ARCHIVED CD 2010-021
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November 12, 2010
SUBJECT: 2010 Year-end Requirements
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 2009-026 dated November 16, 2009.
3.1 Each year end, there are recurring activities that require manual action. To assist clients and PO s, a single directive is now being issued on a yearly basis as a reminder of all these year-end activities.
4.1 Reminder 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.
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 T4statement 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 PO the amounts pertaining to each province or territory, so that these amounts are reflected on each T4 statement.
- Personal Use of Government-owned Vehicles
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 PO the annual taxable benefit amount to be included for T4statements and Relevé1 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/Relevé1).
- 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], e.g. 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:
- Compensation Directive 1994-012, dated March 23, 1994, if the situation is related to dual employment or educational leave;
- Superannuation Administration Manual Special Bulletin 1999-003, dated February 15, 1999, if the situation is related to employees who are on leave without pay 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 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 Code62 was entered into the RPS, and not from the effective date of the rehabilitation leave.
- 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. 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, deductions 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.).
Please refer to the following documents:
- Compensation Directive 1993-017, dated November 16, 1993, for FSTQ related information;
- Compensation Directive 1997-034, dated November 6, 1997, for alimony and/or child support payments related information;
- Compensation Directive 2002-020, dated August 21, 2002, for information on reducing source deductions of income tax;
- Compensation Directive 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.
- T4 and T4A Statements, Relevé 1 and Relevé 2 Issued to Deceased Employees
In reference to Compensation Directive 2007-015, dated August 22, 2007, clients are reminded that system generated T4, T4A, Relevé1 and Relevé2 statements for which advance manual copies were issued, are to be kept in the employee's personnel file.
- 2010 T4 Statement - Status Indian
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 field42 (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 of the T4statement. Failure to record code "0" in field 42 where the Status Indian employee's income is entirely 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 Compensation Directive 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 process a PAC 30 to credit MER element 744 (Indian Exempt Income). This will result in reporting only the exempt portion of the earnings in box 71 of the T4statement.
- 2010 Relevé 1- Status Indian
Clients are required to calculate and provide a written notice to report to the PO 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.
NOTE: The tax exempt earnings for Status Indian employees working on a reserve in Québec need to be reported only once to the PO for both the Relevé1 and T4 statements.
- Self-funded Leave (SFL)
In reference to Compensation Directive 1994-048, dated December 8, 1994, clients are reminded to provide a written notice to report to the PO the amounts deducted for self-funded leave (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.
- Vacation Travel Assistance (VTA) Payments
Clients who have issued Vacation Travel Assistance (VTA) payments through their own finance sections will be responsible for issuing 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 sections.
- 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 Compensation Directive 2006-002, Section 4.4 dated January 5, 2006, for additional information.
- Payments Made after the Closing of Pay Period 26, but Before the Opening of Pay Period 01 - 7A Accounts
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 7Apay period of the calendar year.
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 MER, unactioned, until the first 7A pay period 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 new year 7A pay period is run, the previously unactioned transactions will process along with any new time summary 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 for 2010.
- Printing of Addresses on Statements of Remuneration (SOR s)
In reference to Compensation Directive 2005-007, dated May 17, 2005, clients that print addresses on SOR s should ensure that their employee mailing addresses in the RPS are up to date.
- Union Dues Deductions
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 paid by the Crown.
- 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 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.
4.2 Reminder to Pay Offices (PO)
- 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.
- Pension Adjustment (PA)
Please refer to Compensation Directive 1994-012 concerning actions required in certain situations of dual employment and educational leave.
Please refer to the Superannuation Administration Manual 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 pay periods.
- Status Indian - 2010 T4 and Relevé1 Statements
Upon receipt of written notice from clients, the PO will be responsible for processing PAC 30 transactions 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 Relevé1 for those working on a reserve in Québec.
Please see Compensation Directive 1996-053 for more information on the Québec provincial taxation requirements for Status Indian employees, and Compensation Directive 2009-028 for the federal taxation requirements.
- 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 (self-funded leave) for employees working in Quebec. Please refer to Compensation Directive 1994-048 for additional information.
- Vacation Travel Assistance (VTA) Payments
Refer to section 4.1 (h) herein. The PO will no longer update employee T4s with amounts paid by the departmental finance section as VTA payments.
- Union Dues Deductions
Upon receipt of the client's written notice to adjust the employee's T4/Relevé1 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 Compensation Directive 2005-008, sections 4.2.2 and 4.3.3.
5.1 The compensation community is reminded that they are not to contact the PWGSC Printing Operations sites in Dartmouth, Québec City or Winnipeg regarding the issuance of the 2010 T4/Relevé tax forms. The forms will be produced at the beginning of February 2011, and distributed from the print sites on a priority basis.
6. ADDITIONAL INFORMATION
6.1 Statements of Remuneration (e.g. T4, T4A, Relevé1, etc.) Not Issued by the PWGSC Compensation Sector
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 the PWGSC compensation systems.
7.1 Any request for information regarding the foregoing should be addressed to your PWGSC Compensation Services Office.
Original Signed by
Carrie E. Roussin
Carrie E. Roussin
Accounting, Banking and Compensation
Reference(s): CJA 9007-10-2 and 9007-10-3
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