11 January 1996 Internal T.I. 9529286 - SEASONAL EMPLOYEES, PENSION ADJUSTMENT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Can seasonal employees be exempted from having a pension adjustment?

Position:

No

Reasons:

Nothing at law to support it.

			January 11, 1996

	HEADQUARTERS	HEADQUARTERS
	Registered Plans Division	M.P. Sarazin
	Stella M. Black	(613) 957-3499
	Director	

Attention: J. Hollinger
			952928

Pension Adjustment and Seasonal Employees

This is in reply to your memorandum dated November 6, 1995 wherein you requested our comments regarding the computation of a pension adjustment ("PA") under the current pension legislation where a member of a pension plan is a seasonal employee of the employer and the employee ceases to be employed by the employer in the spring of each year. Even though the employee receives a refund of his or her pension contributions plus interest upon cessation of employment, the employer is still obligated to report a pension adjustment each year thereby limiting the amount that the employee may contribute to a registered retirement savings plan.

Comments

Since the employee earns pension credits as a result of his or her membership in the pension plan on December 31 of each year, the employer has to report a PA on the employee's T4 or T4A Supplementary slip. There are no provisions in the Income Tax Act or the Income Tax Regulations exempting such seasonal employees from earning pension credits for the purposes of computing the employee's PA.

We trust the above comments will be of assistance to you.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch