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The feature request is to allow the defining of current liability accounts for pay items with pay types set to Deductions, Payroll Taxes, and Post-tax Deductions. This will enable the tracking of payroll source deductions and taxes necessary for remittance reports to the tax authority (such as EI, CPP and income taxes for T4 and T4 summary completion in Canada).

There are two ways I believe Xero developers could achieve this goal.

Below is an explanation of what currently happens during pay runs:

For pay items with a pay type set to Wages, Allowances, or Non-taxable Allowances, the journal entry is credit Wages Payable the amount of net pay and debit the expense account defined when setting up the pay item. A separate pay stub is created for each employee that acts similar to a bill but is not editable. You must void the pay run and recreate if an error was made.

For pay items with a pay type set to Deductions, Payroll Taxes, Post-tax Deductions, or Employer Contributions, the journal entry is credit Accounts Payable for the full amount and debit the expense account of the expense account defined in the first pay item selected from the group above on the paystub, with exception of Employer Contributions which you can define the expense account when setting up the pay item. Xero will create a separate bill for each of these pay items in the name of the Contact defined when setting up the pay item.

To void a pay run, you must first remove all payments applied to bills or pay stubs related to that pay run. Voiding deletes all pay stubs and bills created for that pay run.

The first strategy would be to select a different accounts payable account for the pay items Deductions, Payroll Taxes, and Post-tax Deductions in the pay item settings.

The second strategy would be to allow editing of the bills.

I recommend the first strategy as the voiding logic would have to be changed as much. But this doesn't resolve the issue of having to void the whole pay run if you want to make a change of which account the transactions are posted to.