Rescinded [2009-04-01] - Deductions from pay

This document elaborates on the various mandatory and voluntary deductions, which may be made from an employee's pay. (Chapter 6, Pay Administration Manual)
Date modified: 1991-06-01

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Notice to the reader: As of April 1st 2009, this document has been archived online and is kept purely for historical purposes.

1. Purpose

This chapter elaborates on the various mandatory and voluntary deductions which may be made from an employee's pay.

2. Mandatory deductions

The following deductions are mandatory for eligible employees.

Note:

No deduction is made of any tax imposed by provincial or municipal law unless authority is granted by a Federal Act or executive regulation.

2.1 Public Service Superannuation Act (PSSA)

The Public Service Superannuation pension plan is designed to provide income for the lifetime of the employee, the employee's survivors or a lump-sum payment to the employee's estate. The type of benefit available to individuals, or the estate, is subject to prescribed conditions as well as factors such as; the age of the employee, number of years of pensionable service and the reason for the termination of employment. For detailed information reference should be made to the Superannuation Administration Manual published by Supply and Services Canada.

Under the PSSA, all eligible employees are required to contribute a set percentage (6 1/2%) of their gross salary, minus the rate required by the Canada/Quebec Pension Plan. An additional 1% is required under the Supplementary Retirements Benefits Act (SRBA). Employees are required to contribute.

For all eligible employees, contributions commence on the first day of employment. For employees under 18 years of age; employees appointed for term appointments; and/or employees appointed while on retirement leave from one of the Canadian Forces, reference should be made to the Superannuation Administration Manual.

Contributors under the PSSA, who are on authorized leave without pay, are required to pay at the single or double rate upon their return to duty. Deficiencies are deducted from salary in equal installments over a period equal to the period of leave without pay and in some cases payments may be made in a lump-sum within 30 days of return to duty. (Refer to the Superannuation Administration Manual).

On termination of employment, the collection of superannuation deficiencies including Supplementary Retirement Benefit account (SRBA), Death Benefit (DB) deficiencies, Disability Insurance/Long-Term Disability (DI/LTD) deficiencies from severance pay is made on the authority of the employee only and should not be done automatically by the paying office as the employee has the option of making other arrangements with the Superannuation Division for repayment.

2.2 Supplementary Retirement Benefits Act (SRBA)

The Supplementary Retirement Benefits Act provides for increases, dependent on increases to the cost of living, on all pensions payable.

Each contributor to the Public Service Superannuation account, including the period following completion of 35 years of pensionable service, contributes an additional 1% of salary for credit to the Supplementary Retirement Benefits account. (Refer to the Superannuation Administration Manual.)

2.3 Canada Pension Plan/Quebec Pension Plan (CPP/QPP)

While the provisions of the plans are not identical, each provides employees with a basic protection against loss of income resulting from retirement, death and disability.

2.3.1 Eligibility

All public servants employed outside the province of Quebec and who are between the ages of 18 and 70 are eligible to contribute to the Canada Pension Plan. Similarly, public servants whose place of work is in the province of Quebec contribute to the Quebec Pension Plan.

2.3.2 Contributions

For both CPP and QPP, contributions are deducted at source to a maximum rate of pensionable earnings each year. The employer also contributes an amount equal to that deducted for each employee.

The employee's contributions are deductible for income tax purposes.

Contributions under these pension plans are not refundable but remain in the appropriate account until a pension becomes payable.

2.3.3 Benefits

The Canada Pension Plan and the Quebec Pension Plan provide the following types of benefits:

  • disability pensions;
  • benefits for dependent children of disabled pensioners;
  • a lump-sum death benefit payment at death;
  • pensions to surviving spouses of deceased contributors;
  • orphans benefits;
  • retirement benefit;
  • retirement pensions as early as age 60; however, when the retirement pension becomes payable in a month other than the month of the beneficiary's 65th birthday, the pension amount is either reduced or increased for each month between the beneficiary's 65th birthday and the month the pension becomes payable.

In all cases, application must be made for benefits as soon as possible, because in most cases benefits begin only after an application is approved.

2.3.4 Increases in benefits

The Plan provides for increases in benefits through a Pension Index based on the Consumer Price Index.

Refer to the Superannuation Administration Manual.

2.4 Insurance funds

2.4.1 Unemployment Insurance Act

Unemployment Insurance is a benefit payable to eligible employees when there has been an interruption of earnings.

Employees, with few exceptions, in the Public Service who are under age 65 are subject to the Unemployment Insurance Act on a compulsory basis.

Premiums are deducted automatically from the employee's earnings. The employer also contributes premiums on behalf of employees.

Departments are responsible for:

  • the provision of general information to employees upon request;
  • the direction of employees to the appropriate Canada Employment Centre for specific information or advice;
  • the completion of Records of Employment and the prompt distribution of the completed copies within the prescribed period of 5 calendar days.

Refer to the Insurance and Related Benefits volume of the Treasury Board Manual.

2.4.2 Supplementary Death Benefit (SDB)

The Supplementary Death Benefit Plan provides a form of life insurance protection. The benefit becomes payable, upon an employee's death, to a designated beneficiary or to the estate.

The Plan applies to all public servants who are contributors under the Superannuation Act (including employees who have completed thirty-five years of pensionable service) unless employed with one of the excluded branches or the employee opted out of the Plan in 1954.

The rate of contribution is ten cents per month for each $250 of basic benefit, with an annual 10% reduced benefit following the participants 61st birthday plus a $500.00 paid-up coverage on the participant's 65th birthday.

Refer to the Superannuation Administration Manual.

2.4.3 Hospital insurance outside Canada

Coverage under both comprehensive benefits and hospital expenses portions of the Group Surgical Medical Insurance Plan (GSMIP) is compulsory for employees and dependants posted abroad if they are not covered under a provincial health insurance plan.

Individual monthly premiums are deducted at source from salary for each of the above coverages. Departments are responsible for determining which employees are required to participate and for reporting the deductions to the paying office.

For further information refer to the Public Service Health Insurance Directives, Insurance Administration Manual and the Insurance and Related Benefits volume.

2.4.4 Provincial medicare plans

In provinces where premiums are payable by residents, the government, as employer, contributes towards combined provincial and medical care insurance premiums payable by its employees.

The insurance plans of Alberta, British Columbia and outside Canada, provide for monthly premiums to be deducted from employees' earnings.

Eligible employees

  • employees residing in a province where contributions are required.
  • employees engaged in Canada and posted abroad.
  • employees residing outside Canada while on educational leave with pay.

Employer's share of contributions are not payable in respect of any full calendar month of leave without pay.

Employees are required to remit premiums (employee's share and employer's share) directly to the provincial government to maintain continuous coverage while on leave without pay.

Non-premium provinces such as Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario, Yukon, Manitoba, Saskatchewan and Northwest Territories finance their hospitalization plan either from general revenue, property tax, sales tax or special tax.

Most of the provinces have prescribed a waiting period from one to three months and require the payment of a specified premium in order to qualify for benefits. All the provinces, with the exception of Alberta, provide for continuance of coverage after a resident leaves the province and moves to another province.

Quebec

The contributions of individuals to the financing of health programs is integrated into the Quebec Income Tax rates.

Alberta

The plan provides for payment of basic health and hospital services.

It is the responsibility of the employee to register himself and his dependents not later than one month after becoming eligible for coverage. If a new employee is not registered, the employer must register the employee immediately unless he is properly excluded from group coverage. Employees are required to pay premiums at a rate applicable to their status.

The premium is deducted from salary on a current basis (July premium deducted in July for July coverage).

If an employee moves from Alberta it is the responsibility of the personnel office to take deductions for both plans (Alberta and the other Provincial Plan) on the first day of the current month.

Deductions for the Alberta Medical Plan cease the first of the month that the other Provincial Medical Plan coverage takes effect.

A "Notice of Change" must be completed for change of name, addition of child, deletion of dependents, etc.…

At age 65 the employee is no longer required to pay premiums. Free coverage for the employee and his dependents becomes effective the first of the month following the 65th birthday.

British Columbia

The plan provides for payment of the cost of required medical, surgical, obstetrical and diagnostic services.

It is the responsibility of every employee to enroll in the plan and to maintain coverage for himself and his dependents.

Employees are required to pay premiums at a rate applicable to their status.

Employees from another province establishing residence in British Columbia would be eligible for coverage effective the first of the third month following the date on which they became residents of British Columbia provided that an application is made during the statutory waiting period or within one month thereafter.

A "Request for Change" must be completed when any of the following changes are required:

  • addition of dependent,
  • deletion of dependent, or
  • termination of coverage.

All other changes should be reported by letter. A "Request for Change" must be completed whether or not the deletion causes a change of premium.

Yukon Territory

The plan provides a wide range of medical and hospital services for employees regardless of age, state of health or financial means.

Under the plan, registration with the Administration is compulsory. It is the responsibility of the employee to register himself and his dependents.

Coverage is effective after a three month waiting period.

Employees are covered for three months from the day of their permanent departure from the territory. Every employee is required to complete an adjustment card to report changes in status.

Refer to the Insurance and Related Benefits volume for further information.

2.4.5 Disability Insurance Plan (DI)

The Disability Insurance Plan provides employees in the Public Service who are included in collective bargaining and who are members of the Plan, with benefits to replace a substantial portion of earnings lost as a result of extended periods of disability.

Once an employee has become subject to the plan, there are no waiting periods on subsequent reappointments. Specifically, if an employee is a member of the Plan on termination of employment and again becomes employed after a break of less than three months (even when appointed for a term of less than six months), the insurance resumes immediately, and premiums will commence on the first day of the month following re-employment.

The plan applies to all employees, including seasonal employees, in a department or other portion of the Public Service of Canada listed in Part I of Schedule I of the Public Service Staff Relations Act or Schedule I of the Disability Insurance Directives, except:

  • employees locally-engaged outside Canada;
  • part-time employees who are not ordinarily required to work more than one-third of the normal weekly hours of work for employees doing similar work;
  • persons to whom the Public Service Management Insurance Regulations apply;
  • employees who have attained the age of 64 years, 9 months; and
  • employees hired for 6 months or less.

In general, membership in the plan is compulsory. Membership is optional only for those employees who were eligible to join the plan on a voluntary basis when it was introduced on November 1, 1970, but did not do so and who have remained continuously employed since that date. These employees may still become members; however, they will only be admitted to the plan on the basis of medical evidence of insurability satisfactory to the insurer. Deductions will commence effective the first of the month following receipt of the application in the personnel office. If coverage is not approved, deductions will be refunded.

For an employee who becomes employed in an indeterminate position, or for a term of more than six months, insurance coverage will automatically commence on the date of employment. Premiums will commence on the first day of the following month.

An employee hired for six months or less will become insured on the day following the day on which six months of employment are completed. A seasonal employee would also have coverage commencing on the day following the day that the qualifying period is completed.

In all these cases, premiums will commence effective the first day of the month following the month in which coverage commenced. This procedure also applies to an employee whose date of coverage is the first day of the month. For example, where the first day of coverage occurs on any day in April, including April 1, premiums would commence May 1.

Under this arrangement, employees will receive a period of insurance coverage without cost.

For all employees, insurance ceases on the date employment terminates but a full premium shall be deducted for the month of termination.

Contributions and benefits are based on the employee's current annual salary, adjusted to the next highest multiple of $250 if it is not already a multiple. (See Appendix A.)

The cost of the plan is shared by the employee and by the government, as employer.

A slightly higher premium rate has been set for part-time employees.

When the adjusted salary is revised as a result of a promotion, or acting pay, and the amount of DI is increased retroactively, the deficiencies will be recovered in a lump-sum.

The effective date must be the first of the month following the date of appointment or the first day of the month following the signing date of the instrument of appointment (ROST), whichever is the later.

Coverage will continue without interruption during all periods of authorized leave without pay and premiums are collected on return to duty over a period equal to the period of leave without pay. Premiums are waived for periods of leave without pay when an employee has qualified for disability payments.

Membership in the plan cannot be cancelled by an employee who is still employed in an eligible category.

Coverage continues until age 65, but contributions cease with effect from the first of the month following the month in which the employees attain 64 years and 9 months.

For further information, refer to the Insurance and Related Benefits volume and the Insurance Administration Manual.

2.4.6 Long-term Disability Insurance (LTD)

The plan is intended to provide employees who are excluded from collective bargaining with a benefit, to a predetermined level, which will supplement other disability benefits payable under such plans as the Public Service Superannuation Act, the Government Employees Compensation Act, the Canada Pension Plan and the Quebec Pension Plan, and will assure a reasonable level of income during periods of long-term disability.

For employees who entered the Public Service on or after November 1, 1970, this coverage is compulsory whether or not the employee elects to take any other insurances under the plan. Participation in the plan is optional for employees on strength prior to November 1, 1970.

All part-time employees who become eligible to join PSMIP on or after the effective date, September 1, 1982, will be compulsorily enrolled in the LTD portion of the plan on the date they first become eligible.

Employees who have attained the age of 64 years, 9 months are not eligible to join the plan.

For any employee being required to join LTD on or after December 1, 1978, coverage commences:

  • on the date employment commences, in the case of an eligible employee in an indeterminate position or in a position of a term of more than 6 months;
  • on the day following the date on which 6 months of continuous employment is completed, in the case of a term of 6 months or less.

Premiums are payable only from the first of the month following the date coverage commences. Contributions and benefits for LTD insurance are based on the member's current salary, if that salary is a multiple of $250, or, if it is not a multiple of $250, they are based on the next highest multiple of $250. (See Appendix A.)

The premiums for a full-time employee are paid by the employee and Treasury Board as the employer. The premium rate payable is calculated on each $1,000 of the adjusted salary.

A slightly higher premium rate has been set for part-time employees.

The coverage will continue when an employee is on leave without pay including sick leave without pay. Arrears in premiums are collected upon return to duty over a period equal to the period of leave without pay. Premiums are waived during the periods of leave without pay when an employee has qualified for disability payments.

For further information refer to the Insurances and Related Benefits volume and the Insurance Administration Manual.

2.4.7 Dental Care Plan (DCP)

The employer-paid Dental Care Plan provides eligible employees, their spouse and children, with assistance in bearing the costs associated with dental care and dental hygiene.

The eligibility requirements are set out in the National Joint Council (NJC) part or the Public Service Alliance of Canada (PSAC) part of the Public Service Dental Care Plan.

The Plan applies to all eligible employees, including seasonal employees, term employees who have completed six (6) months of employment and part-time employees working more than one-third (1/3) of the hours normally scheduled for full-time employees.

Effective from June 1, 1988, membership in the Plan is compulsory for all eligible employees.

For rules of membership before June 1, 1988 reference should be made to the Insurance and Related Benefits volume.

The cost of the Plan, effective June 1, 1988, is one hundred percent (100%) off-set by the government, as employer.

Employees on strength on May 31, 1988, who satisfied the eligibility requirements, are covered by the employer-paid Dental Care Plan effective June 1, 1988.

For any person who becomes an eligible employee on or after June 1, 1988, membership begins on the first day of the month after the completion of three (3) months continuous eligible employment.

A term employee hired for a period of six (6) months or more must complete six (6) months of continuous employment before becoming "eligible" to participate in the Plan.

Eligible spouse and eligible children of eligible employees are also covered by the Plan.

Seasonal employees who are members of the Plan will have continuous year-round coverage, including the time of seasonal lay-off.

Members who proceed on certain periods of authorized leave without pay will continue to enjoy dental coverage during their period of absence.

For further information refer to the Insurance and Related Benefits volume.

Coverage will end on the date a member ceases to be eligible or the date he or she ceases to be employed.

2.5 Income tax

2.5.1 Federal, provincial and territorial taxing arrangements

The Federal-Provincial Fiscal Arrangements Act authorizes the federal government to enter into a tax collection agreement with any province which imposes income tax, under which the federal government will collect and pay to the province the tax levied by the province. Agreements have been entered into with all of the provinces except Quebec.

Provinces other than Quebec

One of the conditions of the tax collection agreement is that the provincial legislation will be in a form similar to the federal legislation and the tax expressed as a percentage of the federal tax.

The federal government remits to the provinces each month an amount estimated by the Department of Finance to be their share of the tax collected, and a final adjustment is made at the year end.

Quebec

The tax levied under Quebec income tax legislation is not expressed as a proportion of the federal tax; consequently, no tax collection agreement has been made between the federal and Quebec governments. The tax liability of residents of the province of Quebec is:

  • federal tax – the basic tax levied under the federal Income Tax Act, less the percentage deduction permitted; and
  • the provincial tax levied by Quebec Income Tax legislation.

The latter is collected by the province. The federal government is concerned with the provincial tax only in its role as an employer and in relation to making the necessary year-end adjustments in the distribution of tax collected during the year by the federal and Quebec governments. These adjustments are made under the tax transfer agreement made with the Province of Quebec.

