Questions and answers from the world of payroll
The following questions were fielded by Carswell’s Payroll Hotline service. Answers are provided courtesy of The Canadian Payroll Manual and The Canadian Payroll Manager newsletter, published by Carswell.
Christmas Day and Boxing Day fall on non-work days this year (Saturday, Dec. 25 and Sunday, Dec. 26). According to employment standards acts, what days should we substitute as days off with pay? We have employees across Canada.
The Canada Labour Code, which applies to federally regulated employers, and the Ontario Employment Standards Act are the only two legislations that deem Boxing Day as a statutory holiday.
This means that, outside these jurisdictions, if an employer gives workers a day off with pay on Boxing Day, it would be considered a company floater because your company provides a greater benefit.
The following list sets out the minimum requirements set by employment or labour standards laws in each jurisdiction.
Canada Labour Code: When a statutory holiday falls on a non-working day, an entitled employee must be granted a holiday with pay at a mutually agreed upon time. But when that statutory holiday is New Year’s Day, Canada Day, Remembrance Day, Christmas Day or Boxing Day, the entitled employee must be granted a holiday with pay on the working day immediately preceding or following the holiday.
Alberta: When a statutory holiday falls on a non-working day, and an entitled employee does not work the holiday, the employer is not required to pay the employee or grant another day off with pay.
British Columbia: When a statutory holiday falls on a non-working day, an entitled employee must receive an average day’s pay.
Manitoba: When a statutory holiday falls on a non-working day, an entitled employee must be granted a day off with regular pay on another day mutually chosen by both the employee and the employer. That replacement day cannot come after the employee’s next annual vacation.
When New Year’s Day, Canada Day or Christmas Day falls on a Saturday or Sunday that is a non-working day, an entitled employee must be granted a day off with regular pay on the working day immediately following the holiday.
New Brunswick: When a statutory holiday falls on a non-working day or during an employee’s vacation, the entitled employee must receive either the regular wages for the holiday; or another working day off with pay, that’s no later than the next annual vacation.
Newfoundland and Labrador: When a statutory holiday falls on a non-working day, an entitled employee is to be granted the first working day following the holiday or another mutually agreed upon day as a holiday.
Northwest Territories and Nunavut: When a statutory holiday falls on a non-working day, an entitled employee must receive regular wages or be granted another day off with pay, to be taken not later than the next annual vacation or termination of employment, whichever occurs first.
Nova Scotia: When a statutory holiday falls on a non-working day, the entitled employee must receive a day off with pay on the working day immediately following the holiday, or a day off with pay on a mutually agreed upon day.
Ontario: When a statutory holiday falls on a non-working day or during an entitled employee’s vacation, the employee must receive either a substitute day off with statutory holiday or, if the employee and employer agree in writing, payment for the statutory holiday.
Prince Edward Island: When a statutory holiday falls on a non-working day, an entitled employee must be granted a paid holiday on the working day immediately following the statutory holiday, or a holiday with pay the day immediately following the next annual vacation.
Quebec: When a statutory holiday falls on a non-working day, an employer is not required to give an employee another day off with pay. The employer, however, is still required to pay entitled individuals their average daily wage.
Saskatchewan: When a statutory holiday falls on a non-working day, an entitled employee must receive the regular daily wage. Where the wage varies, the employee is entitled to an amount calculated according to the formula: A = W/20, where W is the total wages the employee earned in the four weeks immediately before the holiday, excluding overtime.
When New Year’s Day, Christmas Day or Remembrance Day falls on a Sunday, employees must be granted a holiday with pay on the following Monday.
Yukon: When a statutory holiday falls on a day that is a non-working day for an employee, the entitled employee must receive a day off with pay on the working day immediately following the holiday.
We hired an executive who’s a high-income earner. He just advised us of having already paid the maximum deductions for both Canada Pension Plan and Employment Insurance with the previous company. Can we exempt him from the two deductions?
This employee may have reached maximum contribution for Canada or Quebec Pension Plan and Employment Insurance for the year, but because he has changed employers during the calendar year, the new employer must begin to deduct CPP or QPP contributions again.
The employee will be reimbursed for any overpayment when he files a personal income tax return. The new employer, however, cannot claim an overpayment refund, since each employer must make full contributions regardless of what any other employer may have deducted.
What are the basic personal amounts for the 2004 federal and provincial/territorial TD1 forms?
