I use a different way to track banked hours.

In the Payroll setting I've added the following:

-an income called Banked Hours, set it for hourly rate, and linked it to the usual wage expense account.

-a deduction called Banked Funds and linked it to a liability account called Banked Funds Payable.

When doing the payroll cheque you enter the banked hours as income, if you want to hold it for pay-out at a later time then you can enter it in the Deduction tab using a lesser amount to compensate for source deductions.

Example: enter by itself - 8 hrs at 30.00/hr is 240.00, CPP and EI totals 9.80 so take off $10 and enter 230.00 in deduction as Banked Funds Payable. Then add in the regular hours and have the taxes recalculate automatically.

This way the taxes are paid and the net amount now accumulates in Banked Funds Payable which will also show on the payslip. What the employee sees is exactly what will be paid out in full.

Maybe this method will work for you?

Note: CRA requires all unpaid banked hours to have source deduction remitted at year-end for the T4s. When paid out it already has the taxes paid.

Can you provide me with a reference showing CRA's requirement that unpaid banked hours have source deductions remitted in the year banked rather than the year paid out?