Ask an Expert, with Annie Chong

Filing CPT30 with multiple employers; Retiring allowances and employment with an affiliate

Question: We have recently hired an employee who is 67 years old. She has told us that she filed a form CPT30, Election to Stop Contributing to the Canada Pension Plan or Revocation of a Prior Election, with her former employer to stop CPP deductions. Does she have to file another form now that she is working with us? If so, do we keep deducting CPP contributions until she gives us the form?

Answer: The employee must file only one CPT30 form in a calendar year. She needs to give you a copy of the CPT30 that she previously sent to the Canada Revenue Agency (CRA) and gave to her former employer. Until she does that, you must deduct CPP contributions from her pensionable earnings. Once she gives you a copy of the form showing she has elected to stop CPP contributions, you will likely have to make some payroll adjustments.

If she gives you a copy of the form in the same year that you made the payroll deductions, you will have to reimburse her for any CPP contributions you took.

You can reduce your next remittance to the CRA to recapture the CPP that you deducted and paid. You will also have to revise your payroll records.

If the employee does not give you the form until next year, do not reimburse her for the outstanding amount or reduce a remittance in 2015 to make up for the contribution. Instead, the employee can receive a refund when filing her personal income tax return. To recover the employer share, file form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums, with the CRA.

If the employee cannot find her copy of the form, advise her to contact the CRA. The agency will send her a copy of the form that it has on file. The employee has to contact the CRA, not the employer.

Retiring allowances and employment with an affiliate

Question: Our company is terminating the employment of an employee because his position has been eliminated. We are paying him severance pay for the loss of the job. The employee has been hired in a different position by a company affiliated with us. Will this employment affect whether the severance payment qualifies as a retiring allowance?

Answer: It may. A retiring allowance is a sum of money paid, on or after termination of employment, to recognize an employee’s long service or to compensate for loss of office or employment. In Interpretation Bulletin IT-337R4, Retiring Allowances, the CRA states that a loss of an office or employment does not include situations where an employer terminates an employee’s employment and the employee is then re-employed full- or part-time by the employer or an affiliate of the employer if this was arranged before the termination.

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