I handle a lot of churches but none of them use Sage 50 to produce the receipts for income tax purposes. But this is how I would suggest you consider your handling. First set up a deduction in payroll that is deducted after all taxes and other payments are calculated. This deduction would be a credit to an account such as Payroll Donation Payable. When you produce the T4 early next year this account should show in the list of deductions where you can choose box 46. This looks after the deduction and proper reporting, however, you will still have to move the funds from the Payable account to an income account and this would require a manual entry. No donation receipt would be required as the T4 satisfies that requirement.

Hope this helps

I handle a lot of churches but none of them use Sage 50 to produce the receipts for income tax purposes. But this is how I would suggest you consider your handling. First set up a deduction in payroll that is deducted after all taxes and other payments are calculated. This deduction would be a credit to an account such as Payroll Donation Payable. When you produce the T4 early next year this account should show in the list of deductions where you can choose box 46. This looks after the deduction and proper reporting, however, you will still have to move the funds from the Payable account to an income account and this would require a manual entry. No donation receipt would be required as the T4 satisfies that requirement.

Hope this helps

Alwyn, I am very grateful for your reply.  Your answer was EXACTLY what I needed to get this set up correctly.  Thank you so much for detailing each step clearly for me.