ARCHIVED Services Pay Directive: 1993-017
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November 16, 1993 (Revised September 28, 2010)
SUBJECT: New Deduction Code and Taxability Related to the "Fonds de solidarité des travailleurs du Québec"
1.1 The purpose of this directive is to advise you of the establishment of a new deduction code for the "Fonds de solidarité des travailleurs du Québec" (FSTQ) and to inform you of the new tax implications related to the FSTQ.
2.1 This directive supersedes Compensation Directive 1993-008 dated September 2, 1993 also entitled "New Deduction Code and Taxability Related to the Fonds de solidarité des travailleurs du Québec".
2.2 Changes from the aforementioned directive are identified by a vertical line.
3.1 Previously, when an employee purchased FSTQ shares through a payroll deduction, the only tax exemption that he or she received at source was an annual exemption from the Ministère du Revenu du Québec.
For any other exemption or credit to which the employee was entitled, he or she had to make a request to Revenue Canada and/or the Ministère du Revenu du Québec, who then authorized the additional exemption or credit via letters to the employer.
4.1 Starting January 1, 1993, Revenue Canada and the Ministère du Revenu du Québec, have authorized a new method of calculating income tax at source to provide a tax credit of 20% (15% effective January 1, 1998) on deductions with held for Labour Sponsored Funds (i.e. FSTQ) to an annual maximum amount of $1,000 ($5,000 effective January 1, 1998).
Also, a letter from Revenue Canada or the Ministère du Revenu du Québec is no longer required to provide the employee with an additional exemption, when the shares purchased from the FSTQ, via payroll deductions, are transferred to a Registered Retirement Savings Plan (RRSP).
In these cases, the additional exemption will be provided to the employee directly at source, by inputting the annual amount transferred to an RRSP in field 43 "Undue Hardship Federal Tax Exemption" and field 44 "Additional Provincial Tax Exemption".
4.2 Furthermore, the employee who requests a deduction to purchase FSTQ shares will now be given the choice of requesting or waiving the benefit of tax reductions at source.
A new form "Request for Tax Reductions at Source Relating to the Fonds de solidarité du Québec" (Annex 'A') has been implemented by the FSTQ, to advise the personnel office of the option the employee has chosen. This form is to be used in conjunction with the "Subscription Form" (Annex 'B') or the "Request for Modifications" (Annex 'C').
Also in September 1993, the FSTQ has revised their "Subscription Form" (Annex 'D') and their "Request for Modifications" (Annex 'E') to include the employee's choice concerning the income tax reduction at source directly on these forms.
4.3 A new deduction code 889 "Fonds de solidarité des travailleurs du Québec - no tax" has been established to be utilized when purchasing FSTQ shares for which there will be no tax credit or exemption given at source.
The deduction code 797 "Fonds de solidarité des travailleurs du Québec", that was previously used when purchasing FSTQ shares, has been amended, effective January 1, 1993, to give the employee a credit of 20% (15% effective January 1, 1998) for both federal and the Québec provincial tax.
Both deduction codes 797 and 889, are to treated on a current basis only (i.e. refunds or arrears actions are not permitted). These deductions will be made from 24 pay periods per year (i.e. they will not be deducted from the pay period plus). If a cheque is cancelled, the amount of the deduction from that cancelled cheque will be subtracted from the next remittance to the FSTQ. A reference number of 8 digits should be entered if available. When only 5 digits are available, three zeros must be added at the end.
5.1 The "Subscription Form" (Annex 'B'or 'D') or the "Request for Modifications" form (Annex 'C'or 'E') must be received by personnel to authorize the deduction.
When the old version of these forms are utilized (i.e. Annex 'B'or 'C'), they should be accompanied by the form, "Request for Tax Reductions at Source Relating to the Fonds de solidarité des travailleurs du Québec" (Annex 'A'), in order to apply the employee's choice with regard to tax reductions.
To assist you, further instructions are included on the attached Annexes 'A', 'B', 'C', 'D'and 'E'.
5.2 If the employee has chosen to waive his or her right to benefit from tax reductions, personnel should start the deduction under code 889.
5.3 If the employee has chosen to have the tax reductions applied but there is no amount transferred to an RRSP, then personnel should start the deduction under code 797 (this code will give a credit of 20% [15% effective January 1, 1998] for both the federal and the Québec provincial tax).
5.4 If the employee has chosen to have the tax reductions applied and to have his or her shares transferred to an RRSP, personnel should start the deduction under code 797. They should also input the annual amount transferred to an RRSP into fields 43 and 44.
When the exemption starts during the year, the amount to input in field 43 and in field 44 should be calculated as follows:
- Determine the annual amount that will be transferred to an RRSP by multiplying the amount deducted each pay period by the number of pay periods where the deduction will apply during the year (maximum 24)
if only a part of the subscribed shares are transferred to an RRSP, use the annual amount indicated on the subscription or modification form (this amount must be less than the amount that will be deducted from pay during the year, otherwise use the amount that will be deducted during the year).
- Multiply the amount in a) by the total number of pay periods in the year.
- Divide the results from b) by the number of remaining pay periods in the year.
A reminder should be in place to amend the exemption at the beginning of the next year.
5.5 For employees who already have a deduction under code 797, there will be no change unless new documents are received with new instructions. These employees will continue to benefit from a tax credit of 20% (15% effective January 1, 1998) for both federal and provincial tax.
5.6 These deductions should be stopped at the date mentioned on the "Subscription Form" or on the "Request for modifications" form or upon receipt of written advice from the employee. Any exemption entered in field 43 and in field 44 related to that deduction should also be removed.
5.7 Pay Offices should forward their remittances for the FSTQ to the following address :
Direction des opérations
Fonds de solidarité des travailleurs du Québec
1550, rue Metcalfe
Commencing September 3, 1993 the remittance address will be changed to:
Direction des opérations
Fonds de solidarité des travailleurs du Québec
8717, rue Berri
| 6.1 Any inquiries on the information contained in this document should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.
Original Signed by
Government Operational Service
Reference : CJA 9006-1
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