Canadian Payroll Reporter

News Published 12 times a year by thomson reuters canada Ltd. Subscription rate: $179 per year customer service Tel: (416) 609-3800 (Toronto) (800) 387-5164 (outside Toronto) Fax: (416) 298-5106 E-mail: carswell.customerrelations @thomsonreuters.com Website: www.carswell.com One Corporate Plaza 2075 Kennedy Road Toronto, Ontario, Canada M1T 3V4 Director, Carswell Media karen Lorimer Publisher John Hobel (on leave) Managing Editor/Acting Publisher todd Humber Editor sheila Brawn sbrawn@rogers.com Assistant Editor Mallory Hendry Marketing Manager Mohammad Ali mm.ali@thomsonreuters.com (416) 609-5866 Circulation Co-ordinator keith Fulford keith.fulford@thomsonreuters.com (416) 649-9585 Payroll Reporter Can R Can R adian adian a www.payrollreporter.com ©2014 Thomson Reuters Canada Ltd ISBN/ISSN: 978-0-7798-2810-4 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, photocopying, recording or otherwise without the written permission of the publisher (Carswell, a Thomson Reuters business). Return Mail Registration # 1522825 | Return Postage Guaranteed Paid News Revenue Toronto Canadian Payroll Reporter is part of the Canadian HR Reporter group of publications: • Canadian HR Reporter — www.hrreporter.com • Canadian Occupational Safety magazine — www.cos-mag.com • Canadian Payroll Reporter — www.payroll-reporter.com • Canadian Employment Law Today — www.employmentlawtoday.com • Canadian Labour Reporter — www.labour-reporter.com See carswell.com for information If an employee gives an employ- er a completed CPT30 electing to opt out of CPP contributions or to revoke an election, Hardiman says the first thing payroll should do is ask the individual whether this is the first time they have filed an election/revocation or whether the form is a copy of one they sub- mitted to another employer. "You will need to have a talk to your employee about this," Hardi- man says. "Have a conversation and figure out if you are receiving the election or revocation for the first time or, if the employee has already given it to a previous employer and now you are just receiving a copy. Since the decision to elect or revoke is the employee's, the CRA will not give you any information as the employer." Hardiman advises payroll ask for a copy of the pension award letter from the government to ensure eli- gibility. Payroll must also check the date in part C. The date determines when the election actually takes effect. Hardiman says it should be in the same month the employee gives the form to payroll. If it's different, she says the em- ployee must change it before re- submitting it. While the CRA advises employ- ers not accept post-dated CPT30s (for either elections or revoca- tions), the agency says it's OK for organizations to ask employees to submit the forms in advance if payroll needs time to meet cut-off dates or system input deadlines for stopping (or starting) deductions. Payroll has to continue deduct- ing CPP contributions (and paying the employer's share) on all pays up to and including the employee's last pay dated in the month shown on the form. In many cases, employ- ers will have pay periods that over- lap the end of one month and the beginning of the next. In that case, Hardiman says it is important pay- roll does not break up the final pay period and only deduct CPP from the part of the period that includes the month shown on the form. Instead, payroll will have to pro- rate and adjust the final CPP con- tribution. "In these situations, you will need to check the amount of CPP deducted from the beginning of the year until the end of the final month shown in part C and adjust if necessary." If payroll deducts CPP contri- butions after an election takes ef- fect and realizes in the same year, Hardiman says they should reim- burse the employee and revise its records. It may reduce its next re- mittance to the CRA by both em- ployer and employee share. If payroll does not realize the er- ror until doing T4s the next year, Hardiman says it is essential pay- roll not adjust the amount of CPP deducted from the employee. She advises payroll report the adjusted pensionable earnings on the em- ployee's T4 in box 26 (CPP/QPP pensionable earnings) so the em- ployee can request a refund when filing a personal income tax return. The employer can file a PD24 form to request a refund of its share. If an employee says the election on the CPT30 form is not new and is a copy previously sent to the CRA and another employer, pay- roll must make sure the employee hasn't since revoked that election before stopping deductions. Payroll must also check to see whether it has deducted CPP after the end of the month entered in part C on the form. If so, payroll will have to correct this. from ElECTIoNs on page 3 Aging population putting off retirement In some cases, employees who stop paying CPP contributions change their mind. They can if they are 65 to 70, receiving a C/QPP re- tirement pension, are employed in pensionable employment and re- ceiving pensionable earnings. To make the change, the em- ployee has to complete parts A, B and D of the CPT30, give a copy to the employer in the month they sign it and send the original to the CRA. The CRA has placed restric- tions on how often employees can opt in and out of CPP contribu- tions, limiting them to only one election or revocation a year. Hardiman again advises pay- roll to watch the date on the form. The date in part D must be in the same month the employee gives the form to the employer. If not, the employee must revise it. Once payroll accepts the form, it must start deducting CPP contri- butions (and paying the employer portion) with the first pay dated in the month following the one en- tered in part D. Deductions contin- ue until the employee is no longer employed by the employer, turns 70 or files to stop contributions. If an employee already filed a CPT30 revocation with the CRA and a previous (or other) employer, but delayed giving it to the current employer, Hardiman says payroll begins to deduct CPP contribu- tions as of the first pay dated in the month after the month the em- ployee submits the form. Employees in this situation can still contribute to the CPP by com- pleting a form CPT20, Election to Pay Canada Pension Plan Con- tributions, and filing it with their personal income tax return. They would have to pay both the em- ployee and the employer share of CPP contributions. For year-end reporting for a year in which an employer receives a CPT30, Hardiman advises payroll ensure boxes 16 (CPP contribu- tions) and 26 on the employee's T4 agree with the period in the year when the employee was required to pay CPP. She adds payroll must not enter anything in box 28 (CPP/ QPP exempt). One situation payroll must sometimes deal with is a newly hired employee who says they have previously filed an election to stop contributions with a previous em- ployer, but did not make a copy of the form or cannot find it. Hardi- man advises payroll ask the em- ployee to contact the CRA to re- quest a copy . The employee should make a copy for the new employer and keep a copy. "Until the employer receives a copy of the election, the employer has to continue to deduct CPP con- tributions," Hardiman says. She admits this may cause com- plications for payroll. "Once the employee gets the election (and) gives it to the employer, you may find out that you will have to make adjustments. You realize that you have deducted CPP after the ef- fective date, so you may be caught in a situation where you have to reimburse your employee and re- duce your next remittance to the Canada Revenue Agency," she says. However, this route may be pref- erable to possible penalties and interest for not making the deduc- tion. "If the employee says they elect- ed and they are not able to produce a copy of the form and you don't deduct CPP contributions and the employee never does provide you with a copy, you (may) find out at the end of the year that CPP contri- butions may be assessed." September 2014 | CPR

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