Residents of a Territory

Pursuant to Votes 108 and 118, Northern Affairs and Natural Resources, Special Appropriation Act 1963, the federal government has entered into agreements with the Yukon and Northwest Territories, respectively, whereunder the territories agreed to refrain from levying income tax.

Foreign service personnel

Employees of the federal government serving abroad who were resident in Canada immediately prior to appointment or who are receiving representation allowances are, for income tax purposes, residents of Canada. However, since they are not residents in a province, they are not subject to provincial tax.

Locally-engaged employees

An employee engaged locally outside Canada who was at any time resident in Canada or ordinarily resident in Canada, and who at any time in the relevant taxation year was the spouse of a member of the Foreign Service or a member of the Canadian Armed Forces, is deemed to be resident in Canada through the full taxation year.

Any person who falls into the category of "resident in Canada" is subject to Canadian tax on taxable income for the year from any source and employers are required to deduct tax at source from salary or wages.

In all cases, the tax liability of federal government employees in a taxation year is dependent on the place of residence on December 31st of that year. Since tax deduction at source is made on the basis of the place where the employee reports for work, adjustments in the distribution of tax collected at source are required:

  • where during the year there is a transfer between provinces, or between a province and a territory or a post abroad; and
  • where an employee resides in one province but reports for work in another province.

These adjustments are a part of the general year-end distribution of tax.

2.5.2 Payroll deduction for income tax

The Income Tax Act requires employers to make deduction of the federal tax at source and at the prescribed rates, from payments to an employee by way of salary, wages or any other remuneration, including fees, commissions or other amounts paid for services.

The Act also requires tax deduction at source from retiring allowances or superannuation benefits payable to an employee at the time of or following separation from employment, and from superannuation benefits or any other amount payable upon or after death, in recognition of service, to the surviving spouse, estate or to any other person.

With respect to those provinces which entered into a tax collection agreement with the federal government, authority for compliance with provincial law requiring employers to deduct tax at source is contained in the Federal-Provincial Fiscal Arrangements Act. This section permits such deduction in respect of all persons paid out of the Consolidated Revenue Fund or by an agent of the Crown.

The total amount to be deducted for federal and provincial tax is determined from the tables of tax deduction applicable in the province or territory in which the employee reports for work or, in the case of lump sum payments, by deduction of a specified percentage of the amount payable.

Under certain circumstances, an employee may be entitled to have tax deductions made at a reduced rate. Such an employee should be advised to apply in writing to the District Taxation Office, setting out the details of the situation. No reduction can be effected in tax deductions until a letter of authority has been received by the employer from the District Taxation Office.

The content of the authorizing letter from Taxation officials will highlight the amount of exemption to apply, the appropriate article of the Income Tax Act, the method of application and the calendar year for which it pertains. Additionally, said letter also provides authorization to prorate the new exemption amount equally over the remaining pay periods in the year.

Since the pay system does not automatically prorate the new exemption over the remaining number of pay periods in a year, a formula was devised to action such special requests.

The formula is as follows:

  • Amount of exemption requested by the RC-T letter.
  • Multiplied by the number of pay periods in the year.
  • Divided by the remaining pay periods in the year.

Example:

Letter requesting additional $15,000 exemption received and processed for the cheque dated July 8, 1988.

$15,000 (New Exemption) X 26 (P.P. 1988)
12 (P.P. remaining 1988)

= $32,500 (pro-rated exemption for remainder of the year)

Due to the above calculation the employee will not lose the benefit of any exemptions but will in fact gain the full $15,000 exemption from July to December 1988.

Deduction is made at source in accordance with the rates applicable in the province or territory in which the employee normally reports for work. The area in which the employee resides or is on temporary duty has no bearing on the tax deduction. The paying office must therefore be informed of the area in which each employee works, for which purpose codes have been provided in the Personnel-Pay Input Manual.

For employees who work in a province other than their province of residence, Revenue Canada, Taxation has authorized arrangements whereby the total amount of tax withheld will approximate the amount that would have been withheld had the employee worked in the province of residence.

For the purpose of calculating tax deductions at source for employees who work in Quebec, the following classes of employees have been established:

Class 1

  • Employees who work in Quebec and reside in Quebec;

Class 2

  • Employees who work in Quebec within the National Capital Region (basically the City of Hull) and reside in Ontario;

Class 3

  • Employees who work in Quebec and reside in a province other than Quebec; and
  • Employees who work in Quebec, but outside the National Capital Region and who reside in a province other than Quebec.

Examples

  • An employee who works and resides anywhere in the province of Quebec is categorized in class 1.
  • An employee who works at Place du Portage, Hull (within the National Capital Region) and resides anywhere in Ontario is categorized in class 2.
  • An employee who works anywhere in Quebec and resides in any province other than Quebec is categorized in class 3.
  • An employee of any department who works in Montreal (i.e. outside the National Capital Region) and resides in any province other than Quebec is categorized in class 3.

*****

Employees who are residents of Quebec but work in a province other than Quebec and who desire increased source deductions of tax may elect to have additional tax deductions withheld from earnings by completing and filing form TD1 (Personal Tax Credit Return) with their employer. Tax deductions authorized by form TD1 must be in multiples of five dollars per pay period and will remain in effect until an amended form TD1 is filed with the employer.

Where an employee's tax deductions are greater by reason of working in a province other than the province of residence (excluding Quebec as a province of employment), the employee may apply to the employer to have tax deducted as if the employee worked in the province of residence.

The Income Tax Act requires employers to deduct tax at source from various types of payments to employees as follows:

  • salary or wages of an employee (including overtime earnings, retroactive increases, etc.);
  • other remuneration of an employee, including:
    • allowances related to the duties of the employee's position;
    • allowances for personal or living expenses with the exception of:
  • travelling or personal or living expense allowances expressly fixed by statute or authorized by Treasury Board to persons appointed or engaged pursuant to the Enquiries Act,
  • per diem allowances paid while in travel status, or
  • representation or other special allowances received in respect of a period of absence from Canada when posted abroad for duty. This category does not include the allowance paid to foreign service personnel while in Canada, for example, during home leave; this allowance is taxable;
    • the value of board, lodging and other benefits provided to the employee is included in taxable income;
    • bonuses or honoraria;
  • retiring allowances;
  • amounts payable, on death of an employee, in recognition of the employee's service.

Income earned in one taxation year and received after January 1 of the following year is taxed in the year in which it is received. Where possible, the pay input should be submitted in time to ensure payment in the calendar year in which the salary is earned.

This paragraph is applicable to deduction of federal tax and provincial tax for all provinces except Quebec.

Contributions to the Superannuation Account are not taxable and are therefore deducted from salary before calculation of the tax deduction.

If no TD1 form is submitted, deduction of tax will be made as for single persons.

No deduction is required where the employee will not receive income in the year in excess of claim shown on the TD1 form.

A revised TD1 form must be filed with the employing department within seven days of any change in circumstances affecting an employee's personal exemption.

TD1 forms are not submitted to the paying office. Instead, the amount of the claim or amended claim is reported to the paying office.

Where an employee claims complete exemption because the employment is casual, seasonal or part-time, the pay input should show the tax exemption as calculated on the TD1 form and indicate "No Tax" in the appropriate field.

When tax deductions are to commence, a second pay input process must be completed to indicate the new tax status of the employee.

Superannuation contributions are also deducted in determining taxable income for provincial tax under the Quebec act. Personal claims are determined from the TPD1 form (Source Deduction Return) filed with the employing department by the employee, and are reported to the paying office as above.

Except where a flat percentage rate deduction is applicable, all deductions from remuneration are made pursuant to the relevant table of tax deduction.

The table applicable in each case is dependent on the location of the employee's normal place of work. If an error is made in selecting the table applicable, the T4 form (Statement of Remuneration Paid) should identify the table used to arrive at the tax deducted and remitted.

Lump sum payments and certain additional earnings such as bonuses and cash gratuities in lieu of retiring leave are taxed at source by deduction of a specified percentage of the amount payable.

In the following circumstances, deviation from the foregoing deduction requirements is permitted:

  • when an employee's estimated yearly income is less than the total claim on the TD1 or TPD1 no tax withholding is required.
  • payments on death of an employee

Any compensation or other money payable periodically is, in case of death, deemed to have accrued daily in respect of the period for which it is payable, and only the portion of any amount payable when an employee dies which had accrued at date of death is income of the employee for taxation purposes.

