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PURPOSE |
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1.1 |
The purpose of this directive is to provide clients and pay offices with a reference tool and direction for year-end activities.
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CANCELLATION |
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2.1 |
This supersedes Compensation Directive 2005-022 dated November 23, 2005.
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3 |
BACKGROUND |
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3.1 |
Each year end, there are recurring activities that require manual action. To assist clients and pay offices, a single directive is now being issued on a yearly basis as a reminder of all these year-end activities.
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4 |
PROCEDURES/INSTRUCTIONS |
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4.1 |
Reminder to Clients |
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Clients should confirm the close-out date with their respective pay office so that the information specified below will be received in the pay office on time, and the amounts reported by the clients will be reflected on the original Statement of Remuneration forms. |
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Note: T4 statements are issued depending on the province or territory of work. An additional copy of the T4 will be printed for residents of Quebec who work in a province other than Quebec. If there has been a change in the province or territory of work during the year, more than one T4 statement will be issued. For situations described in Section 4.1 (a) and (g) herein (personal use of government-owned vehicles and self-funded leave), clients are required to provide a written notice to report to the pay office the amounts pertaining to each province or territory so that these amounts are reflected on each T4 statement. |
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(a) Personal Use of Government-owned Vehicles |
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Please refer to the procedure outlined in the Compensation Directive 2004-009, dated July 9, 2004. This procedure states that clients are required to provide a written notice to report to the pay office the annual taxable benefit amount to be included for T4 statements and Relevé 1 purposes. The written notice should be submitted by the date prescribed by each individual pay office in order for these amounts to be reflected on the Statement of Remuneration (T4/Relevé 1). |
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(b) Pension Adjustment (PA) |
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It is the responsibility of the client to advise the pay office of the required information concerning specific situations such as: dual employment (employee on pensionable leave without pay occupying a term position where he contributes to the Public Service Superannuation Account [PSSA], e.g. relocation of spouse cases), when the employee is on pensionable educational leave without pay and when the employee is on leave without pay to serve as a full-time paid official of a bargaining agent (union). Please refer to the following documents: |
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Also, any employee who was on rehabilitation leave with a pension type Code 62 in Field 39, at any time during the calendar year, will not have a PA reported automatically for this period. In order to have a PA calculated for the rehabilitation leave period, clients must provide a written notice to report to the pay office the employee's number of pensionable pay periods and the amount of pensionable earnings for the period reflected under Code 62 in the Regional Pay System (RPS). Please note that this period will be from the date that Code 62 was entered into the RPS and not from the effective date of the rehabilitation leave. |
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(c) Hardship Exemption and Additional Tax Credit |
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Clients are reminded to amend or stop the hardship exemption and/or the additional tax credits at the beginning of the new calendar year when applicable (e.g. self-funded leave, authorization letters from the Canada Revenue Agency [CRA] or from the "ministère du Revenu du Québec" [MRQ] to exempt income from tax at source, deduction for the "Fonds de solidarité des travailleurs du Québec" [FSTQ], deductions for the Fondaction [le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi], deduction for alimony and/or child support payments, etc.). |
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Please refer to the following documents: |
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To assist clients with the yearly requirement to review Element 43 (Hardship Federal Exemption Amount), Element 44 (Quebec Tax Exemption Additional Amount), Element 82 (Federal Tax Credits Additional Amount), Element 85 (Quebec Tax Credit Additional Non-refundable Amount) and Element 88 (Provincial Tax Credits Additional Amount), listings of employees with amounts in these particular fields will be forwarded to each client. |
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(d) T4 and T4A Statements, Relevé 1 and Relevé 2 Issued to Deceased Employees |
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In reference to Services Pay Directive 1989-089(33), dated June 14, 1989, clients are reminded to destroy system generated T4 and T4A statements, Relevé 1 and Relevé 2 forms for which advance manual copies were issued. |
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(e) 2006 T4 Statement - Status Indian |
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Clients should continue to prepare letters to their Status Indian employees identifying the amount of income earned while working on a reserve. In addition, as CRA takes into consideration the amount deducted as union dues and the amount deducted as pension contributions while working on a reserve, clients will have to confirm in their letter the income earned, union dues deducted and pension contributions deducted while working on a reserve. |
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(f) 2006 Relevé 1- Status Indian |
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Clients are required to calculate and provide a written notice to report to the pay office the total amount of income earned, which includes the taxable benefits, by a Status Indian employee while working on a reserve in Quebec, provided that this employee did not work exclusively on a reserve in Quebec during the year. Please refer to Compensation Directive 1996-053, dated November 25, 1996. |
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(g) Self-funded Leave |
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In reference to Compensation Directive 1994-048, dated December 8, 1994, clients are reminded to provide a written notice to report to the pay office the amounts deducted for self-funded leave during the year. |
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Due to the Quebec legislation, clients are required to calculate and provide a written notice to report separately the amount deducted for self-funded leave while the employee was working in Quebec and the amount deducted while the employee was not working in Quebec. |
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(h) Vacation Travel Assistance Payments |
