How to assess the reimbursement of professional membership fees paid by the employer plus lots more
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.
Question: How do we assess the reimbursement of professional membership fees if paid by the employer?
Answer: Employer-paid (or reimbursed) professional membership fees are not taxable federally if the employer is the “primary beneficiary” of the payment. If membership in a professional association is a condition of employment, the payment is still not taxable, as the employer is considered the primary beneficiary. If the membership is not a condition of employment, it is up to the employer to determine who the primary beneficiary is. The employer must be able to support its position if the CCRA requests it.
For the province of Quebec, employer-paid (or reimbursed) professional membership fees for employees are generally a taxable benefit. The benefit equals the amount the employer paid (taxes included), less any amount the employee reimbursed the employer for the fees.
Exceptions may apply if the employer is the one who primarily benefits from the professional membership fees payment.
If a taxable benefit arises, report it in box (14) and in the “Other Information” area of the T4 (code 40) and boxes (A) and (L) of the RL-1.
Question: We have employees across Canada who occasionally work overtime. Our company would like to implement a policy to allow employees to take the time off instead of being paid for the overtime. What is the legislative requirement for each jurisdiction?
Answer: Banked overtime policy varies across the country with no specified regulations in place for employers covered by the Canada Labour Code, nor those in Saskatchewan, Yukon Territory, Northwest Territories and Nunavut, Prince Edward Island, Nova Scotia and New Brunswick.
However, the remaining jurisdictions have the following guidelines:
Alberta: Banking overtime is permitted provided an overtime agreement is signed by both parties. Under such an agreement, banked time may be taken as one hour off for each hour worked. If the accumulated time is not taken within three months of the end of the pay period, the employee must be paid for the overtime hours at the overtime rate. An exception can be made if the Director of Employment Standards issues a permit authorizing a longer period of time or the overtime agreement is part of a collective agreement that provides for a longer period.
Each employee must receive a copy of the overtime agreement. No changes may be made to the agreement, unless one party to the agreement gives the other party at least one month’s notice in writing.
British Columbia: Banked overtime may be set up by an employer at the written request of an employee. Instead of being paid for the overtime within eight days of the end of the pay period in which it was earned, the employee would save overtime wages in the bank and later “withdraw” them either as money or time off work.
Employers are not allowed to arbitrarily introduce a banked overtime system. Rather, they may establish a time bank only after an employee (employees) makes a written request for one. At any time, employees may ask the employer to pay out the banked overtime, request time off with pay for a mutually agreed period, or to close the bank.
Employees must take all wages credited to the time bank as either time off or as money within six months for the payment.
The employer may set a date for paying out overtime wages credited to the bank, provided no employee waits more than six months for the payment.
Manitoba: Employer and employees may enter into a written agreement that permits the employee to take time off instead of receiving overtime pay. Where there is an agreement the employer must provide time off in an amount equal to at least the number of hours or parts of hours of overtime worked. During this time off, the employee is to receive the regular wage rate for each hour or part hour taken off.
Newfoundland and Labrador: With the employer’s agreement, an employee may choose to be compensated for overtime hours by receiving 1.5 hours of paid time off for each hour of overtime worked instead of receiving overtime pay. The time must be taken within three months of the overtime being worked or, with the employee’s agreement, within 12 months of the overtime being worked.
Ontario: With the employer’s agreement, an employee may choose to be compensated for overtime hours by receiving 1.5 hours of paid time off for each hour of overtime worked instead of receiving overtime pay. The time must be taken within three months of the overtime being worked or, with the employee’s agreement, within 12 months of the overtime being worked.
Quebec: With the employer’s agreement, an employee may choose to be compensated for overtime hours by receiving 1.5 hours of paid time off for each hour of overtime worked instead of receiving overtime pay. The time must be taken within 12 months of the overtime being worked.
Question: Will Human Resources Development Canada (HRDC) introduce a new reason-for-leave code for the Record of Employment (ROE) to cover the compassionate family care leave benefit announced in the 2003 federal budget?