This section is significant where salary is payable for the full month in which death occurs. Only that portion up to date of death is taxable as income of the employee; the remainder is a "death benefit" as described below.

Where notice of death is received in the paying office before issue of pay for the month of death, the portion of salary to date of death is taxed in the normal way pursuant to the tax tables; the remainder is treated as a death benefit, and except where payment is made to the surviving spouse, tax is deducted at the rates prescribed for lump sum payments.

A "death benefit" for taxation purposes is an amount paid upon an employee's death in recognition of services. A death benefit includes:

  • the two months gratuity paid under the Public Service Terms and Conditions of Employment Regulations or other comparable authority;
  • where salary is paid for the full month of death, the portion of such payment representing the salary subsequent to the date of death; and
  • any other payment made in recognition of the employee's service.

A death benefit for taxation purposes does not include payments out of the Death Benefit Account or the Superannuation Account on death of an employee.

Where a death benefit is payable to the surviving spouse, a portion equal to the employee's remuneration for the last year of service, up to a maximum amount of $10,000, is tax-exempt.

Any amount in excess of the tax-exempt portion is taxable in the same manner as a bonus.

In view of the large tax exemption on these death benefit payments, no deduction of tax is made at source except in those cases where notice of death was not received in time to make the tax adjustment for salary for the full month of death.

2.5.3 Reporting to federal and Quebec taxation authorities

At the end of each pay period the paying offices analyze the tax collected at source, pursuant to the federal act, in accordance with the prescribed formula for allocation of the amount among the relevant provincial governments and the federal government.

This formula is shown on the reverse side of form TD7A (Tax Deduction Remittance Return). The form is completed and sent with the total amount collected, twice a month, to the federal district taxation office. The latter remits the provincial shares to the provinces monthly and makes a final adjustment at the end of the year.

At the end of the taxation year, the paying office completes a T4 form for each employee showing total income and the Canada Pension Plan contributions, superannuation contributions and income tax deducted at source. A T4A form (Statement of Pension, Retirement, Annuity and Other Income) is completed showing items not subject to Canada Pension Plan contributions, such as a cash gratuity in lieu of retiring leave, a return of superannuation contributions, etc.

The computer tape is sent by the paying office to Revenue Canada Taxation and three copies of the forms are sent to the employing department, one to be retained and two to be given to the employee.

The paying offices also send a T4 return (summary and supplementary) to the district taxation office not later than the end of February in the following year.

The aggregate amount deducted pursuant to the Quebec tables of tax deduction is remitted twice a month to the Quebec Revenue Branch. This report is accompanied by form TPD7A showing the account number allocated to the department concerned.

At the end of the taxation year, the paying offices complete a Relevé 1 form (and Relevé 2 where applicable) in respect of each employee for whom tax was deducted at source.

These forms are sent to the department for completion and distribution in the same manner as the T4 forms referred to above, except that the copy for the taxing authority is sent to the Quebec Revenue Branch instead of the federal taxation office.

A Relevé 1 return (summary and supplementary) for the provincial income tax service is also required from the paying offices by February 28th of the following year.

2.6 Union dues

Through collective bargaining, the Treasury Board as employer has agreed to deduct union dues from the salaries of employees who are members of bargaining units regardless of whether the employee is a member of such union and to remit such dues to the appropriate certified bargaining agent.

Currently all collective agreements (except the Air Traffic Control agreement) provide an exemption to employees who are members of a religious organization whose doctrine prevents them from contributing financially to an employee organization.

To apply for this exemption, an employee must submit an application to the employing department or agency.

Departments and agencies must submit such applications to the Staff Relations Division, Treasury Board Secretariat which will approve or reject them.

2.6.1 Starting deductions

Initial appointments

Dues are to be deducted for the first complete calendar month of employement (except for the Meteorology bargaining unit, for which dues start for the month of appointment).

For term appointees, dues are to be deducted from the first day of the month following the month in which the employee has completed six months of employment without a break of more than five days.

Deductions for appointees to bargaining units represented by the Public Service Alliance of Canada (PSAC) must be started at a specified flat rate. Subsequently, Supply and Services Canada (SSC) revises this rate on instruction by PSAC.

Departments are required to complete and distribute PSAC Payroll Identification form PSAC 26 R02-89 (Appendix B) for all appointments that initiate or maintain the employee as a member of a bargaining unit represented by PSAC.

Subsequent appointments

Departments must treat persons initially appointed to excluded or unrepresented positions who are subsequently appointed to bargaining unit positions, as initial appointees.

De-Exclusion (managerial or confidential duties)

When a person's duties change so that he or she is no longer employed in a managerial or confidential capacity, departments must start deduction of union dues on the first day of the second month following the agreement of the Treasury Board and the union or notification of the determination made by the PSSRB if the Treasury Board and the union disagree.

2.6.2 Changing deductions

Subsequent appointments

Appointments that result in a change in union representation require the Department to stop the previous dues deductions and start the new ones, and complete the Notice of Change of Union Affiliation form TBC/CTC 340-8 (Appendix B).

Where there is a change in bargaining agent only, Departments must change dues deductions on the first day of the month following the effective date of the appointment or the issue date of the Report on Staffing Transaction (ROST), whichever is later.

Appointments which do not result in a change in union representation do not require any departmental action.

In such cases, changes of dues deductions for individual employees will be authorized by the relevant union by direct correspondence with the relevant pay office.

Transfers

When an employee transfers from one department to another, it is possible that the amount of dues will be different in the new department. It is important, therefore, that prompt reporting to the paying office of the transfer be made in order to avoid incorrect payments of dues.

When an employee is transferred from one department to another without a change in bargaining unit, but with a difference in the amount of dues, and if a higher rate continues to be deducted for several months, a request for refund of dues is required.

However, when the employee continues to be deducted at a lower rate, action will be taken by the paying office to pick up the difference in the amount of dues owing.

Revisions of dues structures

SSC will initiate such changes on notification by Staff Relations Division, Treasury Board Secretariat, on the date specified.

Treasury Board Secretariat will inform departments and agencies.

2.6.3 Stopping deductions

Termination

Departments must deduct dues for the month in which the termination occurs provided sufficient earnings remain after deductions.

Departments must deduct dues arrears being collected at termination in full, provided sufficient funds exist from earnings (not superannuation income or refunds of contributions).

Departments must request payment from the former employee of dues arrears outstanding after termination if so requested by the union, and must notify the Staff Relations Division of Treasury Board Secretariat with full details if payment is not made.

Non-employee status (i.e., for reasons other than managerial or confidential exclusion status).

On appointment to non-employee status such as Governor-in-council appointment, term, part-time less than 1/3 normal hours, departments will cease dues deductions on the first day of the month following the effective date of the appointment or the issue date of the ROST or other appointment document, whichever is later.

Exclusion (i.e., because of managerial or confidential duties):

When an employee becomes excluded in his or her own position, departments must stop dues deductions on the first day of the second month following the date of the agreement by the union or the decision by the PSSRB. Treasury Board informs departments and agencies by TBS/SCT 340-13.

When an employee is appointed to succeed an excluded person, departments must stop dues deductions on the first day of the second month following the issue date of Form A, Valid Transaction Report.

Suspension

The Treasury Board Secretariat (TBS) will advise Supply and Services Canada (SSC) to automatically stop all dues deductions that are present on affected accounts when union dues are being suspended.

Following the announcement by TBS that dues are suspended, departments must hold all dues transactions (ie union dues commence) pertaining to the targeted population until the suspension is lifted. If these transactions were submitted, dues would be reactivated for those accounts.

Departmental pay personnel must stop and refund any dues deducted in error subsequent to a bulk suspension.

At the end of the suspension period, SSC paying offices will again process automatically the recommencement of all dues which had been present at the time of suspension.

Departmental pay personnel must also take appropriate action at that time to process any changes that occurred during the suspension period (ie union dues commence), including for those accounts where union dues were recommended and stopped after the bulk suspension.

2.6.4 Acting assignments

For a bargaining unit employee who is placed on an acting assignment to:

  • replace another bargaining unit employee, departments shall deduct dues as if the assignment were an appointment;
  • replace an employee in an unrepresented group, departments shall terminate dues ducutions on the first day of the month following the effective date of the assignment;
  • replace an employee excluded because of managerial or confidential status, departments shall continue to deduct dues until the department or agency proposes the exclusion through Form A, Valid Transaction Report.

If the employee is excluded, departments shall stop dues on the first day of the second month following the date of the agreement by the union or the decision of the PSSRB.