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Clients who have issued these payments through their own finance sections will be responsible to issue the T4 for the amount of the payment. Public Works and Government Services Canada (PWGSC) will not manually update the T4 for employees who receive these payments issued through their finance section. |
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(i) Lump Sum Payment of Past Service Contributions from Retiring Allowances |
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Clients are to issue a letter to employees to report eligible amounts of retiring allowances transferred to a registered pension plan (RPP) and non-eligible amounts used to pay past service. Please refer to Compensation Directive 2006-002, Section 4.4 dated January 5, 2006, for additional information. |
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(j) Payments Made after the Closing of Pay Period 26 but Before the Opening of Pay Period 01 - 7A Accounts |
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Clients are reminded of the importance of having time summary transactions created, verified and authorized in time to meet the close out for the final 7A pay period of the calendar year. |
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Transactions representing the final pay period that are input after the scheduled 7A close out and prior to the year end roll over (last supplementary update of the year) will remain on the employee's Master Employee Record (MER), unactioned, until the first 7A pay period of the new calendar year is executed. There is no edit message produced to alert the client or the pay office in this situation. |
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When the first new year 7A pay period is run, the previously unactioned transactions will process along with any new time summary transactions. |
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In this situation, not only is the final payment from the previous calendar year delayed, the income tax deducted will be according to the new year rate. In accordance with the CRA income tax regulations, the pay office is unable to adjust the income tax in these situations. Please refer to the Pay Processing Schedule for 2006. |
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(k) Addresses on Statements of Remuneration |
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In reference to Compensation Directive 2005-007, dated May 17, 2005, clients that have taken advantage of this feature should ensure that their employee mailing addresses in the RPS are up to date. |
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(l) Union Dues Deductions |
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In reference to Compensation Directive 2005-008, dated May 19, 2005, clients should refer to section 4.2.2 of this directive concerning the issuance of refunds through their financial system, and, to section 4.3.3 concerning the recovery of union dues done via deduction code 540. |
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(m) Change in Employer |
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Clients are to ensure that all transactions associated to a struck off strength (SOS), reason code 19 (employee of a department where Treasury Board is the employer, hired by an organization where Treasury Board is not the employer or vise-versa), are completed in the same taxation year as the SOS. If the account is not processed accordingly, the statement of remuneration issued by the new department will not accurately reflect the employee's earnings. Please refer to Compensation Directive 2002-017, dated June 27, 2002, and Compensation Directive 2005-017 dated September 29, 2005, for detailed procedures regarding a change in employer. |
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4.2 |
Reminder to Pay Offices |
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(a) Personal Use of Government-owned Vehicles |
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On receipt of the client's written notice for an employee who received an automobile benefit that was deemed a taxable benefit within the calendar year, the pay office will credit Element 732 by the annual amount reported. As this benefit is subject to the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP), the pay office must also credit elements 700 (year to date [YTD] gross) and 706 (CPP earnings) or 707 (QPP earnings) as applicable. |
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(b) Pension Adjustment (PA) |
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Please refer to Compensation Directive 1994-012 concerning actions required in certain situations of dual employment and educational leave. |
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Please refer to the Superannuation Administration Manual Special Bulletin 1999-003 when employees are on leave without pay to serve as full-time paid officials of bargaining agents (union). |
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On receipt of the client's written notice for any employee on rehabilitation leave with pension type Code 62 in Field 39, the pay office will credit Element 734 by the amount of pensionable earnings and adjust Element 118 by the proper number of pensionable pay periods. |
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(c) 2006 Relevé 1 - Status Indian |
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On receipt of the client's written notice, the pay office will credit Element 744 by the amount reported, as per Compensation Directive 1996-053. |
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(d) Self-funded Leave |
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On receipt of the client's written notice, the pay office will update the appropriate elements by reducing elements 700 (YTD gross), 706 (CPP earnings) and 707 (QPP earnings). In addition, the pay office will credit Element 756 (self-funded leave) for employees working in Quebec. Please refer to Compensation Directive 1994-048 for additional information. |
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(e) Vacation Travel Assistance Payments |
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Refer to section 4.1 (h) herein. Pay offices will no longer update employee T4s with amounts paid as Vacation Travel Assistance Payments. |
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(f) Union Dues Deductions |
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Upon receipt of the client's written notice to adjust the employee's T4/Relevé 1 for the affected taxation year(s), the pay office will update Element 717 (Union Dues) by the amount reported by the client. The pay office should refer to Compensation Directive 2005-008, sections 4.2.2 and 4.3.3.
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5 |
ADDITIONAL INFORMATION |
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5.1 |
Statements of Remuneration (e.g. T4, T4A, Relevé 1, etc.) Not Issued by the Compensation Sector |
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Clients who issue statements to report employee income must use their own CRA and MRQ payroll account numbers and not the PWGSC Compensation Sector CRA and MRQ payroll account numbers used for reporting payments issued through PWGSC compensation systems.
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6 |
INQUIRIES |
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6.1 |
Any request for information regarding the foregoing should be addressed to your PWGSC Compensation Services Office.
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