A salary deferral arrangement is a plan or arrangement made between an employee and an employer. Under such an arrangement, an employee postpones receiving salary and wages to a later year.

Non-prescribed plans or arrangements

If the arrangement is not a prescribed plan, treat the deferred salary and wages as employment income in the year the employee earns the amount.

Report it on the employee's T4 slip for the year in which it was earned. Deduct CPP contributions, EI premiums and income tax in the usual way.

Prescribed plans or arrangements

Prescribed plans or arrangements are not covered by the above salary deferral rules. Treat the deferred amounts in these cases as income in the year the employee receives them. Report the income on the employee’s T4 slip for that year.

To find out how to report pension adjustments under these circumstances, see Guide T4084, Pension Adjustment Guide.