Answer: The government announced in this year’s budget a new type of Employment Insurance benefit for people who are temporarily absent from work to provide care or support to a family member who is gravely ill with a significant risk of death. The proposed start date for compassionate care benefits is Jan. 4, 2004.
Under this new type of benefits, an employee may be entitled to receive compassionate care benefits to care for one of the following family members:
•child or child of the employee’s spouse or common-law partner;
•wife or husband, or common-law partner;
•father or mother;
•father’s wife or mother’s husband, if the father or mother has remarried; or
•the common-law partner of the employee’s father or mother, if there has been no remarriage. (For these purposes, a common-law partner means a person who has been living in a conjugal relationship with that person for at least a year.)
Eligible individuals may be entitled to a maximum of six weeks of EI benefits after having served a two-week waiting period.
For the purpose of the Record of Employment, the employer is to use “K” (other) and in Box 18 (comment section) indicate compassionate care leave. For the next printing of the paper ROEs, there will be a new reason for separation, code “Z.”
Question: Under what conditions are we permitted to pro-rate an employee’s Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) contributions?
Answer: Canada Customs and Revenue Agency (CCRA) permits an employer to pro-rate an employee’s annual CPP contributions in the following situations.
Employees who turn 18: Once employees reach the age of 18, they are subject to deductions on the first day of the month following the month they turn age 18. To calculate an employee’s CPP maximum contribution, pro-rate the maximum yearly contribution over the number of full months in the year after the employee turns 18.
Employees who turn 70: Once an employee turns 70, contributions cease on the first day of the month following the month the employee turns age 70. For the year in which the employee turns 70, pro-rate the maximum yearly contribution by the number of full months in the year up to and including the month in which the employee reaches age 70.
Employees who receive a CPP retirement pension: Employees receiving a CPP retirement pension are not required to pay CPP contributions. Once proof is obtained (for example, an award letter issued by HRDC), stop deducting CPP on the last day of the month prior to the month the pension becomes payable. In this situation, pro-rate the maximum yearly contribution by the number of full months before the month in which the pension becomes payable.
Employees who receive a CPP disability pension: If an employee begins to receive a disability pension under the CPP, stop deducting CPP contributions on the first day of the month after the month in which the person was considered to be disabled. In this situation, pro-rate the maximum yearly contribution by the number of full months up to and including the month in which the employee was considered disable under the CPP.
Start the CPP contribution again on the first day of the month following the month in which the employee no longer receives the disability pension. In this situation, pro-rate the maximum annual contribution by the number of full months following the month in which the person was no longer considered disabled.
Employees who die during the year: If an employee dies during the year, stop deducting CPP on the first day of the month following the month in which the employee passes away. In this situation, pro-rate the maximum annual contribution by the number of full months up to and including the month in which the employee dies.
Commission employees paid irregularly: If a commission-based employee is paid irregular commissions, pro-rate the basic exemption for each day worked.
(If the employee is paid commissions on a regular basis, normal CPP deductions apply.)
For the purpose of the Quebec Pension Plan contributions, employers are permitted to pro-rate QPP contributions under the following scenarios.
Employees who turn 18: Once employees reach the age of 18, they are subject to deductions on the first day of the month following the month they turn age 18. To calculate an employee’s QPP maximum contribution, pro-rate the maximum yearly contribution over the number of full months in the year after the employee turns 18.
Employees who receive a QPP disability pension: If an employee begins to receive a disability pension under the QPP, stop deducting QPP contributions on the first day of the month after the month in which the person was considered to be disabled under the terms of the plan(s). In this situation, pro-rate the maximum yearly contribution by the number of full months up to and including the month in which the employee was considered disable under the QPP.
Start the QPP contribution again on the first day of the month following the month in which the employee no longer receives the disability pension. Pro-rate the maximum annual contribution by the number of full months following the month in which the person was no longer considered disabled.
