| August 24, 1990 | |
| Treasury Board of Canada | Financial Industries |
| Secretariat | Division |
| Maureen Shea-DesRosierss | |
| (613) 957-8953 | |
| Attention: Ray Springer | 5-901720 |
| EACC9265 |
Section 6801 of the Income Tax Regulations (the "Regulations")
This is in reply to your Memorandum of July 23, 1990 concerning the treatment of the Quebec Pension Plan ("QPP") in a salary deferred leave plan (as described in section 6801 of the Regulations) which is explained in 19(1) 19(1) letter addressed to you, a copy of which was attached to your memorandum.
The Quebec Pension Plan currently allows only the employer to withhold from the remuneration paid to an employee the amount prescribed on account of the employee's contribution. If it is the trustee of the DSLP who pays the deferred amounts to the employees, he is not allowed to withhold from the employee's remuneration the prescribed amount on account of the employee's contributions.
19(1) advises in his letter that the Quebec Minister of Finance, in his budget speech of April 26, 1990, indicated that amendments would be made to the Quebec Pension Plan to deem the trustee who pays the deferred amounts to be the employer of that employee in addition to his/her own regular employer for purposes of deducting and remitting the contributions. These amendments will apply to amounts paid after the budget speech.
However, where the employee is not required to report for work at an establishment of the employer, the withholding from the remuneration paid to the employee will not be required if the salary is paid or deemed paid from an establishment situated outside Quebec.
Therefore, if the salary is paid from an establishment situated in Quebec, the trustee will have to contribute to the QPP and, for the same reasons, the employee will also have to contribute to the QPP for the salary paid by the trustee.
On the other hand, no contribution can be demanded where the employee, during his/her leave, is not required to report at an establishment of his employer and receives his salary from a trustee situated outside Quebec.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate