Vacation pay is remuneration for time off! The Ministry of Labour, through the Employment Standards Act, allows for 2 weeks of paid vacation per year worked. This is the legal minimum — and many employers offer their employees more than the standard 2 weeks, often to reward long service with the company.

The 2-week amount is often expressed as 4% of your regular pay. (Out of 52 weeks in the year, you work 50 and go on holiday for 2; the 2 weeks is 4% of the 50.) If you’ve worked less than a full year, the amount of paid vacation you receive is pro-rated accordingly. So, summer students, for instance, would receive vacation pay amounting to 4% of their summer earnings.

Visit this Q & A for methods on calculating vacation pay. Vacation pay is treated in the same manner as regular pay in terms of tax, EI, and CPP deductions.

Visit the Ministry of Labour website for more information on vacation pay in Ontario, or find a comparable government resource for your location.

Open this Q & A in its own tab to comment.

Use good form on your forms! CRA says, complete T-slips neatly and in alphabetical order. E-filing is required for 50+ forms, and is always the preferred option. Guidelines are published here: http://bit.ly/WEYwq1

Use good form on your forms! CRA says, do not use $ signs on your T-slips; just enter the number. Do not use hyphens or dashes between numbers and names. Guidelines are published here: http://bit.ly/WEYwq1

Use good form on your forms! CRA says, if you do not have an amount to enter in a box, leave it blank. Do not enter “Nil.” Guidelines are published here.

As of last year, it is mandatory to complete Box 24 (EI Insurable Earnings) and Box 26 (CPP Insurable Earnings) on employee T4 slips. If there are no earnings, report 0.

Employers who need to file 50 or more of any type of slip (e.g T4s or T4As) must file electronically. CRA provides a choice of online applications.

Thursday February 28: mark it on your calendar! That’s the filing deadline for T-slips for the 2012 tax year.

Employees and employers contribute equally to the Canada Pension Plan. As of 2011, the rate is 4.95% of earnings over $3,500. Self-employed individuals pay the entire amount – that is, 9.9% of earnings over $3,500.

Staff Post
By Shelley Cahill

On November 30, I attended the Canadian Payroll Association’s 2012 session on Year-End & New Year Requirements. The binder provided to session attendees has been added to the reference collection at the Young Associates office. It contains a number of sections of information which are of interest to us and our clients:

• Starting with changes to the maximum pensionable earning for both EI & CPP: the maximum pensionable earnings for CPP is raised to $51,100 and $47,400 for EI. The 2013 CPP rate is the same, but the EI rate is going up to 1.88% from 1.83%.
• Additionally, the CRA will, as of January 2013, stop automatically sending out paper copies of the PD7A (payroll remittance forms) to those who are already filing electronically. It is strongly recommended that all companies register for “My Account”; it will allow immediate access to payroll account.
• In order, to set up “My Account”, you will need to have permission to access your company’s information (RC59 filled out) and your 2011 Notice of Assessment from your personal return. This is the future of easy access to all your company’s CRA information.
• After 2012, there will be no more mail out of the Web Access Code (WAC) – used to upload T4s/T4As etc. to the CRA – and the WAC will not expire. Employers must keep the final letter in a safe place for reference for following years. Also, T4 Desktop application is cancelled effective January 2013.
• The CRA has made some improvements to the PDOC. It includes: an additional tax bracket for earners over $500k, tax exempt, year-to-date input field, and improvement to the results screens. They have also created a smart phone app for basic personal tax returns and are on Twitter.
• Service Canada is moving away from using ePass. Moving forward, you will need to sign in using either their Sign In Partners (BMO Credit, BMO Debit, Scotiabank Online or TD Canada Trust easy Web) or by setting up a GC Key. This change took effect September 30, 2012.
• There are changes to the way employees and employers contribute to CPP while the employee is receiving CPP payments (aged 65-70). Recommend reading on this topic: the updated information in Section 2, pages 32-35.
• The changes to ROE Web are as follows: there is a new online credentials sign in, as mentioned in paragraph 5; ROEs filed online are no longer required to print off copies for the employees. Employees can access this information through their “My Service Canada Account”.
• There is an interesting program that was introduced in Budget 2011; it is called Working While on Claim Pilot Project. This allows an individual to keep a portion of their EI payment in addition to their other earnings.

  Example: Blake has been laid off from his full-time job and is collecting EI benefits of $450.00/week. He has found a part-time job that pays $600.00/week.

  Under the new pilot project his EI benefits will be reduced by 50% of his additional earning, leaving him with a combined weekly income of $750.00.

  [$450 – ($600.00 x 50%)] + $600.00 = $750.00

• There is a good possibility that SIN cards are going to be phased out in the near future, but at this time there is no deadline.
• There will be changes in GST/HST over the next couple years. The first change will be British Columbia reverting back to 7% on March 31, 2013. Secondly, Nova Scotia is reducing their HST from 15% to 13% over the next 2 years, down to 14% in 2014 and 13% in 2015. Lastly, PEI will be implementing an HST of 14%, effective the date of implementation.
• And, lastly the penny began to be phased out in the fall of 2012 and the Royal Canadian Mint will stop distribution. While the penny will retain its value, gradually cash transactions with be rounded to the nearest $0.05. Non-cash transactions, cheques, EFTs, and debit or credit card payments will still paid to the cent. There is no requirement for employers to round to the nearest $0.05 when paying by cheque or direct deposit; however, employers paying in cash will gradually have to round payments to the nearest $0.05.
• There is a Year End and a New Year Checklist in the binder.

Do you offer a benefits package? If the employer pays for group life insurance premiums, there is a taxable benefit to the employee which must be reported as compensation on the T4 slip. For more information, see the CRA website.