ARCHIVED CD 2001-004
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January 24, 2001
SUBJECT: Issuance of T5s and Relevé 3s for Pay Equity Interest Payments
1.1 The purpose of this directive is to provide Compensation Advisors with information concerning the issuance of the T5 (Statement of Investment Income) and the Relevé 3 (Investment Income). These forms will be produced to report the interest payment portion of Pay Equity for income tax purposes as a result of the Public Service Alliance of Canada (PSAC) Pay Equity Agreement.
1.2 This directive should be read in conjunction with Compensation Directive 2000-031, dated November 3, 2000, entitled "Interest Calculation and Payment--PSAC Pay Equity".
1.3 In this text, use of the masculine is generic and applies to both men and women.
2.1 The PSAC Pay Equity Agreement included the calculation and payment of interest on the retroactive adjustments owing.
3.1 In accordance with Canada Customs and Revenue Agency (CCRA) requirements, this interest payment must appear on a T5 for income tax purposes for the year in which it is received. Furthermore, individuals who are residents of Quebec on December 31 should also receive a Relevé 3. Interest payments are considered as taxable income in the event of death, and T5s and where applicable Relevés 3s will be issued in the name of the beneficiaries or the estate. The production of the T5s and Relevé 3s is a new process within the Regional Pay System (RPS).
3.2 This new process will be similar to the one used by the Regional Pay System (RPS) to produce T4s and Relevé 1s and will be included as a component of the yearly Statement of Earnings process.
4.1 The amount of interest paid on Pay Equity adjustments using the RPS will be accumulated as "PE Interest" and will be reflected in element 746 of the Master Employee Record (MER) for the current year. The total amount reflected in this element will be reported as Interest from Canadian sources in Box 13 of the T5 and in Box D of the Relevé 3.
4.2 Amendments will be scheduled and processed the same as for all other Statements of Remuneration (e.g.; T4, Relevé 1, etc.). Requests for duplicates will be handled manually as per current procedures.
If an employee provided proof in advance to his department that he is considered a non-resident, tax was withheld from the interest payment when it was paid. In these cases, the interest and the tax deducted are to be reported on an NR4 (Statement of Amounts Paid or Credited to Non-Residents of Canada) instead of a T5. The Compensation Advisor must inform the Payroll Accounting Office (PAO) of the Department, Paylist, Personal Record Identifier (PRI) number, Social Insurance Number (SIN) and the employee's name along with the gross amount of the interest payment(s) and the amount of income tax deducted from the payment(s). Once informed, the PAO will send a list of the affected accounts to the appropriate pay office requesting that the income tax amount be debited from MER element 704 and the interest amount be debited from MER element 746. When these adjustments have been made, the PAO will remit the tax to the proper tax account number and create the NR4.
If the department was not advised of the employee's non-resident status before the payment was issued, a T5 and where applicable a Relevé 3 will be produced. If these forms were produced for a non-resident, the employee should contact the International Tax Services Office which is located at 2204 Walkley Road, Ottawa, Ontario K1A 1A8 or can be reached by telephone at either 1-800-267-3395 (toll free from Canada or the United States) or collect from other countries at 613-952-2344. The facsimile number is 613-941-6905.
5.1 Any request for information regarding the foregoing should be addressed to your Public Works and Government Services (PWGSC) Compensation Services Office.
Original Signed by
Government Operational Service
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