Federal (TD1): $ 8,012
Alberta (TD1AB): $14,337
British Columbia: (TD1BC) $ 8,523
Manitoba (TD1MB): $ 7,634
New Brunswick (TD1NB): $ 7,756
Newfoundland and Labrador (TD1NL): $ 7,410
Nova Scotia (TD1NS): 7,231
Northwest Territories (TD1NT): $11,415
Nunavut (TD1NU): $10,495
Ontario (TD1ON): $ 8,044
Prince Edward Island (TD1PE): $ 7,412
Quebec (TP-1015.3-V): $ 9,150
Saskatchewan (TD1SK): $ 8,264
Yukon (TD1YT): $ 8,012
If an employee does not complete the form TD1 Personal Tax Credits Returns or for Quebec employees (TP-1015.3-V, Source Deductions Return) what claim code amount should we use when we calculate the income tax deduction?
The guideline issued by the Canada Revenue Agency (CRA) says employees who do not complete a TD1 form will have taxes deducted using the basic personal amount only.
The federal and provincial/ territorial TD1 forms are printed by the CRA to allow employees to claim eligible tax credits at the source. Employees should complete the TD1 forms upon hire with a new employer or, if there is a change in their entitlement to personal tax credits, they must complete a new TD1 form within seven days after the change.
For Quebec, employees are required to complete the provincial TP-1015.3-V Source Deductions Return (published by Revenu Québec) along with the federal TD1 form.
If there is a change in their entitlement to the personal tax credit, they will need to revise the TP-1015.3-V Source Deductions Return within 15 days after an event that results in a reduction of the amounts indicated on the previous TP-1015.3-V form completed.
We distributed the T4 and RL-1s to employees on Feb. 20, 2004. Some employees have already misplaced their copies. How do we replace them?
If an employee loses copies of the T4, you may give the individual another slip. Do not send these slips to the CRA. Clearly mark the replacement slips “duplicate.”
For an RL-1 slip that has already submitted to Revenu Québec, do not file a new slip. Simply give the employee a photocopy of the copy you retained for your records, clearly marked “duplicate.” Make sure the number appearing in the upper right-hand corner of the slip is legible on the photocopy.
Can we apply the lump-sum tax rates when we pay out lump-sum payments (banked overtime, bonuses or retroactive pay increases)?
No, often the term lump-sum payment is used to describe payments such as bonuses, vacation pay, banked overtime, bonuses or retroactive payments. They are reported in Box 14 (Employment Income) of the T4 and they are subject to all statutory deductions (C/QPP, EI and Income Tax).
The lump-sum tax rates are applied to specific types of payments such as retiring allowances, severance pay, death benefits, and amount paid out of an RRSP or RPP, redemption of an RRIF, and payments from an income averaging fund.
For more information visit www.carswell.com/payroll or call (800) 387-5164.
Christmas Day and Boxing Day fall on non-work days this year (Saturday, Dec. 25 and Sunday, Dec. 26). According to employment standards acts, what days should we substitute as days off with pay? We have employees across Canada.
The Canada Labour Code, which applies to federally regulated employers, and the Ontario Employment Standards Act are the only two legislations that deem Boxing Day as a statutory holiday.
This means that, outside these jurisdictions, if an employer gives workers a day off with pay on Boxing Day, it would be considered a company floater because your company provides a greater benefit.
The following list sets out the minimum requirements set by employment or labour standards laws in each jurisdiction.
Canada Labour Code: When a statutory holiday falls on a non-working day, an entitled employee must be granted a holiday with pay at a mutually agreed upon time. But when that statutory holiday is New Year’s Day, Canada Day, Remembrance Day, Christmas Day or Boxing Day, the entitled employee must be granted a holiday with pay on the working day immediately preceding or following the holiday.
Alberta: When a statutory holiday falls on a non-working day, and an entitled employee does not work the holiday, the employer is not required to pay the employee or grant another day off with pay.
British Columbia: When a statutory holiday falls on a non-working day, an entitled employee must receive an average day’s pay.
Manitoba: When a statutory holiday falls on a non-working day, an entitled employee must be granted a day off with regular pay on another day mutually chosen by both the employee and the employer. That replacement day cannot come after the employee’s next annual vacation.
When New Year’s Day, Canada Day or Christmas Day falls on a Saturday or Sunday that is a non-working day, an entitled employee must be granted a day off with regular pay on the working day immediately following the holiday.
New Brunswick: When a statutory holiday falls on a non-working day or during an employee’s vacation, the entitled employee must receive either the regular wages for the holiday; or another working day off with pay, that’s no later than the next annual vacation.
Newfoundland and Labrador: When a statutory holiday falls on a non-working day, an entitled employee is to be granted the first working day following the holiday or another mutually agreed upon day as a holiday.
Northwest Territories and Nunavut: When a statutory holiday falls on a non-working day, an entitled employee must receive regular wages or be granted another day off with pay, to be taken not later than the next annual vacation or termination of employment, whichever occurs first.
