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COMPENSATION DIRECTIVE: 2003-006
May 30, 2003 (Revised January 19, 2005)
| SUBJECT: |
Isolated Posts Directive - Vacation Travel Assistance:
- 100% Fully Accountable Vacation Travel Assistance Payment
- 80% Non-accountable Vacation Travel Assistance Payment |
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1 |
PURPOSE |
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1.1 |
The purpose of this directive is to provide compensation advisors with information concerning the reporting of Vacation Travel Assistance (VTA) payments that are identified under "Part II - Expenses and leave" of the Treasury Board Secretariat - Isolated Posts Directive. |
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1.2 |
In this text, use of the masculine is generic and applies to both men and women.
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2 |
BACKGROUND |
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2.1 |
Presently, Clients are requesting the 100% fully accountable VTA advance payment through their finance branch. Commencing with the 2004 T4s, departments are responsible to issue the T4 for this payment. |
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2.2 |
Commencing immediately, departments are able to process the new 80% Non-accountable Vacation Travel Assistance payment via the On-line Pay System.
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3 |
POLICY |
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3.1 |
On April 1, 2002, a parallel system of vacation travel assistance was made available to employees offering them a choice in the type of VTA they would prefer. Employees are able to choose either a 100% fully accountable advance or an 80% non-accountable vacation travel assistance payment. Additional information regarding this policy can be found under Part II - Expenses and leave of the Isolated Posts
Directive, Treasury Board Secretariat. |
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3.2 |
The 80% non-accountable VTA payment is subject to federal and Quebec income tax, Canada/Quebec Pension Plan (CPP/QPP) contributions and Employment Insurance (EI) premium deductions. |
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3.3 |
Canada Customs and Revenue Agency (CCRA) has advised us that income tax at source on the 80% non-accountable VTA payment may be waived at a rate of 100% if the employee is located in a prescribed northern zone or at a rate of 60% if the employee is located in a prescribed intermediate zone. Employees are not required to take leave or to travel to receive the non accountable VTA. |
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In order to have federal income tax waived at source, employees must agree in writing to use the entire VTA payment for vacation travel in the same calendar year in which the payment is received and in the period in which the employee lived at the place or places in the prescribed northern or intermediate zones. Treasury Board Secretariat has provided a waiver form to assist employees in determining the exemption for federal income tax. This form has been identified as Appendix "A". |
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The Ministère du Revenu du Québec (MRQ) has advised us that this payment is subject to Quebec income tax at source, and that there is no provision for a waiver of the Quebec income tax as is the case with the federal income tax. |
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3.4 |
These payments will be reported in box 14 of the T4 with a code 32 footnote and in boxes "A" and "K" Of the Relevé 1. |
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3.5 |
A list of prescribed northern and intermediate zones in Canada can be found at the following Internet link: |
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http://www.ccra-adrc.gc.ca/
E/pub/tg/t4039/README.html |
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A list of prescribed northern and intermediate zones in the province of Quebec can be found at the following Internet link: |
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http://www.revenu.gouv.qc.ca/
eng/formulaires/tp/tp-726_21_g-v.asp |
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An employee who would like additional information concerning deductions upon filing of his income tax return may be referred to the following Internet links: |
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For CCRA: |
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http://www.ccra-adrc.gc.ca/
E/pbg/tf/t2222/README.html |
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For MRQ: |
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http://www.revenu.gouv.qc.ca/
eng/formulaires/tp/tp-726_21_g-v.asp
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4 |
PROCEDURES/INSTRUCTIONS |
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4.1 |
Effective January 1, 2003, compensation advisors should process the 80% non-accountable payment utilizing entitlement code 282, "Vacation Travel Assistance Payment". In situations where income tax on VTA payments will be waived, either in whole or in part, compensation advisors should process entitlement code 282 together with entitlement code 395, "Special Tax Exemption (federal)". This will ensure that these two pay transactions are part of the same supplementary update. |
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4.2 |
In order to process this payment, compensation advisors will be provided with an authorizing document and tax waiver, if applicable, either from the employee's manager or the finance section. These documents will indicate the payment's amount and the specific amount of the payment for which federal income tax should be waived in accordance with the tax policy. |
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4.3 |
Compensation advisors will refer to the Personnel-Pay Input Manual (PPIM), Section 4-4-18-3-1 for processing procedures. Section 9-5-2 of the PPIM has been updated to reflect entitlement code 282 "Vacation Travel Assistance Payment".
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5 |
INQUIRIES |
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5.1 |
Any inquiries on the information contained in this directive should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office. |
| Original Signed by
R. Jolicoeur |
R. Jolicoeur
Director General
Compensation Sector
Accounting, Banking and Compensation
Reference(s): CJA Entitlement codes 282, 395
APPENDIX A
80% Non-accountable Vacation Travel Assistance
Request for Waiver of Income Tax Withholding
| Family Name: |
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Given Name: |
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| PRI: |
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P/L Number: |
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This request is conditional on the following:
- At the time in the calendar year that the payment is made, you must have lived, on a permanent basis, at a place or places in the prescribed northern or prescribed intermediate zones for at least six consecutive months, or it must be reasonable for the employer to expect that you will live at that place or those places for at least six consecutive months.
AND
- You must certify that this payment will be fully used for vacation travel in the same calendar year in which you receive it, and in the period in which you live at the place or places in the prescribed northern or intermediate zones.
Please tick above box to certify compliance.
80% Non-accountable Vacation Travel Assistance
As an employee located in a prescribed northern or intermediate zone, I hereby request my employer to waive at source the required income tax on the 80% Non-accountable Vacation Travel Assistance payment, in accordance with Canada Customs and Revenue Agency (CCRA) regulations.
| Enter the prescribed northern zone: |
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OR
| Enter the prescribed intermediate zone: |
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Employee's signature: _______________________
Date: ________________
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