Principal Issues: [TaxInterpretations translation] 1) Should the amount shown in Box 26 of the T4 slip be zero or be left blank where an employee is under the age of 18 for the entire taxation year in which the employee received a salary in Quebec?
2) From which date must the amount to be shown in Box 26 of the T4 slip be accounted for in a situation where an employee turned 18 in a taxation year in which the employee received a salary in Quebec?
Position: 1) Zero
2) From the first pay of the month following the month in which the employee attains the age of 18.
Reasons: 1) RC4120
2) Legislative analysis.
XXXXXXXXXX 2010-039113 I. Landry, M.Fisc. March 22, 2011
Dear Madam XXXXXXXXXX,
Subject: Pensionable Earnings - CPP/QPP
This is in response to your email of December 21, 2010 in which you requested details regarding the amounts to be shown in Box 26 - CPP/QPP pensionable earnings ("Box 26") on T4 Statement of Remuneration Paid ("T4 slip").
Specifically, you wish to know if the amount in Box 26 of the T4 slip should be zero or if this box should be left blank where an employee is under 18 years of age during the entire taxation year in which the employee received a salary in Quebec. You also wish to know from what date the amount to be shown in Box 26 of the T4 slip must be accounted for in a situation where an employee turned 18 in a taxation year in which the employee received salary in Quebec.
As stated in paragraph 22 of Information Circular 70-6R5, Advance Income Tax Rulings, it is the practice of the Canada Revenue Agency not to issue a written opinion regarding proposed transactions otherwise than through advance rulings. Furthermore, when it comes to determining whether a completed transaction has received adequate tax treatment, the determination is made first by our Tax Services Offices as a result of their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments that we hope may be helpful to you.
As stated in RC4120, Employer's Guide - Employers' Guide - Filing the T4 slip and Summary (available on our Web site at: http://www.cra-arc.gc.ca/E/ pub / tg / rc4120 / rc4120-10e.pdf), Box 26 of the T4 slip must in most cases be left blank, particularly if Box 14 - Employment income of the T4 slip includes an amount of remuneration paid to an employee before or during the month in which he turned 18.
In a situation where compensation is paid to an employee in a taxation year in which the employee is under 18 years of age throughout the year, the amount to be shown in Box 26 of the T4 slip should be zero. Indeed, Box 26 of the T4 slip should not be left blank as this remuneration is covered by the exception described above. In this situation, however, the amount of pensionable earnings would be zero.
With regard to the question of when the amount to be included in Box 26 of the T4 slip should be recorded for a year in which an employee reaches the age of 18 and receives a salary in Québec, section 45 of the Act respecting the Québec Pension Plan, RSQ, Chapter R-9, provides that income received by a worker or an amount paid in respect of the worker is not salary eligible for the Québec Pension Plan if it is received before the age of 18 years. The Act respecting the Québec Pension Plan provides that for the purposes of that Act, a person is deemed to have attained a certain age on the first day of the month following the month in which the person attains that age.
In a situation where an employee working in Québec has reached the age of 18 in a particular taxation year, that employee will have received a salary eligible for the Québec Pension Plan only on the first day of the following month when the age of 18 years was attained. As stated on page 15 of document T4001, Employers' Guide - Payroll Deductions and Remittances (available on our Internet site at the following address: http://www.cra-arc.gc.ca /E/pub/tg/t4001/t4001-10e.pdf), deductions for contributions to the Québec Pension Plan must therefore begin to be deducted from the first pay of the month following the month in which the employee reaches the age of 18 years and the amount to be shown in Box 26 of the T4 slip must be recognized from that same time.
Best regards,
Guy Goulet CA, M. Fisc.
for the Director
Ontario Corporate Income Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.