ARCHIVED CD 2010-014

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August 27, 2010

SUBJECT: Changes to Deduction Code 5B3 (Fondaction)


1.1 The purpose of this directive is to provide clients with information about changes to the Fondaction (Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi), a labour-sponsored fund in Quebec.


2.1 In 2006, the Union of Canadian Correctional Officers (UCCO) requested that a deduction code be created in the Regional Pay System (RPS) to enable their members residing in Quebec to purchase Fondaction shares via payroll deduction and receive the tax credits directly at source. As a result, code 5B3 was created for this purpose. Effective June 1, 2009, the policy governing entitlement code 5B3 (Fondaction) has changed.

2.2 This compensation directive must be read in conjunction with Compensation Directive 2006-020.


3.1 On March 19, 2009, the Government of Quebec announced a temporary increase in their provincial tax credit for the purchase of shares issued by Fondaction after May 31, 2009.

3.2 The provincial tax credit for the purchase of Fondaction shares increased from 15% to 25% effective June 1, 2009.

3.3 Please note that the federal tax credit for Fondaction shares remains the same at 15%.


4.1 Effective September 14, 2010, the RPS will be modified to reflect the new provincial tax credit of 25%. Eligible employees purchasing Fondaction shares after that date will receive the entire tax credit directly at source.

4.2 Employees who purchased Fondaction shares prior to September 14, 2010, will receive the additional tax credit when they file their completed income tax return.


5.1 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
B. Fortin

Brigitte Fortin
Associate Assistant Deputy Minister
Accounting, Banking and Compensation

Reference(s): 5B3