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Date: July 20, 2006
To: Compensation Managers
Subject: Transfer of the non-eligible portion of a retiring allowance amounts
The purpose of this bulletin is to provide clarification to departments and agencies in regards to requirement for tax waiver letters.
Following the release of the Compensation Directive 2006-002, Income Tax Information Concerning Retiring Allowances, Returns of Contributions, Transfers of Transfer Value Payments, and Transfers to Registered Retirement Savings Plans (RRSPs) and Registered Pension Plans (RPPs), questions were raised in regards to the documents needed for the non-eligible portion of retiring allowances and for the "outside income tax limits" of the transfer value payments. Departments questioned whether a tax waiver letter was required for these situations.
Transfer of eligible retiring allowance amounts
A letter from the employee including the amount to be transferred, the financial institute's complete information and the applicable RRSP account number is the only documentation required to transfer eligible retiring allowances to an
RRSP.
Transfer of non-eligible retiring allowance amounts and of "outside income tax limits" of the transfer value
payments
A tax waiver letter is not necessary to transfer non-eligible retiring allowances and "outside income tax limits" of the transfer value payments directly to an RRSP account.
A letter signed by the employee certifying that he or she has sufficient RRSP room
or a copy of the employee's latest "Notice of Assessment" from CRA signed and dated by the employee is accepted.
In both circumstances, the employee must indicate the amount to be transferred, the financial institute's information and the applicable RRSP account number.
Note:
If the employee wishes to personally deposit the money in an RRSP, a waiver letter from CRA and if applicable, from MRQ, is required to waive the income tax at
source.
Payments other than retiring allowances (revisions, leave payouts such as vacation and compensatory leave,
etc)
A waiver letter from CRA and, if applicable, a waiver letter from MRQ is still required to waive the tax on payments other than retiring allowances such as lump sums, retroactive salary revisions and vacation and compensatory leave payouts. It remains the employee's responsibility to deposit these monies into the RRSP since the employer has provided the authority to transfer only retiring allowances and the return of
contributions.
The Treasury Board as an employer is still limiting the application for waivers to exclude such monthly payments as overtime and the terminable allowance. In other words, income tax will continue to be withheld at source from payments of overtime and terminable allowances.
Departmental Compensation managers are to direct any questions that they may have to their departmental corporate official who, if need be, can contact the Pay Administration
Section.
Original signed by
Sylvie Joseph
Manager,
Corporate Pay Administration & Community Renewal
Project Management, Internal Service Transformation & Pay Administration
Labour Relations and Compensation Operations
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