Note:

If the acting assignment is completed before input to the pay system has been made (i.e., closed period), no change in dues shall be made.

2.6.5 Special Assignment Pay Plan (SAPP)

A bargaining unit employee who accepts a SAPP appointment remains subject to the provisions of the collective agreement, including dues deduction. However, should the employee be appointed so that he or she no longer meets the PSSRA definition of employee or proposed and ultimately agreed or decided to be a person performing managerial or confidential duties, that employee will cease dues deductions in the same manner as all other appointments in these circumstances.

2.6.6 Dual remuneration

The employer has a contractual obligation to deduct dues for all positions held by an employee. When one person fills two or more positions that are represented by the same bargaining agent, departments and agencies should seek the union's agreement to make only one deduction.

2.6.7 Part-time employment

Departments must deduct the full monthly dues amount for all unions except the PSAC. The PSAC prorates dues according to the ratio of the employee's assigned hours to the normal full-time hours. Departments and agencies must start dues at the standard monthly rate. PSAC will calculate the appropriate rate and inform SSC.

2.6.8 Leave without pay

Departments shall not deduct union dues for complete months during which an employee is on leave without pay. Departments must deduct union dues for the month in which the employee returns from leave without pay provided sufficient earnings for the full amount of dues exist.

2.6.9 Arrears

Departments must collect dues owed but not paid by deducting an amount equivalent to the current monthly rate of dues until the full amount owing is collected.

For employees who are members of bargaining units represented by the PSAC, arrears subject to collection are limited to one year's dues.

2.6.10 Refund of dues

To correct duductions made in error, departments and agencies must submit pay input forms to the SSC pay office. However, when PSAC is involved, departments and agencies must submit a request for refund form DSS/MAS 2595 (Appendix B) to the PSAC with a specific description of the transaction(s) creating the refund request.

If the PSAC agrees, the department and agencies submit pay input forms to SSC. If the PSAC disagrees, departments and agencies must consult Staff Relations Division Treasury Board Secretariat.

When union dues are reported on T4s and a refund is made which includes a period in a previous calendar year, an amended T4 will be issued by SSC Pay Office.

2.6.11 Union insurance premiums

Unions are authorized to start, change and stop insurance premiums for their members by input to SSC.

When union insurance premiums are deducted separately from union dues, departments and agencies must stop, and start (if appropriate) deductions for union insurance when they change deductions from one union to another or when they stop dues deductions.

Requests for refunds of insurance premiums are strictly a matter between the employee and the union.

Employees are responsible for maintaining insurance coverage whenever union dues cease to be deducted.

3. Voluntary deductions

Deduction is made only upon written authorization by the employee on the appropriate form.

All deductions continue in force until revoked in writing by the employee, unless circumstances warrant the employer to do otherwise (e.g. garnishment).

3.1 Voluntary hospital, surgical and medical insurance plans

Authority has been granted for deduction from salary and payment to the relevant agency of contributions or premiums required in respect of employees who are participants in the Group Surgical-Medical Insurance Plan underwritten by the Mutual Life Assurance Company.

This insurance provides for certain surgical and major medical expense benefits as well as hospital expense benefits.

The plan is designed to provide two separate types of insurance coverage. These are:

  • the Supplementary, which is available to employees who are insured under a provincial health insurance plan, and
  • the Comprehensive, including the Hospital Expense (Outside Canada) Benefit, which is compulsory for employees not so insured and residing outside Canada.

3.1.1 Membership

Membership in the plan is voluntary.

3.1.2 Eligibility

Listed below are the employees eligible to join the GSMIP plan:

  • employees appointed for an indeterminate period (full-time and part-time).
  • employees appointed for a term of more than six months.
  • employees appointed for 6 months or less, on completion of 6 months of continuous employment. However, a term employee appointed to a subsequent term resulting in the total of both periods exceeding six months employment, or whose term has been or is extended for a period of more than 6 months, becomes eligible upon the effective date of the new appointment or extension.
  • eligible dependents, as defined below, may also be insured under the Plan:
    • the spouse of the member;
    • unmarried children under 21 years, including step children, foster children or adopted children;
    • unmarried children between 21 and 25 years of age and who are in full-time attendance at a school or university;
    • unmarried children over 21 and who are dependent because of physical or mental impairment.

3.1.3 Qualifying conditions

Except for employees posted abroad, if an application to join the Plan is received in the Personnel Office within 60 days of the employee's date of eligibility, coverage starts on the first day of the month following the month in which the application is received in the Personnel Office. Deductions start in the month the Personnel Office receives the application.

For employees posted abroad refer to the Insurance Administration Manual for qualifying conditions.

If the application is submitted after 60 days, coverage will commence the first of the fourth month following the month in which the application is received (three months waiting period).

A new application card is required for coverage of an additional dependent such as a spouse or a child. The application should be made within 60 days of acquiring the dependent otherwise there will be a three month waiting period. Premiums are deducted for the month of acquisition of the dependent so that coverage at the new rate begins from the date of marriage or birth.

An application card is required only if the acquisition of a dependent results in an increase in premiums.

A new application card is required to insure a dependent who attains the age of 21 or enrolls as a full-time student at school or university between the ages of 21 and 25 and a separate premium is required. Provided the application is received within 60 days, coverage will commence the first of the month following the date the application is received.

If a dependent ceases to be eligible and it involves a reduction in premiums, an application card must be submitted.

Employees may cancel or amend their coverage at any time. A written notification must be submitted in order to cancel the membership in the plan.

3.1.4 Contributions

Premium costs are shared by the employee and the government, as employer. Separate monthly premiums are established for the various levels and types of coverage, according to "single" or "family" status, as well as for "overage dependents". Deductions of premiums are made from salary on a monthly basis, in advance.

3.1.5 Benefits

The benefits available under the Plan depend upon the specific coverage applied for, and the amount of premiums paid.

The supplementary benefits provide benefits which are not insured under the provincial health insurance plans of participants, such as prescription drugs, private nursing services, etc.

The optional hospital benefit provides coverage up to specific daily dollar limits for preferred hospital accommodation expenses above the standard ward costs (that is "semi-private" or "private" accommodation), depending upon the level of coverage for which the employee has applied and is paying premiums.

Employees may apply for the optional Hospital Expense Benefit at any time. If they do not apply when they first become eligible to join the plan, the benefit will become effective the first day of the fourth month following the date the application is received.

3.1.6 Coverage during period of leave without pay

Coverage may be continued during a period of leave without pay provided the appropriate premiums are paid direct and in advance, through the employee's personnel office.

In all cases, payments are to be made by cheque or money order payable to the Receiver General for Canada.

Employees who are on leave without pay must pay the full premium – that is, there is no matching share by the government, when the leave without pay is for reasons other than:

  • illness, disability or pregnancy;
  • training;
  • serving in the Armed Forces such as the Reserve Force;
  • paternal responsibilities for the purpose of caring for the participant's child;
  • parental responsibilities for the purposes of caring for a child for which the participant accepts custody for adoption; and
  • personal needs for a period not exceeding three months when the leave was approved by the appropriate authority.

3.1.7 Coverage after termination

For employees who leave the Public Service and who are not receiving a pension, the coverage ceases at the end of the month following the month of cessation of employment. For employees who are entitled to a pension, they may continue their coverage through their pension.

Employees who are laid off may continue in the plan for a period of one year from the last day of the month in which they were laid off, or until they become eligible to participate as pensioners whichever is the shorter period. The employee must pay both the employer's and employee's share of the premiums.

3.1.8 Claims

Claims for a calendar year must be submitted to the GSMIP office by June 30 of the following year. Personnel offices will provide the appropriate forms.

3.2 Other voluntary insurance or annuity contracts

There is authority for deduction from salary of premiums for policies held under the following:

Civil Service Insurance Act

The requirement for deduction of premiums from salary or superannuation allowance is contained in the policy form approved by P.C. 24/2687 of December 30, 1922. (This is restricted to policies in effect or being processed when the Death Benefit Plan came into effect.)

Veterans' Insurance Act

This Act is applicable to veterans of World War II.

Civil Service Mutual Benefit Society

The objectives of the Civil Service Mutual Benefit Society are to provide limited life insurance at modest premium costs and pay claims as quickly as possible, providing survivors with ready cash to cover immediate expenses occurring at death.

