll-deductions-formulas-computer-programs.html#toc31

In general Option 1 focuses more on the CURRENT pay period amount and annualizes the tax owing by multiplying by the # of pay periods per year.

In contrast, Option 2 (Edsembli way) is based on cumulative averaging, which means taking into account the YTD values and projecting the tax owing using what has happened so far in the current taxation/calendar year.  

It is strongly recommended for new clients (and existing ones!) to use the built in tax analyzer to explain questions about how HRP calculates taxes.