Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
APFF - 1995
Question 3
Treatment of accrued salaries, vacation pay and employment-related costs
At year-end, a corporation records a liability for accrued salaries and vacation pay, including employment-related expenses such as unemployment insurance, Quebec/Canada Pension Plan and health insurance. Does Revenue Canada agree with this treatment?
Answer by the Department of Revenue
Expenses relating to accrued salary and vacation pay payable at the end of a tax year are deductible if they represent a genuine liability to the company. Accordingly, the total amount payable to employees must be reasonable, must not be set at the employer’s discretion, and the employees must not be required to meet any conditions in order to receive their salary and vacation pay.
In addition to the contributions withheld from employee salaries that an employer is required to deduct and remit under the Unemployment Insurance Act (1971), the Quebec Pension Plan and the Quebec Health Insurance Act, these laws require an employer to pay its share of contributions at the time salaries are paid. The Department feels that the employer’s share of employment-related expenses recorded as liabilities constitutes a future liability, for which contributions are not deductible under paragraph 18(1)(e) of the Act for that taxation year.