Nova Scotia: When a statutory holiday falls on a non-working day, the entitled employee must receive a day off with pay on the working day immediately following the holiday, or a day off with pay on a mutually agreed upon day.
Ontario: When a statutory holiday falls on a non-working day or during an entitled employee’s vacation, the employee must receive either a substitute day off with statutory holiday or, if the employee and employer agree in writing, payment for the statutory holiday.
Prince Edward Island: When a statutory holiday falls on a non-working day, an entitled employee must be granted a paid holiday on the working day immediately following the statutory holiday, or a holiday with pay the day immediately following the next annual vacation.
Quebec: When a statutory holiday falls on a non-working day, an employer is not required to give an employee another day off with pay. The employer, however, is still required to pay entitled individuals their average daily wage.
Saskatchewan: When a statutory holiday falls on a non-working day, an entitled employee must receive the regular daily wage. Where the wage varies, the employee is entitled to an amount calculated according to the formula: A = W/20, where W is the total wages the employee earned in the four weeks immediately before the holiday, excluding overtime.
When New Year’s Day, Christmas Day or Remembrance Day falls on a Sunday, employees must be granted a holiday with pay on the following Monday.
Yukon: When a statutory holiday falls on a day that is a non-working day for an employee, the entitled employee must receive a day off with pay on the working day immediately following the holiday.
We hired an executive who’s a high-income earner. He just advised us of having already paid the maximum deductions for both Canada Pension Plan and Employment Insurance with the previous company. Can we exempt him from the two deductions?
This employee may have reached maximum contribution for Canada or Quebec Pension Plan and Employment Insurance for the year, but because he has changed employers during the calendar year, the new employer must begin to deduct CPP or QPP contributions again.
The employee will be reimbursed for any overpayment when he files a personal income tax return. The new employer, however, cannot claim an overpayment refund, since each employer must make full contributions regardless of what any other employer may have deducted.
What are the basic personal amounts for the 2004 federal and provincial/territorial TD1 forms?
Federal (TD1): $ 8,012
Alberta (TD1AB): $14,337
British Columbia: (TD1BC) $ 8,523
Manitoba (TD1MB): $ 7,634
New Brunswick (TD1NB): $ 7,756
Newfoundland and Labrador (TD1NL): $ 7,410
Nova Scotia (TD1NS): 7,231
Northwest Territories (TD1NT): $11,415
Nunavut (TD1NU): $10,495
Ontario (TD1ON): $ 8,044
Prince Edward Island (TD1PE): $ 7,412
Quebec (TP-1015.3-V): $ 9,150
Saskatchewan (TD1SK): $ 8,264
Yukon (TD1YT): $ 8,012
If an employee does not complete the form TD1 Personal Tax Credits Returns or for Quebec employees (TP-1015.3-V, Source Deductions Return) what claim code amount should we use when we calculate the income tax deduction?
The guideline issued by the Canada Revenue Agency (CRA) says employees who do not complete a TD1 form will have taxes deducted using the basic personal amount only.
The federal and provincial/ territorial TD1 forms are printed by the CRA to allow employees to claim eligible tax credits at the source. Employees should complete the TD1 forms upon hire with a new employer or, if there is a change in their entitlement to personal tax credits, they must complete a new TD1 form within seven days after the change.
For Quebec, employees are required to complete the provincial TP-1015.3-V Source Deductions Return (published by Revenu Québec) along with the federal TD1 form.
If there is a change in their entitlement to the personal tax credit, they will need to revise the TP-1015.3-V Source Deductions Return within 15 days after an event that results in a reduction of the amounts indicated on the previous TP-1015.3-V form completed.
We distributed the T4 and RL-1s to employees on Feb. 20, 2004. Some employees have already misplaced their copies. How do we replace them?
If an employee loses copies of the T4, you may give the individual another slip. Do not send these slips to the CRA. Clearly mark the replacement slips “duplicate.”
For an RL-1 slip that has already submitted to Revenu Québec, do not file a new slip. Simply give the employee a photocopy of the copy you retained for your records, clearly marked “duplicate.” Make sure the number appearing in the upper right-hand corner of the slip is legible on the photocopy.
Can we apply the lump-sum tax rates when we pay out lump-sum payments (banked overtime, bonuses or retroactive pay increases)?
No, often the term lump-sum payment is used to describe payments such as bonuses, vacation pay, banked overtime, bonuses or retroactive payments. They are reported in Box 14 (Employment Income) of the T4 and they are subject to all statutory deductions (C/QPP, EI and Income Tax).
The lump-sum tax rates are applied to specific types of payments such as retiring allowances, severance pay, death benefits, and amount paid out of an RRSP or RPP, redemption of an RRIF, and payments from an income averaging fund.
For more information visit www.carswell.com/payroll or call (800) 387-5164.
