How well do you know your SIN responsibilities?

Test yourself with a series of true and false statements

Payroll departments play an important role in the federal government’s social insurance number (SIN) program. By using the number when completing T4s and Records of Employment, payroll helps the government keep track of individuals’ source deductions and pensionable and insurable earnings for tax purposes and for receiving C/QPP and EI benefits.

A mistake in recording or maintaining SINs could lead to tax or benefit problems for individuals or fraud concerns for the government. How well do you know your SIN responsibilities? To find out, test yourself with these true or false statements.

When employees must provide employers with their SIN, the employee can either show the SIN document to the employer or just provide the number. True or False?

False. Employees must show the employer either their SIN card or a letter from Service Canada verifying their SIN (Service Canada began issuing letters instead of plastic cards just over a year ago). Even though many individuals have memorized their SIN, it is not enough for them to just write it down or tell the employer. The employer must see the SIN documentation and they must ask all new hires to show identification to verify their identity.

Employers must obtain and record a SIN from every employee within one week of the employee beginning work. True or False?

False. Employers have a legal responsibility to obtain and record a SIN from every employee within three days after the employee begins work.

If an employer does not have an employee’s SIN when completing its T4s, the employer must enter nine zeros in the SIN box on the form. True or False?

True. Although employees are required to provide their SIN, there may be situations in which the employer does not have it, and the employer must still complete a T4 for the employee.

Employees must have a SIN to work in Canada and employers have a legal responsibility to tell employees how to obtain or replace a SIN. An employer should tell a new hire without a SIN to apply for one by going to a Service Canada Centre with their original proof-of-identity documents (such as a Canadian birth certificate, Canadian citizenship certificate or work permit). Photocopies are not accepted. Once the individual receives the SIN, he has three days to relay the number to the employer.

If an employer is unable to obtain an employee’s SIN, the employer should contact Service Canada within six days of the individual beginning work. If an employee does not provide a SIN, the employer must be able to show it made a reasonable effort to obtain the number (such as keeping copies of written requests for the SIN). Employers that do not make a reasonable effort may be fined $100 for each failure. Employees who fail to provide their SIN may also be penalized $100 for each failure.

Employers can contact Service Canada to verify an employee’s SIN. True or False?

True. Service Canada has a Social Insurance Registration Office that employers can call to confirm an employee’s SIN or to make sure a new employee’s number is correct. The office will not provide information to payroll service providers though.

If an employer realizes it has the wrong SIN for an employee after sending in its T4 return, the employer should obtain the correct SIN from the employee and contact Service Canada to report the T4 correction. True or False?

False. If an employer has already filed its T4 return, it must submit an amended T4 with the correct SIN to the CRA, not Service Canada. It must also provide the employee with a corrected T4 (two copies if printed or one copy if sent electronically and the employee provided consent to receive it that way).

An incorrectly reported SIN can cause problems for the employee. It could lead to the CRA giving her the wrong deduction limit for her registered retirement savings plan if the employer reports a pension adjustment under the wrong SIN. It could also negatively affect the individual’s future Canada Pension Plan benefits if the employee’s record of pensionable earnings is not accurate.

Under the North American Free Trade Agreement, citizens of the United States and Mexico do not need to apply for a SIN to work in Canada. True or False?

False. Service Canada requires every person working in pensionable and insurable employment in Canada to have a SIN, regardless of any trade agreements.

If an employee changes her name (such as getting married or divorced), the employee must also change his social insurance number document to reflect this. True or False?

True. If a person changes her name, she must apply to Service Canada to update her SIN record with the new name within 60 days of the change. It is important the name associated with the SIN record match the individual’s current legal name.

The employee will need to go to a Service Canada Centre with her original proof-of-identity documents. Once Service Canada has updated the information, it will provide the individual with a confirmation letter. The previous SIN card or document will no longer be valid and should be destroyed. Employees must provide the updated SIN information to their employer within three days of receiving the Service Canada confirmation.

Employers may use social insurance numbers as their employee identification numbers. True or False?

False. Service Canada "strongly" discourages employers from using SINs as employee identification numbers. SINs are confidential and payroll departments must ensure the numbers are kept in a secure area or on an encrypted computer system. Any person (including an employer) who must prepare information returns may not knowingly use, communicate or allow an individual’s SIN to be communicated, unless the law authorizes it or the individual gives written consent.

Students who are under 18 years of age do not need a SIN in order to be employed. True or False?

True. Even without a SIN, employers are required to take source deductions from the employee and pay the remittances to the Canada Revenue Agency and Revenu Québec.

SINs beginning with the number "9" expire every calendar year and must be renewed. True or False?

False and true. SINs beginning with 9 do have expiry dates but the period in which they are valid corresponds to the period the cardholder is authorized to work in Canada. Service Canada issues SINs beginning with 9 to foreign workers who have been given authorization to work here, but not to Canadian citizens and permanent residents.

If an individual’s SIN has expired, the employer must ask him to contact Citizenship and Immigration Canada to obtain a valid work permit before the employer is allowed to hire him. Once the individual has the new document, the employer must ask him to contact Service Canada to obtain an updated expiry date for the SIN.

There is a mathematical formula employers can use to determine if an employee’s SIN is valid. True or False?

True. To determine if a SIN is valid, follow these steps:

1.Remove the last digit of the number.

2. Multiply every second digit by 2.

3.Add all of the digits together, considering a two-digit number as two separate numbers.

4. Round the total up to the next highest tenth.

5. Subtract the total of all the digits from the rounded-up number.

6. The resulting number should be the same as the last digit of the SIN.

Example: 193 456 787

1. Remove the last digit: 7

2. Multiply every second digit by 2: 9x2=18 4x2 =8 6x2=12 8x2=16

3. Add all of the digits together, considering a two-digit number as two separate numbers:

1 + (1 + 8) + 3 + (8) + 5 + (1 + 2) + 7 + (1 + 6) = 43

4. Round the total up to the next highest tenth: 43 rounds up to 50

5.Subtract the total of all the digits from the rounded-up number: 50 – 43 = 7

6. The resulting number should be the same as the last digit of the SIN: 7

The SIN 193 456 787 is valid.

If the number is not valid and you think the employee is illegally using the SIN, call Service Canada to report it. Service Canada says it is an offence under the Income Tax Act for an employer to knowingly employ someone using a fraudulent SIN.

If you got all or most of the questions correct, congratulations! You know your SIN responsibilities. Readers wishing to know more about the SIN, may refer to Service Canada’s Social Insurance Number Code of Practice (www.servicecanada.gc.ca/eng/about/reports/sin/cop/toc.shtml).

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