26 May 1988 Income Tax Severed Letter

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.

Supply & Services Canada Accounting Banking and Compensation Directorate Place du Portage 11B1, Phase III K1A OS5

Attention: J. Norris Advisory Officer Advisory Services - Pay Products Group Personnel Products Branch

May 26, 1988

Dear Sirs:

We reply to your letter of April 20 concerning the reporting for tax purposes of employees' contributions under the Public Service Superannuation Act for periods of authorized leave of absence without pay due to disability.

XXXX

For income tax purposes, that portion of the contribution for superannuation made in 1986 that is in respect of the leave of absence in 1984 is a past service contribution that relates to services in a prior year when the employee was a contributor, while the portion of the contribution that is in respect of the 1985 calendar year is a past service contribution that relates to services in a prior year when the employee was not a contribution. The portion of the contribution that is in respect of the 10 days in 1986 is a current service contribution. The total amount deducted from the severance pay on account of the contribution for superannuation is, therefore, a combination of contributions for current service and for past service and the past service contributions relate in part to a year while the employee was a contributor (1984) and in part to a year while the employee was not a contributor (1985). The above has to be reflected on the T4 supplementary. We include a copy of the 1987 Employer's and Trustee's Guide for the filing of T4 - T4A and T4F returns. You will find a full explanation of the reporting requirements for registered pension plan contributions on page 9 of the guide. On page 4 of the guide you will find an explanation of the procedures for amending T4 supplementaries. The reason for the above reporting requirements is that, under the Income Tax Act, rules for the deduction of employee's contributions to registered pension plans differ depending on whether or not particular contribution covers current service, past services while the employee was a contributor or past service while the employee was not a contributor.

Please call the writer if you need further assistance.

Yours truly,

for Director Financial Industries Division Rulings Directorate