This can be the busiest time of year for payroll. Besides preparing to accurately report taxable income, it’s important to be aware of legislative changes coming into effect in 2014 as well as year-end reporting requirements for 2013. Here’s a quick look at what’s on tap for 2014.
What’s new (forms and guides) for 2013:
• The Canada Revenue Agency (CRA) no longer offers the T4 desktop option for filing information returns.
• For electronic filing, the CRA no longer offers the diskette option. Employers filing electronic media must use either CD or DVD.
RC4157 guide: Deducting income tax on pension and other income, filing the T4A slip and summary:
The CRA has added new income codes for reporting amounts on the T4A:
• Code 136 — Federal income support for parents of murdered or missing children grant (PMMC)
• Code 162 — Pre-1990 past service contributions while not a contributor
• Code 194 — Pooled registered pension plan (PRPP) annuity payments from taxable income
• Code 195 — Indian (exempt income) – PRPP payments
T4061 guide: NR4 – Non-resident tax withholding, remitting, and reporting:
The CRA has added two new income codes to the NR4 related to pooled registered pension plans (PRPPs):
• Code 65 PRPP – Periodic payments
• Code 66 PRPP – Lump-sum payments
Temporary EI hiring credit for small business extended by one year
The federal government has extended the temporary EI hiring credit for an additional year. If an employer’s shares of EI premiums were $15,000 or less in 2012 and the premiums for 2013 have increased, it will be eligible for a refund of the difference up to $1,000. Employers are not required to do any calculations as the CRA will do the reconciliation on the employers’ behalf.
Reduced EI premium rates set for 2014
Service Canada has released the reduced EI premium rates for 2014 for employers with registered wage-loss replacement plans. For 2014, the following rates apply:
• category 1 plans: x 1.283 the employee premium (1.256 for Quebec employees)
• category 2 plans: x 1.219 the employee premium (1.178 for Quebec employees)
• category 3 plans: x 1.219 the employee premium (1.178 for Quebec employees)
• category 4 plans: x 1.203 the employee premium (1.158 for Quebec employees)
The category refers to the group to which Service Canada assigns the employer, based on the type of wage-loss replacement plan the employer has set up.
RPP, RRSP limits change
The maximum contribution rates for 2014 for registered pension plans and registered retirement savings plans will increase:
• money purchase plans — $24,930
• deferred profit-sharing plans — $12,465
• RRSPs — $24,270
• defined benefit (DB) plans — $2,770
Agency name change
Human Resources Skills and Development Canada (HRSDC) has changed its name to Employment and Social Development Canada (ESDC). This government agency is responsible for the administration programs of Canada Pension Plan (CPP), Old Age Security (OAS) and EI benefits. This change does not affect the way employers should continue to conduct business with the agency.
Medical services premiums rise in B.C.
Effective Jan. 1, British Columbia will increase its monthly medical services plan (MSP) premium rates for a single person to $69.25 from $66.50. The maximum monthly premium for a family of two will increase from $120.50 to $125.50. For a family of three or more, it will rise from $133 to $138.50.
Newfoundland and Labrador
minimum wage increasing
The province’s minimum wage rate will increase from $10 per hour to $10.25 on Oct. 1, 2014.
2014 QPP rates
The Quebec Pension Plan (QPP) rates and maximum for 2014 are as follows:
• Maximum pensionable earnings — $52,500
• Basic exemption — $3,500
• Maximum contributory earnings — $49,000
• Contribution rate (employee and employer) — 5.175 per cent
• Maximum employee contribution — $2,535.75
• Maximum employer contribution — $2,535.75
Effective Jan. 1, Quebec is also changing the method employers use to determine the maximum QPP contribution to deduct from employees transferred to Quebec from another part of Canada who were covered under the CPP. The change is necessary to deal with the fact QPP and CPP have different contribution rates. Beginning next year, employers who transfer employees from another part of Canada to Quebec will have to multiply the total CPP contributions they deducted from the employees since the start of the year by a weighting factor. The weighting factor will be determined by dividing the QPP contribution rate for the year (5.175 per cent for 2014) by the CPP contribution rate for the year (4.95 per cent for 2014). For 2014, the weighting factor will be 1.0455.
What’s new (forms and guides) for 2013 year end
• Employers filing on paper (those with 50 or fewer RL-1s to file) must now only send copy 1 of the RL-1 to Revenu Québec and give copy 2 to the employee.
• Revenu Québec has added new code CD to the list of codes used in the Box (O). The new code is used to report federal benefits paid to the parents of children who are missing or murdered.
• Beginning with 2013 year-end reporting, employer must not include the following amount from box (A) when completing box (G) on an RL-1; the value of a benefit resulting from amounts an employer paid to acquire a share (or a part of a share) for an employee from the Fonds de solidarité FTQ or Fondaction period. Because the benefit is pensionable, the employer must inform the employee that he may make optional contributions to the QPP on the value of the benefit when filing a personal tax return, provided the employee has not reached the annual maximum. Also, on the RL-1, enter "G-1" in one of the blank boxes in the centre of the RL-1followed by the amount.
Quebec legislation to enact VRSPs Legislation that would implement voluntary retirement savings plans (VRSPs) in Quebec beginning Jan. 1, is still being considered by the Quebec’s National Assembly.
Bill 39, the Voluntary Retirement Savings Plans Act, passed second reading on Oct. 1, 2013. At press time, the Assembly’s Committee on Public Finance was still reviewing it.
VRSPs would offer a retirement savings option for individuals. They would be managed by an insurer, trust company or investment fund manager. Employers would sign up for them and would automatically enroll their employees, although employees would be allowed to opt out.
The bill proposes to make it mandatory for employers to sign up for a VRSP if they employ at least five employees with a minimum of one year of uninterrupted service and they do not already offer payroll deductions for a registered retirement savings plan or tax-free savings account or registered pension plan.
The terms "employee" and "uninterrupted service" would apply in the same way they do under the act respecting labour standards.
Employers would not be obligated to contribute to the plan; however, they could choose to do so. If an employer does contribute to a VRSP for an employee, the contribution will not result in a taxable benefit to the employee.
Although employers would not be responsible for managing the plans, they would have certain obligations, including the following: selecting a VRSP, communicating to employees about membership in (and opting out of) the plan, enrolling eligible employees, regularly deducting employee contributions and remitting them (along with any employer contributions) to the administrator by the last day of the month following the day the employer collected them.
Annie Chong is manager of the payroll consulting group at Carswell, which publishes the Canadian Payroll Manual and operates the Carswell Payroll Hotline.