Benefits available to public servants (such as SDB, CPP survivors benefits, PSMIP and group insurances with collective bargaining agents) greatly reduced the Society's activity. As a result, a resolution to discontinue new business was presented and passed at the Society's Annual Meeting of February 22, 1982. While the Society has discontinued writing new insurances, however, it continues to protect the interests of existing members.

In the case of leave without pay, the member is required to pay premiums direct. The employee should be advised to contact the Society to provide their home address and period of leave without pay. The Society will bill the employee direct.

When an employee terminates employment for reasons other than retirement or death, coverage may be maintained by paying premiums direct. The employee should be advised to contact the Society in order to make arrangements for continued coverage under the plan.

Upon retirement, the employee has the option of continuing coverage by having premiums deducted from pension cheques. Deductions from Annuity or Annual Allowance form DSS 1422 shall be used for this purpose.

In the event of death, survivors should be advised to contact the Society to make application for benefits.

Government Annuities Act

Deductions may be made from the compensation of an employee to pay installments on the purchase of an annuity under a contract as provided by the Government Annuities Act.

The moneys so paid are deposited to the credit of the Government Annuities Account which forms part of the Consolidated Revenue Fund.

Public Service Management Insurance Plan

The Public Service Management Insurance Plan provides insurance to certain employees excluded from collective bargaining. The following types of insurance are available to eligible employees.

Basic Life Insurance

  • life insurance in an amount based on the employee's annual salary;
  • the premium rate is based on the employee's salary, sex and age.

Supplementary Insurance

  • additional life insurance equal in amount to the Basic Life insurance;
  • this insurance is available only if the employee is covered under Basic Life Insurance.
  • A statement of health satisfactory to the insurer is needed for the supplementary insurance no matter when application is made.

Accidental Death and Dismemberment (AD & D) Insurance

  • obtainable in units of $25,000 up to a maximum of ten units;
  • for each unit the monthly premium is 10 cents, regardless of age or sex.

Dependants' Insurance

  • Life and AD & D insurance on the spouse and/or dependent children of the employee in fixed amounts;
  • Life Insurance; and Accidental Death and Dismemberment Insurance – A Principal Sum of $5,000 on the life of the spouse and $2,500 on the life of each child;
  • the premium rates for Dependants' insurance are based on the member's sex and age (not that of the spouse who is to be insured).

Long-term Disability (LTD) Insurance

  • provides income in cases of prolonged total disability where paid sick leave credits have expired;
  • participation in the plan is optional except for Long-term Disability Insurance (LTD).

Persons eligible are:

  • Persons appointed on a full-time basis by the Governor in Council.
  • Persons employed on a full-time basis in a managerial or confidential position.
  • Persons employed on a full-time basis by or under the Public Service Staff Relations Board.
  • A deputy head or a person performing the functions of a deputy head.
  • Persons who are eligible to join as associate members.
  • Part-time employees excluded from the collective bargaining process who are assigned to work more than one-third of the normally scheduled hours of work for a full-time employee in the same occupational group (effective September 1, 1982).
  • A person appointed pursuant to Section 37 of the Public Service Employment Act as a member of a Minister's exempt staff.

The eligibility is immediate, if the employee is appointed for an indeterminate period, or to a term greater than six months. Employees appointed to terms of six months or less are eligible to participate only after completion of six months of continuous employment in the Public Service.

Insurance coverage and deductions start on the first day of the month following the latest of the following dates:

  • the date an employee becomes eligible for membership;
  • the date the written application is received in Personnel Office;
  • the expiry date of insurance under a previous plan;
  • the first of the month following the date the personnel officer receives a written application for insurance, where the application is submitted more than two months after the employee becomes eligible, and is accepted by the Insurer. Where insurance coverage is declined by the Insurer, any premiums deducted from the employee's salary will be refunded.

In all cases, an employee must submit a formal application in order to join the optional insurance portions of the plan. If the application is not received by the personnel office within two months of the employee's first becoming eligible, a Statement of Health satisfactory to the Insurer must be submitted.

The insurance may be changed at any time by completing a new application card and submitting a Statement of Health if required. It may also be cancelled except for the Long-term Disability portion of the plan.

Termination of the member's insurance occurs on the date the member ceases to be employed, or the last day of the month following the month in which the personnel office receives a cancellation application.

An employee on sick leave without pay is entitled to free coverage for the portion of the sick leave which is within 6 months from the date the illness began. After 6 months the employee may apply for a waiver of premiums and if approved, no payment is required. If the application is denied, the employee must pay premiums direct to the underwriter. In all other cases of leave without pay, premiums must be paid directly.

PSMIP and GSMIP – Executive (EX) Group, (SM) Group, and (GIC) Group

Since July 1, 1981 the Treasury Board of Canada has assumed the cost of providing certain insurance benefits under the PSMIP and GSMIP to employees classified in the EX group. Approval has also been extended to the Senior Management (SM) group and Governor in Council Appointees (GIC).

For further information refer to the Management Category volume, the Insurance and Related Benefits volume and the Insurance Administration Manual.

3.3 Credit societies and credit unions

The Treasury Board has granted authority for deduction from salary, upon authorization by the employee, and payment to credit societies or unions for savings or repayment of personal loans as follows:

  • Civil Service Co-operative Credit Society, Ottawa, in respect of employees who are members of the society.
  • The authority granted by Treasury Board to cover any indebtedness to the society at the time of cessation of employment from a return of superannuation contributions applies only in respect of assignments made on or before April 15, 1968.
  • Civil Service Co-operative Credit Society of Newfoundland, in respect of employees who were formerly employees of the provincial government and who are members of the society.
  • Other credit unions owned and operated by and for federal public servants, but only where the Minister of Supply and Services Canada has determined from the documentary evidence submitted by the union that the union meets the criteria stipulated by the Treasury Board.

The list of approved credit unions is published in the Personnel-Pay Input Manual. Amendments are issued as required by Supply and Services Canada.

3.4 Canada savings bonds

3.4.1 General

Authority has been granted for deduction from salary, upon authorization by the employee, for the purchase of Canada Savings Bonds. Form DSS 8592 (Payroll Savings Application) shall be used for this purpose. The necessary procedures are issued each year by Supply and Services Canada.

3.4.2 Unpaid balances

To reduce the number of unpaid balances of Canada Savings Bonds that must be handled by the Securities Deposit Division at the end of each bond deduction period, the following procedures should be applied.

Departmental Personnel Offices should ensure that, for changes such as separation, cancellation, etc., a Canada Savings Bonds form DSS 565, Subscription Amendment is completed and forwarded to the pay office.

In the case of leave without pay, where the subscriber wishes to continue purchase of the bond, payment should be made for the period of absence for which a deduction has not been taken.

Personnel officers should advise employees that the required payments are to be made directly to the CSB Division of DSS. A certified cheque or money order shall be payable to the Receiver General for Canada, and should be accompanied by a letter indicating the period covered.

At the end of the campaign, employees who have incomplete bond purchases will be notified by the Canada Savings Bonds Division of DSS and will be given the opportunity of completing the bond purchase.

On transfer of individual pay accounts between pay offices, the personnel office of the department should ensure that bond deductions at the new pay office are continued.

Pay offices shall make certain that when pay accounts are transferred between paying offices, transfer of accumulated bond deductions are made to the new pay office by an Interdepartmental Settlement Advice (ISA). The Securities Deposit Division shall be informed of these transfers. Some delay in bond delivery may be expected in such case.

3.4.3 Reduction of subscriptions

Commencing with the 1976-77 Canada Savings Bond series, the option to reduce a subscription is cancelled. As a result, the line which reads "Reduce Total Subscription" on the Canada Savings Bond form DSS 565 Subscription Agreement can no longer be used. Such requests will be treated as cancellations.

3.4.4 Cancellations or repayment of installment purchases

The prepayment of the outstanding balance of a bond purchased under the installment plan or the cancellation of a bond deduction cannot be actioned by the paying office after July 31 each year unless the employee is being struck off strength. Departmental personnel should report subscription amendments on form DSS 565.

3.4.5 Payroll deduction periods

The standard payroll deduction period will be three basic pay deduction plans:

  • the 11 month (22 payments) plan,
  • the 10 month (20 payments) plan, and
  • a 9 month (18 payments) plan,

with the final deduction being at the end of September in each case.

3.5 Membership fees, contributions, etc., to employee social organizations

The Treasury Board has granted authority for deduction from salary upon authorization by the employee and payment to the organizations, of amounts representing fees, contributions, etc. as follows:

  • membership fees of the Ottawa Civil Service Recreational Association;
  • membership dues of L'Association des fonctionnaires fédéraux d'expression française (AFFEF).

3.6 Staff association dues

The Treasury Board has directed that payroll deduction privileges for union or staff association dues apply only to employees included in a bargaining unit for which a bargaining agent has been certified.

3.7 Charitable donations

Treasury Board has authorized payroll deductions of contributions pledged by employees of the Public Service and members of the Armed Forces and the Royal Canadian Mounted Police to certain United Appeals and Community Chest campaigns conducted throughout Canada.

This authority applies only to those appeals or campaigns which have been recognized by Revenue Canada as having "charitable status" and whose constitutions and by-laws have been approved by the Community Funds and Councils of Canada, a division of the Canadian Welfare Council.

Where salary cheques for employees are issued through departmental bank accounts or by Crown Corporations, responsibility for recovery of amounts pledged and issue of remittance cheques to the appropriate campaigns will rest with those departments or corporations.

Pledges or assignments will be voluntary and revocable, and subject to the following:

  • the installment period will be for a period of 12 months;
  • pledges for a period of less than the normal 12-month installment period will not be accepted;
  • pledges authorizing a total deduction of less than 50¢ per month will not be accepted;
  • cancellation in writing only will be acted upon.

Receipts for pledges deducted are issued on T4 forms. The latest registration number assigned by Revenue Canada Taxation to the paying offices of Supply and Services Canada must be shown.

Where a transfer of an employee involves a change in the paying office, the department to which the employee is transferred is responsible for notifying the new paying office of the amount pledged, the amount of the monthly deduction and the number of installments remaining.

3.8 Purchasing housing units at Gander townsite

The Memorandum of Arrangement dated March 4, 1954, entered into between the Minister of Transport and Central Mortgage and Housing Corporation, now referred to as Canada Mortgage and Housing Corporation (CMHC), under P.C. 1954-26/290 of March 4, 1954, as amended, provided for the sale of the rental housing units at Gander Airport for the establishment and development of a townsite at Gander.

It was further provided that CMHC may, with the approval and concurrence of Transport Canada, offer for sale such rental housing units to federal government employees of a department that has entered into an undertaking with CMHC to deduct from the salary or wages of such employees an amount equal to the monthly installments payable under any mortgage entered into by the employee and to remit that amount to CMHC.

An authorization by an employee for deduction from the employee's salary or wages, in accordance with the above, may be acted upon.

3.9 Maintenance of dependants

Authorization by the employee for deduction from salary or wages may be acted upon where such deduction is for the purpose of providing for the maintenance and welfare of dependants, provided that the deputy head of the employing department gives consent in each case. The authorization by the employee will be sent to the paying office, in duplicate, on form DSS 538 (Authorization for Deduction from Salary or Wages for Benefit of Dependants).

An employee stationed permanently or temporarily at a place in Canada which is isolated from banking facilities may, with the consent of the deputy head, authorize such other payments to be made from salary as the employee may direct.

4. Deductions at source on payments after death

4.1 General

Upon the death of an employee, the benefits which were accruing or otherwise payable by virtue of the employee's office or employment may be liable to statutory deductions at source.

The table in Appendix C of this Chapter has been prepared to assist in determining the payments which are subject to statutory deductions. The table must be read in the context of this section and other specific instructions.

Note:

The amounts paid under the circumstances described in the following sections cannot be transferred directly to a registered retirement savings plan.

4.2 Income tax

The amounts payable as a result of an employee's death fall into three groups for taxation purposes:

4.2.1 Amounts included in the deceased's income

These amounts include:

  • salary or wages (including overtime) accrued from the end of the last pay period to the date of death;
  • payments for accrued leave and furlough leave or payment of four per cent vacation pay;
  • adjustments to accrued leave and furlough leave where the collective agreement or other authorizing instrument was signed prior to the date of death;
  • salary or wages (including overtime) for a pay period that was completed prior to the date of death and paid after the date of death: this situation will primarily occur for employees (casuals) who are paid in arrears;
  • adjustments to salary or wages applicable to the period prior to and including the date of death where the collective agreement or other authorizing instrument was signed prior to the date of death;
  • adjustments to salary or wages (including overtime) as a result of a promotion which was authorized prior to the date of death; and

These payments form part of the employee's remuneration for the taxation year in which the employee died, regardless of when they are paid. They are subject to the normal income tax deductions at source and must be included in the T4/TP4 issued in the deceased's name.

4.2.2 Amounts included in the estate's or beneficiary's income

These amounts include:

  • salary or wages (including adjustments) paid for the period from the date of death to the end of the month;
  • a payment of severance pay (including adjustments) as a result of the signing of a collective agreement or other authorizing instrument; and
  • a return of pension contributions.

Income tax must be deducted at source at the rate prescribed for lump sum payments.

Amounts included in the deceased's income must be reflected in the T4/TP4 issued for the year of death. Where payment is made in the year subsequent to the year of death the T4/TP4 must be amended to reflect all earnings for the year of death.

However, amounts included in the estate's or beneficiary's income should be reflected in the T4A/TP4A issued for the year in which they are paid, except for a return of pension contributions above, which should be reflected on a Relevé 2 for Quebec residents. Therefore, T4A/TP4A's should not be amended where payment is made in the year subsequent to the year of death.

When certain payments as outlined in Appendix A are made directly to a widow or widower, a portion equal to the deceased's remuneration for the last 365 days of service with full salary up to an amount of $10,000 is tax free. In such cases, two input transactions may be required: one for the tax-free amount on which no income tax is withheld and the second transaction for the remaining amount with the applicable income tax deductions.

4.2.3 Non-taxable amounts

The following non-taxable payments are not considered earnings and not reported on T4/TP4 or T4A/TP4A forms:

  • supplementary death benefit (SDB); and
  • retroactive adjustments to amounts included in the deceased's income (salary, accrued leave, etc.), where the collective agreement or other authorizing instrument was signed after the date of death.

4.2.4 Identification of payments for income tax purposes

To satisfy the income tax requirements, the paying office will, immediately upon the death of an employee, issue the appropriate remuneration statements. That is to say, T4s and Relevé 1s are to be issued in the name of the deceased, and accordingly a T4A/Relevé 1 & 2 should be issued for the funds paid to the widow/widower or estate in the name of the recipient. Consequently, the forms (DSS 7744) and (DSS 7743) previously utilized by paying offices will no longer be required.

Paying Offices must forward only copies of the T4, T4A, Relevé 1 and Relevé 2 that are required by the employer and the employee's estate.

The copy required by Revenue Canada and Revenue Québec should be retained and forwarded at year end with the normal February processing. These copies are necessary since they will not reflect the same information as contained on the tape forwarded to the Revenue Offices.

It should be noted that in these circumstances previous year remuneration statement forms should be used if the current ones are not yet available.

At calendar year end when the remuneration statements (T4, T4A, Relevé 1 and Relevé 2) are issued automatically by the various SSC pay systems, in the name of the former employee, personnel offices will, upon receipt of said remuneration forms, destroy them.

Receipt of these forms will permit the beneficiary of the deceased to file the appropriate income tax returns without delay.

4.3 Other mandatory deductions

4.3.1 Canada Pension Plan (CPP)/Quebec Pension Plan (QPP)

Contributions must be deducted only on amounts which are included in the deceased's income. This includes retroactive adjustments as a result of the signing of a collective agreement or other authorizing instrument before the date of death.

Note that no deductions are made when the signing of the collective agreement or other authorizing instrument takes place after the date of death.

4.3.2 Unemployment insurance

Premiums are deducted only on salary or wages payable up to and including the date of death. Any retroactive adjustments to those amounts are not insurable under the Unemployment Insurance Regulations.

4.3.3 Public Service Superannuation Act (PSSA)/Supplementary Retirement Benefits Act (SRBA)

Contributions are deducted from salary or wages up to and including the date of death and on adjustments as detailed in Note 2 of Appendix C.

4.3.4 Supplementary Death Benefits (SDB)

Deductions must be taken on salary or wages paid for the month of death and on adjustments as stated in Note 2 of Appendix C.

5. Payment pursuant to a power of attorney

The term "power of attorney" means an authority in writing, signed by a person to whom a debt is owing, authorizing another person named therein to receive moneys due upon the debt and to give a valid receipt and discharge thereof.

No power of attorney may be recognized or acted upon in respect of payment of salary or wages, or superannuation benefits, except where it is an authorization to pay all or part of a pension or annuity payable under the Public Service, Canadian Forces or RCMP Superannuation Acts or other like legislation into a retirement plan registered by Revenue Canada, Taxation as a Registered Retirement Savings Plan under the Income Tax Act.

