Subject: 2011 Year-End Requirements
November 7, 2011
1.1. The purpose of this directive is to provide clients and pay offices (PO) with a reference tool and direction for year-end activities.
2.1. This document supersedes Compensation Directive (CD 2010-021) dated November 12, 2010.
3.1. Each year end, there are recurring activities that require manual action. To assist clients and POs, a single directive is now being issued on a yearly basis as a reminder of all these year-end activities.
4. Procedures and Instructions
4.1. Reminders to Clients
Clients should confirm the close-out date with their respective PO so that the information specified below will be received in the PO on time, and the amounts reported by the clients will be reflected on the original statement of remuneration forms (T4/Relevé 1).
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 4.1.1. and 4.1.7. herein (personal use of government-owned vehicles and self-funded leave (SFL)), clients are required to provide a written notice to report to the PO the amounts pertaining to each province or territory, so that these amounts are reflected on each T4 statement.
4.1.1. Personal Use of Government-Owned Vehicles
Please refer to the procedure outlined in the ARCHIVED CD 2004-009 dated July 9, 2004. This procedure states that clients are required to provide a written notice to report to the PO 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 PO in order for these amounts to be reflected on the statement of remuneration (T4/Relevé 1).
4.1.2. Pension Adjustment (PA)
It is the responsibility of the client to advise the PO of the required information concerning specific situations such as: dual employment (employee on pensionable leave without pay (LWOP) occupying a term position where he contributes to the Public Service Superannuation Account (PSSA-Fund 1), such as relocation of spouse cases), when the employee is on pensionable educational LWOP, and when the employee is on LWOP to serve as a full-time paid official of a bargaining agent (union). Please refer to the following documents:
- ARCHIVED CD 1994-012 dated March 23, 1994, if the situation is related to dual employment or educational leave;
- ARCHIVED SAM - Special Bulletin 1999-003 dated February 15, 1999, if the situation is related to employees who are on LWOP to serve as full-time paid officials of bargaining agents (union).
Also, any employee who was on rehabilitation leave with the pension type code indicating temporary reduced hours under a rehabilitation program (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 PO the employee's number of pensionable pay periods (PP) 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.
4.1.3. Hardship Exemption and Additional Tax Credit
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. SFL, authorization letters from the Canada Revenue Agency (CRA) or from "Revenu Québec" (RQ) to exempt income from tax at source, deductions for the "Fonds de solidarité des travailleurs du Québec" (FSTQ), deductions for the Fondaction (les Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi), deduction for alimony and/or child support payments, etc.).
Please refer to the following documents:
- ARCHIVED CD 1993-017 dated November 16, 1993, for FSTQ related information;
- ARCHIVED CD 1997-034 dated November 6, 1997, for alimony and/or child support payments related information;
- ARCHIVED CD 2002-020 dated August 21, 2002, for information on reducing source deductions of income tax;
- ARCHIVED CD 2006-020 dated September 12, 2006, for Fondaction related information.
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), a report listing employees with amounts in these particular fields will be forwarded to each client department.
4.1.4. T4 and T4A Statements, Relevé 1 and Relevé 2 Issued to Deceased Employees
In reference to ARCHIVED CD 2007-015 dated August 22, 2007, clients are reminded that system generated T4, T4A, Relevé 1 and Relevé 2 statements, for which advance manual copies were issued, are to be kept in the employee's personnel file.
4.1.5 2011 T4 Statement - Status Indian Employees
If the Status Indian employee'sincome isentirely tax exempt for the full taxation year, compensation advisors are reminded that code 0 should be indicated in Field 42 (Income Tax Status) of the Master Employee Record (MER) by processing a status change (STC - PAC 12A), before the end of the year. This will waive tax at source and have the full earnings reported in box 71 (Status Indian employee) of the T4 statement while reporting other amounts accordingly (i.e. box 20 - RPP deductions and box 44 - Union dues will be blank). Failure to record code 0 in Field 42 where the Status Indian employee'sincome isentirely tax exempt for the full taxation year will result in an incorrect T4 statement that will require a manual amendment by the PO. Please refer to ARCHIVED CD 2009-028 dated December 1, 2009.
Where the Status Indian employee's income is NOT entirely tax exempt during the complete taxation year, compensation advisors must calculate and report the portion of the individual's earnings while working on a reserve, including taxable benefits, directly to the PO before the end of the year. The PO, upon receiving the written notification, will credit MER element 744 (Indian Exempt Income). This will result in reporting only the exempt portion of the earnings in box 71 of the T4 statement.
4.1.6. 2011 Relevé 1 - Status Indian Employees
As indicated in section 4.1.5. above, if the Status Indian employee's income is entirely tax exempt for the full taxation year, compensation advisors are reminded that code 0 should be indicated in Field 42 (Income Tax Status) of the MER by processing a status change (STC-PAC 12A), before the end of the year.
Where the Status Indian employee's income is NOT entirely tax exempt during the complete taxation year, clients are required to calculate and provide a written notice to the PO to report the total amount of income earned on a reserve in Quebec by a Status Indian employee, including the taxable benefits. Please refer to ARCHIVED CD 1996-053 dated November 25, 1996.
Note: The tax exempt earnings for Status Indian employees working on a reserve in Quebec need to be reported only once to the PO for both the Relevé 1 and T4 statements.
