Canadian Payroll Reporter

CPR_JULY_2013V2:Canadian Employer.qxd 13-06-14 12:42 PM Page 7 CANADIAN PAYROLL REPORTER Excluding vacation periods from standby, ROEs for employees on salary deferrence QUESTION: We provide some employees with company automobiles. When calculating the standby charge for their automobile taxable benefit, can we exclude periods that they are away on vacation if they leave the car and the car keys at their home while they are away? ANSWER: No, you have to include the time the employees are away on vacation. It is the CRA's position that the time must be included since the vehicle is still available to the employee because the keys are in the employee's house, not at the employer's place of business. The CRA's view is that an automobile is available to an employee if the employee has access to or control over the automobile. Access ends only when the employee gives all of the automobile keys to the employer. If an employee leaves the keys with the employer ANNIE CHONG ■ ASK AN EXPERT while away on vacation and this is clearly documented, the CRA would allow the employer to exclude the vacation period when calculating the standby charge. QUESTION: When an employee takes a leave of absence under a salary deferral plan, does the employer have to issue an ROE for the period of leave? ANSWER: Generally, an employer would not have to issue an ROE for such a leave (often called a self-funded leave) because there is no interruption of earnings. An employee on a have under a salary deferral plan has already worked and earned the pay, but has deferred a portion of it to fund the leave of absence. An employer would have to issue an ROE if either the employee or the employer ends the agreement that allowed for the selffunded leave of absence. In such a case, the employer would enter in Block 11 (last day for which paid), the date of the last day the employee worked before starting the leave. Annie Chong is the manager of the payroll consulting group at Carswell, a Thomson Reuters business, which publishes the Canadian Payroll Manual and operates the Carswell Payroll Hotline. She can be reached at annie.chong@thomsonreuters.com or (416) 298-5085 CPP amendments require 7-province support Continued from page 5 as a bank or insurance company. In a regular DC plan, the employee and the employer contribute a certain amount to the employee's pension each year. In the case of PRPPs, though, employer contributions are optional. In June 2012, federally regulated employees were offered PRPPs when the federal government passed Bill C25, the Pooled Registered Pension Plans Act. Provincial and territorial governments must adopt their own PRPP legislation for them to be available to non-federally regulated employees in each region. The following provinces have drafted legislation to introduce PRPPs: Quebec, British Columbia, Saskatchewan and Alberta. Ontario committed to consulting on PRPPs in its 2013 budget. There are two advantages to a PRPP plan, according to Kelly. The first is that management fees on PRPPs are lower than group registered retirement savings plan (RRSP) plans, which are a current option for employers wanting to offer employees a pension plan. Only about 20 per cent of CFIB members provide a group RRSP, which proves employers aren't able to provide costly pension savings, Kelly says. "Second is that the contributions from the employer wouldn't be taxed," he says. If an employer is currently contributing to an employee's RRSP, it is required to pay employment insurance, workers' compensa- tion premiums and provincial payroll taxes on the amount contributed. "That can add about 20 per cent more to the costs for the employer to offer the plan," he says. "The PRPP — because it would be a pension — would be exempt from payroll taxes." The CLC argues employees won't offer PRPPs because they are voluntary. The CLC uses the CFIB's Forced Savings report to support their claim: Nearly two thirds of CFIB members indicated they wouldn't consider offering PRPPs. Even if officials recommend expanding the CPP, any amendment to the CPP requires the agreement of two-thirds of the provinces representing two-thirds of the population plus the federal government. Canadian HR Reporter, a Thomson Reuters business 2013 7

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