Introduction

This document provides information on what the Canada Revenue Agency (CRA) looks at when determining whether the employment of an individual who is in tenure of office is pensionable or insurable, or both, under the Canada Pension Plan (CPP) and the Employment Insurance Act (EIA).

Employer responsibilities

All employers are required by law to deduct CPP contributions and employment insurance (EI) premiums from most amounts they pay to their employees. Employers must remit these amounts along with their share of CPP contributions and EI premiums. More information on employer responsibilities and obligations can be found through our Payroll page.

What is tenure of office?

For CPP and EI purposes, office means the position of an individual who is:

• elected by popular vote or appointed; and
• entitled to a fixed or ascertainable stipend or remuneration.

What is an elected or appointed position?

An individual who is in tenure of office is elected or appointed by an appropriate authority under an instrument such as an order in council, an act or other. The individual is not bound by a contract of service or subject to any control when performing his or her duties.

Furthermore, the following factors will normally exist:

• The individual is elected or appointed to the position.
• The individual can be removed or dismissed only according to the internal regulations governing the electoral or appointment process.
• The individual stays in office until he or she loses an election or his or her appointment is ended.
• No one dictates how the individual makes decisions on various issues.
• The individual could face two types of sanctions: not be re‑elected or removed from office for misconduct.

What is fixed or ascertainable remuneration?

For an individual to be considered in tenure of office, any stipend or remuneration he or she gets has to be fixed and ascertainable.

Remuneration is fixed or ascertainable when an individual knows the amount he or she will be paid (such as a fixed salary, commission, or amount per sitting).

Certain expenses an individual incurs for the office to which he or she was appointed may render the remuneration to be variable or unascertainable. When holding an office requires the individual to incur variable expenses that he or she did not know about when he or she accepted the appointment, the remuneration will not be considered to be fixed or ascertainable. However, expenses that are required for the individual to hold office, which the individual knows about when he or she accepts the appointment, as well as any reimbursed expenses, do not render the remuneration variable or unascertainable.

Professional and business expenses that are not related to the tenure of office should not be considered in determining whether remuneration is fixed or ascertainable.

Example:

Mr. Smith is appointed as a chairman of a Commission to hear complaints against a specific industry; he is required to preside at hearings and then provide the parties with reasons for his determination.

Mr. Smith is paid $1000.00 per hearing and it is the responsibility of Mr. Smith to assume all research work, clerical work and all administrative costs associated with his appointment.

Mr. Smith uses a research assistant from time to time.

If Mr. Smith is not reimbursed for his expenses and has to pay for a research assistant, the remuneration is not fixed and ascertainable.

If the Commission is paying the research assistant and reimburses all incurred expenses to Mr. Smith then the remuneration is fixed and ascertainable.

Is the employment pensionable?

Private sector

The employment of an individual in the private sector in tenure of office is included in pensionable employment except in the following two instances:

• An Indian elected as an Indian band chief; unless the employer has filed a CPT124, Application for Coverage of Employment of an Indian in Canada under the Canada Pension Plan whose income is exempt under the Income Tax Act.
• The employment of a director who is not normally resident in Canada when his or her employment is performed only as a director totally or partly outside of Canada.

The employment of a non-resident director who is performing the employment only as a director will be pensionable if the employment is performed exclusively in Canada.

Federal government departments and agencies

The employment of an individual with a Canadian federal government department or agency in tenure of office is included in pensionable employment.

Provincial government departments and agencies

The employment of an individual with a provincial government department or agency in tenure of office will be included in pensionable employment if the province is listed in Schedule III of the Canada Pension Plan Regulations, except if their employment is listed in Schedule IV of the Canada Pension Plan Regulations. (Please note that not every employment listed in Schedule IV has to do with tenure of office.)

Is the employment insurable?

Private sector

The employment of an individual who is in tenure of office in the private sector, for example in the municipal or academic sector, is not insurable.

The employment of the following individuals in tenure of office is not included in insurable employment:

• a mayor
• a municipal councillor
• a school commissioner
• a chief of an Indian band
• a band councillor
• an executor, liquidator, or administrator of an estate
• a director of a corporation
• a person elected to any other position

The only situation where the employment of an individual is included in insurable employment in the private sector is where the individual is in tenure of office in a union or an association of unions.

Federal government departments and agencies

The employment of an individual in tenure of office in a federal government department or agency is included in insurable employment if the individual holds the office in any department or other portion of the federal public administration listed in one of the following schedules of the Financial Administration Act: Schedule I, Schedule II, Schedule III, Schedule IV, or Schedule V.

The employment of the following individuals in tenure of office is not included in insurable employment:

• a minister
• a member of the House of Commons
• a member of the Senate
• the Lieutenant Governor
• a judge
• a magistrate
• a member of a board of referees at the Commission of Canada Employment Insurance
• a prothonotary of the Federal Court of Canada (the Federal Court is not included in the schedules)

Provincial government departments and agencies

The employment of an individual who is in tenure of office in the provincial government is included in insurable employment if the individual is appointed and remunerated under an act governing the public service of a province. The employment of an individual who is in tenure of office for a corporation, a commission, or another body that is an agent of Her Majesty in right of a province is included in insurable employment even if the individual is not appointed and remunerated under an act governing the public service of a province.

Requesting a ruling

If a worker or payer is not sure of the worker’s employment status, either party can request a ruling to have the status determined. More information on the ruling process is available in How to get a CPP/EI ruling.

For information on the possible implications of a CPP/EI ruling, go to Have you received a CPP/EI ruling?

For more information

To get more information, call the CRA’s business enquiries line at 1-800-959-5525.

Legislative references

• Section 2 and paragraphs 6(1)(a), 6(1)(b), and 6(1)(c) of the Canada Pension Plan
• Sections 23 and 24 of the Canada Pension Plan Regulations
• Paragraphs 5(1)(d), 5(4)(d), and 5(4)(g) of the Employment Insurance Act
• Section 2(1) and subsection 6(f) of the Employment Insurance Regulations