Employees who die during the year: If an employee dies during the year, stop deducting QPP contributions on the first day of the month following the month in which the employ
Question: How do we assess the reimbursement of professional membership fees if paid by the employer?
Answer: Employer-paid (or reimbursed) professional membership fees are not taxable federally if the employer is the “primary beneficiary” of the payment. If membership in a professional association is a condition of employment, the payment is still not taxable, as the employer is considered the primary beneficiary. If the membership is not a condition of employment, it is up to the employer to determine who the primary beneficiary is. The employer must be able to support its position if the CCRA requests it.
For the province of Quebec, employer-paid (or reimbursed) professional membership fees for employees are generally a taxable benefit. The benefit equals the amount the employer paid (taxes included), less any amount the employee reimbursed the employer for the fees.
Exceptions may apply if the employer is the one who primarily benefits from the professional membership fees payment.
If a taxable benefit arises, report it in box (14) and in the “Other Information” area of the T4 (code 40) and boxes (A) and (L) of the RL-1.
Question: We have employees across Canada who occasionally work overtime. Our company would like to implement a policy to allow employees to take the time off instead of being paid for the overtime. What is the legislative requirement for each jurisdiction?
Answer: Banked overtime policy varies across the country with no specified regulations in place for employers covered by the Canada Labour Code, nor those in Saskatchewan, Yukon Territory, Northwest Territories and Nunavut, Prince Edward Island, Nova Scotia and New Brunswick.
However, the remaining jurisdictions have the following guidelines:
Alberta: Banking overtime is permitted provided an overtime agreement is signed by both parties. Under such an agreement, banked time may be taken as one hour off for each hour worked. If the accumulated time is not taken within three months of the end of the pay period, the employee must be paid for the overtime hours at the overtime rate. An exception can be made if the Director of Employment Standards issues a permit authorizing a longer period of time or the overtime agreement is part of a collective agreement that provides for a longer period.
Each employee must receive a copy of the overtime agreement. No changes may be made to the agreement, unless one party to the agreement gives the other party at least one month’s notice in writing.
British Columbia: Banked overtime may be set up by an employer at the written request of an employee. Instead of being paid for the overtime within eight days of the end of the pay period in which it was earned, the employee would save overtime wages in the bank and later “withdraw” them either as money or time off work.
Employers are not allowed to arbitrarily introduce a banked overtime system. Rather, they may establish a time bank only after an employee (employees) makes a written request for one. At any time, employees may ask the employer to pay out the banked overtime, request time off with pay for a mutually agreed period, or to close the bank.
Employees must take all wages credited to the time bank as either time off or as money within six months for the payment.
The employer may set a date for paying out overtime wages credited to the bank, provided no employee waits more than six months for the payment.
Manitoba: Employer and employees may enter into a written agreement that permits the employee to take time off instead of receiving overtime pay. Where there is an agreement the employer must provide time off in an amount equal to at least the number of hours or parts of hours of overtime worked. During this time off, the employee is to receive the regular wage rate for each hour or part hour taken off.
Newfoundland and Labrador: With the employer’s agreement, an employee may choose to be compensated for overtime hours by receiving 1.5 hours of paid time off for each hour of overtime worked instead of receiving overtime pay. The time must be taken within three months of the overtime being worked or, with the employee’s agreement, within 12 months of the overtime being worked.
Ontario: With the employer’s agreement, an employee may choose to be compensated for overtime hours by receiving 1.5 hours of paid time off for each hour of overtime worked instead of receiving overtime pay. The time must be taken within three months of the overtime being worked or, with the employee’s agreement, within 12 months of the overtime being worked.
Quebec: With the employer’s agreement, an employee may choose to be compensated for overtime hours by receiving 1.5 hours of paid time off for each hour of overtime worked instead of receiving overtime pay. The time must be taken within 12 months of the overtime being worked.
Question: Will Human Resources Development Canada (HRDC) introduce a new reason-for-leave code for the Record of Employment (ROE) to cover the compassionate family care leave benefit announced in the 2003 federal budget?
