Canadian Payroll Reporter

CPR | September 2014 ask an exPert Annie Chong 7 Canadian HR Reporter, a Thomson Reuters business 2014 manageR of CaRswell's payRoll ConsulTing gRoup annie.chong@thomsonsreuters.com | (416) 298-5085 taxability questions about scholarships and bursaries Question: We are offering scholarships and bursaries to the children of our employees to help them attend post-secondary educational institutions. Is this a taxable benefit for the employees? ANswER: No, the Canada Rev- enue Agency does not consider it to be a taxable benefit unless the scholarship or bursary is being provided as a substitute for pay- ing the employees salary, wages or other remuneration or the employer does not deal with the employees at arm's length. Employers are required to re- port the fair market value of the scholarship or bursary on a T4A slip for the employee's child. For Revenu Québec, report it in box (O) of an RL-1 for the family member receiving the scholar- ship or bursary. The CRA says that individu- als may be able to exclude the amount from their income when filing a personal tax return if they meet certain criteria. It advises payroll practitioners to refer employees to its General Income Tax and Benefit Guide (available on the CRA's website at www.cra-arc.gc.ca/forms- pubs/t1gnrl/menu-eng.html) if the employee or family member have questions. This policy also applies to edu- cational institutions that offer free tuition to their employees' family members. how to properly handle educational allowances Question: We are now offering allowances to employees who sign up their children for tutoring or educational enrichment programs with a third-party provider. We do not run the programs and are not affiliated with them. The employees must provide us with receipts to qualify for the allowance. Is there a specific dollar limit that applies for these types of allowances before they are taxable? ANswER: Regardless of the amount paid, the allowance is a taxable benefit to the em- ployees and must be included in their income for calculating source deductions. It is pen- sionable, insurable and taxable. Do not include the GST/HST in the value of the allowance. The only exception applies for education allowances that employers provide when an em- ployee and the employee's fam- ily have to live away from their home in a specific location for work and the schools there do not meet their children's edu- cational requirements. In this situation, the CRA says the al- lowance may not be taxable if the following conditions apply: • the education provided is in English or French, whichever one the employee primarily uses; • the school is the closest suitable one available in that language; • the employee's child is a full- time student at the school; and • the amount the employer pro- vides for the education is reason- able (the CRA does not define "reasonable"). rules for keeping employment standards records Question: I want to purge some of our old payroll records. I know that for Canada/Quebec Pension Plan, Employment Insurance Quebec Parental Insurance Plan and income tax we have to keep records for six years after the taxation year to which they relate. Does this rule also apply for employment /labour standards records? ANswER: No, the rules cover- ing labour standards records are governed by each province's and territory's labour standards laws and by the Canada Labour Code for federally regulated employ- ers. The record retention re- quirements are as follows: Canada Labour Code: Employ- ers must keep records for three years after work is performed. Records relating to the dates employment began and ended must be kept for a minimum of 36 months after termination of employment. Alberta: Employers must keep records for three years after they make the record. British Columbia: Employers must keep records for two years after termination of employment. Manitoba: Employers must keep records for three years after they make the record. Records of an employee's date of birth, address and wage changes must be kept for three years after termination. New Brunswick: Employers must keep records for a minimum of 36 months after the employee performs the work for which the employer made the record. Newfoundland and Labrador: Employers must keep records for four years from the date of the last entry in the record for the employee. Northwest Territories: Employ- ers must keep records for two years after they make the record. Nova Scotia: Employers must keep records for three years after the work for which the employer made the record is performed. Nunavut: Employers must keep records for two years after they make the record. Ontario: There are a number of different record-keeping re- quirements for employers: • records covering the number of hours the employee works each day or week: three years after work is performed; • records pertaining to excess hours and averaging hours: three years after the last day the employ- ee did work under the agreement; • records pertaining to leaves: three years after the leave expires; • records covering the employee's name, address and the date he or she began employment with the employer: three years after termi- nation of employment; • records relating to the employ- ee's date of birth: three years after the employee's 18th birthday or the employee's employment ter- minates, whichever comes first; • records covering information provided in pay statements: three years after the employer gave the information to the em- ployee; and • specified records relating to va- cations: three years after employ- ers make the record. For more information, contact Ontario Employment Standards. Prince Edward Island: Employers must keep records for 36 months after the employee performs the work for which the employer made the record. Quebec: Employers must keep records for three years after the employee performs the work for which the employer made the record. Saskatchewan: Employers must keep the most recent five years of records for current employees. Upon termination, employers must keep records for an extra two years after the day employ- ment ends. Yukon: Employers must keep records for 12 months after the employee performs the work for which the employer made the record. Note: Even though employers are not required to keep labour stan- dards records for as long as Can- ada Revenue Agency records, for best practices, it may be an idea worth considering.

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