6. Payment pursuant to an assignment of Crown debts

The term "assignment" refers to the transfer of all right, title and interest in a debt owing by the Crown made by the assignor to the assignee in accordance with Part IX of the Financial Administration Act (FAA), and the regulations made thereunder by P.C. 1962-196 of February 15, 1962, as amended.

An assignment must be a transfer of the whole amount owing to the assignor; a portion of the debt cannot be assigned.

The term "assignment" has no reference to a direction given in a power of attorney, by a person to whom the money is owing by the Crown, to pay the money to some other person. Neither does it have any reference to authorizations for deductions from salary, allowances or other payments, or to the existing procedure of effecting set-off to recover indebtedness to the Crown.

Section 68(5) of the Financial Administration Act (FAA) prohibits the assignment of salary, wages, pay or pay and allowances.

7. Garnishment and attachment

See the revised Policy on Garnishment.

8. Priority in making deductions

Where, for any reason, an employee is not entitled to sufficient pay in a pay period to cover all current authorized deductions, priority is given to such deductions in the following order:

Amounts owing to the crown

  • Overpayments of salary, including payment for unearned leave
  • Fines for lates, etc.
  • Rent and other perquisites
  • Advances and loans out of public money
  • Parking
  • Other debts collectable pursuant to Section 156(3) of the Financial Administration Act or by set-off on authorization of the debtor and approval of the Receiver General.

Deductions required by federal statute

  • Canada Pension Plan/Quebec Pension Plan
  • Superannuation (current and arrears)
  • Death benefit
  • Unemployment Insurance
  • Federal income tax pursuant to income tax regulations (current, including provincial tax where federal-provincial collection agreements have been signed and tax in arrears)

Provincial government tax

  • Province of Quebec income tax.

Compulsory dues to Public Service bargaining agents

Hospital, surgical and medical plan premiums

  • Provincial hospital and medical insurance or hospital insurance (outside Canada)
  • Group Surgical-Medical Insurance Plan for the Public Service (GSMIP)

Maintenance of dependants

Life and other insurance premiums

  • Public Service Management Insurance Plan (PSMIP)
  • Disability insurance
  • Civil Service insurance
  • Veterans insurance
  • Civil Service Mutual Benefit Society

Personal and miscellaneous

  • CMHC mortgages on houses at Gander
  • Approved credit unions or co-operative societies
  • Canadian Government annuities
  • Canada Savings Bonds
  • Voluntary dues to Staff Associations
  • Ottawa Civil Service Recreational Association
  • Charitable donations

9. Natives employed by the federal government

9.1 Income tax

Natives working on a reserve are not subject to federal or provincial tax deductions. If the employment is off the reserve, they are subject to deduction of federal and provincial tax as applicable.

9.2 Canada Pension Plan (CPP)/Quebec Pension Plan (QPP)

Natives working on a reserve and contributing under the Public Service Superannuation Act (PSSA) are subject to Canada Pension Plan deductions. Natives working on reserves in Quebec also contribute to the Canada Pension Plan.

Natives working on a reserve who are not contributors under the PSSA are ineligible to contribute to the Canada or Quebec Pension Plans.

Natives working off the reserve contribute either to the Canada or Quebec Pension Plan as applicable, regardless of their contributory status under the PSSA.

9.3 Unemployment insurance

Natives employed by the federal government are subject to deduction for Unemployment Insurance.

9.4 Superannuation

Superannuation contributions are deducted if eligible under the PSSA.

9.5 Death benefit

Death benefit is deducted if eligible under the PSSA.

10. Income tax deduction for premiums paid under the DI and LTD insurance plans

For tax purposes an employee who becomes disabled can request an estimate of the total amount of the premiums paid into the plan from the time he became a contributor. It is the responsibility of the personnel office to provide this information to the employee.

A chart of the premium rates in effect since the plans inception is provided in Appendix A of this chapter.

Notes:

Salary for Disability Insurance purposes has the same meaning as for Part II of the Public Service Superannuation Act (Supplementary Death Benefit). Therefore, a retroactive salary increase becomes effective on the first day of the month following the month in which the salary change was authorized (traitement).

For further information, refer to the Insurance Administration Manual.


Appendix A

Premium Rates
Disability insurance
November 1, 1970 to March 31, 1973 $0.05 for each $250
April 1, 1973 to December 31, 1973 $0.0675 for each $250
January 1, 1974 to March 31, 1980 $0.10 for each $250
April 1, 1980 to March 31, 1988 $0.095 for each $250
April 1, 1988 $0.11 for each $250

* Premium holiday periods (DI)
November 1, 1979 to March 31, 1980
June 1, 1982 to September 30, 1982

Premium Rates
Long term disability insurance
May 1, 1968 to December 31, 1973 $0.05 for each $250
January 1, 1974 to June 31, 1975 $0.0675 for each $250
July 1, 1975 to August 31, 1979 $0.12 for each $250
September 1, 1979 to November 31, 1981 $0.11 for each $250
December 1, 1981 to February 28, 1984 $0.105 for each $250
March 1, 1984 to March 31, 1986 $0.08 for each $250
April 1, 1986 $0.065 for each $250

*Premium holiday periods (LTD)
December 1, 1981 to May 31, 1982
March 1, 1984 to September 30, 1985

*COMMENT: Members of the plan did not have to pay monthly premiums during the premium holiday periods, provided they were members of the plan immediately prior to the effective date of such holidays.

Basic formula

Annual salary (rounded up to the nearest $250)
x the contribution rate ¸ by $250
= the monthly contribution rate

Example

February 1, 1973, salary $29,898
Rounded up to the nearest $250 = $30,000

Monthly rate $30,000 x .05 = $6
$250

Appendix B

Relevant Forms
Title of Form No. of Form Issued br Available from Phone No.
Fax No.
PSAC payroll identification PSAC 26 R02-89 PSAC TBS 613-952-2982
613-957-4190
Notice of change in union affiliation 7540-21-878-4944 TBC/CTC 340-8 (Rev. 5.88) TBS SSC 613-957-1097
613-954-1424
Application for the refund of PSAC dues DSS-MAS 2595 (Rev. 10.88) SSC "Decentralized forms" printed on request; contact your forms management or purchasing services.

Appendix C

Deductions at Source on Payments after Death

Abbreviations

I.T. - Income tax
CPP/QPP - Canada Pension Plan/Quebec Pension Plan
U.I. - Unemployment insurance
PSSA - Public Service Superannuation Act
SRBA - Supplementary Retirement Benefit Act
Curr - Current
Arr - Arrears
SDB - Supplementary death benefit

Deductions at Source on Payments after Death
Types of earnings CPP   Deductions
PSSA/SRBA
  Earnings I.T.
I.T. QPP U.I. Curr Arr SDB to reported forms
(1) Salary or wages up to and including date of death Yes Yes Yes Yes Note 1 Yes Deceased T4/TP4
(2) Retroactive adjustments to salary or wages up to and including date of death Note 2 Note 2 No Yes Notes 1 & 2 Note 2 Deceased Note 2 T4/TP4
(3) Salary or wages after date of death to end of month of death Note 3 No No No No Yes Beneficiary or estate T4A/TP4A
(4) Retroactive adjustments to salary or wages after date of death to end of month of death Note 3 No No No No Note 2 Beneficiary or estate T4A/TP4A
(5) Accrued annual and furlough leave Yes Yes No No No No Deceased T4/TP4
(6) Retroactive adjustments to accrued annual and furlough leave Note 2 Note 2 No No No No Deceased Note 2 T4/TP4
(7) Refund of employer's reduction of U.I. premium Yes Yes No No No No Deceased T4/TP4
(8) Severance pay (including retroactive adjustments) Note 3 No No No No No Beneficiary or estate T4A/TP4A
(9) Return of pension contributions Yes No No No No No Beneficiary or estate T4A/TP4A
  • Note 1 PSSA and SRBA arrears are deducted for the month of death only when death occurs on the last day of the month.
  • Note 2 Deductions are made only if the collective agreement or other authorizing instrument was signed prior to the date of death. Otherwise, payments are not subject to deductions and are not reported on T4/TP4 forms.
  • Note 3 Deductions are made at the rates prescribed for lump sum payments except when the payments are made to a surviving spouse or the estate, a portion equal to the employee's remuneration for the last 365 days in office with full salary up to an amount of $10,000 is tax free.
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