Answer: The government announced in this year’s budget a new type of Employment Insurance benefit for people who are temporarily absent from work to provide care or support to a family member who is gravely ill with a significant risk of death. The proposed start date for compassionate care benefits is Jan. 4, 2004.
Under this new type of benefits, an employee may be entitled to receive compassionate care benefits to care for one of the following family members:
•child or child of the employee’s spouse or common-law partner;
•wife or husband, or common-law partner;
•father or mother;
•father’s wife or mother’s husband, if the father or mother has remarried; or
•the common-law partner of the employee’s father or mother, if there has been no remarriage. (For these purposes, a common-law partner means a person who has been living in a conjugal relationship with that person for at least a year.)
Eligible individuals may be entitled to a maximum of six weeks of EI benefits after having served a two-week waiting period.
For the purpose of the Record of Employment, the employer is to use “K” (other) and in Box 18 (comment section) indicate compassionate care leave. For the next printing of the paper ROEs, there will be a new reason for separation, code “Z.”
Question: Under what conditions are we permitted to pro-rate an employee’s Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) contributions?
Answer: Canada Customs and Revenue Agency (CCRA) permits an employer to pro-rate an employee’s annual CPP contributions in the following situations.
Employees who turn 18: Once employees reach the age of 18, they are subject to deductions on the first day of the month following the month they turn age 18. To calculate an employee’s CPP maximum contribution, pro-rate the maximum yearly contribution over the number of full months in the year after the employee turns 18.
Employees who turn 70: Once an employee turns 70, contributions cease on the first day of the month following the month the employee turns age 70. For the year in which the employee turns 70, pro-rate the maximum yearly contribution by the number of full months in the year up to and including the month in which the employee reaches age 70.
Employees who receive a CPP retirement pension: Employees receiving a CPP retirement pension are not required to pay CPP contributions. Once proof is obtained (for example, an award letter issued by HRDC), stop deducting CPP on the last day of the month prior to the month the pension becomes payable. In this situation, pro-rate the maximum yearly contribution by the number of full months before the month in which the pension becomes payable.
Employees who receive a CPP disability pension: If an employee begins to receive a disability pension under the CPP, stop deducting CPP contributions on the first day of the month after the month in which the person was considered to be disabled. In this situation, pro-rate the maximum yearly contribution by the number of full months up to and including the month in which the employee was considered disable under the CPP.
Start the CPP contribution again on the first day of the month following the month in which the employee no longer receives the disability pension. In this situation, pro-rate the maximum annual contribution by the number of full months following the month in which the person was no longer considered disabled.
Employees who die during the year: If an employee dies during the year, stop deducting CPP on the first day of the month following the month in which the employee passes away. In this situation, pro-rate the maximum annual contribution by the number of full months up to and including the month in which the employee dies.
Commission employees paid irregularly: If a commission-based employee is paid irregular commissions, pro-rate the basic exemption for each day worked.
(If the employee is paid commissions on a regular basis, normal CPP deductions apply.)
For the purpose of the Quebec Pension Plan contributions, employers are permitted to pro-rate QPP contributions under the following scenarios.
Employees who turn 18: Once employees reach the age of 18, they are subject to deductions on the first day of the month following the month they turn age 18. To calculate an employee’s QPP maximum contribution, pro-rate the maximum yearly contribution over the number of full months in the year after the employee turns 18.
Employees who receive a QPP disability pension: If an employee begins to receive a disability pension under the QPP, stop deducting QPP contributions on the first day of the month after the month in which the person was considered to be disabled under the terms of the plan(s). In this situation, pro-rate the maximum yearly contribution by the number of full months up to and including the month in which the employee was considered disable under the QPP.
Start the QPP contribution again on the first day of the month following the month in which the employee no longer receives the disability pension. Pro-rate the maximum annual contribution by the number of full months following the month in which the person was no longer considered disabled.
Employees who die during the year: If an employee dies during the year, stop deducting QPP contributions on the first day of the month following the month in which the employ