4.1.7. Self-Funded Leave (SFL)
In reference to ARCHIVED CD 1994-048 dated December 8, 1994, clients are reminded to provide a written notice to the PO to report the amounts deducted for SFL during the year.
Due to Quebec legislation, clients are required to calculate and provide a written notice to report separately the amount deducted for SFL while the employee was working in Quebec, and the amount deducted while the employee was not working in Quebec.
4.1.8. Vacation Travel Assistance (VTA) Payments
Clients who have issued VTA payments through their own finance sections will be responsible for issuing the T4 for the amount of the payments. Public Works and Government Services Canada (PWGSC) will not manually update the T4 for employees who receive these payments issued through their finance sections.
4.1.9. Lump Sum Payment of Past Service Contributions from Retiring Allowances
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 Section 4.4 of ARCHIVED CD 2006-002 dated January 5, 2006, for additional information.
4.1.10. Payments Made after the Closing of PP 26, but Before the Opening of PP 01 - 7A Accounts
Clients are reminded of the importance of having time summary (TIM) transactions created, verified and authorized in time to meet the close out for the final 7A PP of the calendar year.
Transactions representing the final PP 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 MER, unactioned, until the first 7A PP of the new calendar year is executed. In this situation, there is no edit message produced to alert the client or the PO.
When the first 7A PP is run in the new year, the previously unactioned transactions will process along with any new TIM transactions.
In this situation, not only is the final payment from the previous calendar year delayed, the income tax deducted will be based on the new year rate. In accordance with the CRA income tax regulations, the PO is unable to adjust the income tax in these situations. Please refer to the Pay Processing Schedule.
4.1.11. Printing of Addresses on Statements of Remuneration
In reference to ARCHIVED CD 2005-007 dated May 17, 2005, clients that print addresses on statements of remuneration should ensure that their employee mailing addresses in the RPS are up to date.
4.1.12. Union Dues Deductions
In reference to ARCHIVED CD 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 paid by the Crown.
4.1.13. Change in Employer
It is extremely important that clients ensure that all transactions associated to a struck off strength (SOS), reason code 19 (employee of a department where Treasury Board (TB) is the employer, hired by an organization where TB 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 ARCHIVED CD 2002-017 dated June 27, 2002 and ARCHIVED CD 2005-017 dated September 29, 2005, for detailed procedures regarding a change in employer.
4.2. Reminder to POs
4.2.1. Personal Use of Government-Owned Vehicles
On receipt of the client's written notice for an employee who received a vehicle benefit that was deemed a taxable benefit within the calendar year, the PO 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 PO must also credit elements 700 (year to date (YTD) gross) and 706 (CPP earnings) or 707 (QPP earnings), as applicable.
4.2.2. Pension Adjustment (PA)
Please refer to ARCHIVED CD 1994-012 concerning actions required in certain situations of dual employment and educational leave.
Please refer to the ARCHIVED SAM - Special Bulletin 1999-003 when employees are on LWOP to serve as full-time paid officials of bargaining agents (union).
Upon receipt of the client's written notice for any employee on rehabilitation leave with pension type code 62 in Field 39, the PO will credit Element 734 by the amount of pensionable earnings, and adjust Element 118 by the proper number of pensionable PP.
4.2.3. Status Indian - 2011 T4 and Relevé 1 Statements
Upon receipt of a written notice from clients, the PO will be responsible for processing a PAC 30 transaction to credit Element 744 by the amount indicated on the notice. This will result in reporting the exempt earnings in box 71 of the T4 for all Status Indian employees, and in box R of the Relevé 1 for those working on a reserve in Quebec. Please note that Element 744 will now accept amounts with six digits before the decimal (i.e. 999 999.99).
4.2.4. Self-Funded Leave (SFL)
Upon receipt of the client's written notice, the PO will update the appropriate elements by reducing Elements 700 (YTD gross), 706 (CPP earnings) and 707 (QPP earnings). In addition, the PO will credit Element 756 (SFL) for employees working in Quebec. Please refer to ARCHIVED CD 1994-048 for additional information.
4.2.5. Vacation Travel Assistance (VTA) Payments
Refer to section 4.1.8. herein. The PO will no longer update employee T4s with amounts paid by the departmental finance section as VTA payments.
4.2.6. Union Dues Deductions
Upon receipt of the client's written notice to adjust the employee's T4/Relevé 1 for the affected taxation year(s), the PO will update Element 717 (Union Dues) by the amount reported by the client. The PO should refer to ARCHIVED CD 2005-008 sections 4.2.2 and 4.3.3.
5.1 The compensation community is reminded that they are not to contact the Public Works and Government Services Canada (PWGSC) Printing Operations sites in Dartmouth, Quebec City or Winnipeg regarding the issuance of the 2011 T4/Relevé tax forms. The forms will be produced at the beginning of February 2012, and distributed from the printing sites on a priority basis.
6. Additional Information
6.1. Statements of Remuneration (e.g. T4, T4A, Relevé 1, etc.) Not Issued by the PWGSC Compensation Sector
Clients who issue statements to report employee income must use their own CRA and RQ payroll account numbers, and not the PWGSC Compensation Sector CRA and RQ payroll account numbers used for reporting payments issued through the PWGSC compensation systems.
7.1. Any inquiries on the information contained in this document should be addressed to your PWGSC Compensation Services Office.
Reference(s): CJA 9007-10-2 and 9007-10-3
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