TO: All Participating School Boards and Principals
FROM: Howard Van Mersbergen, Secretary-Treasurer
Important T4 Slip Reporting Information & Requirements for Pension Adjustments
Revenue Canada legislation requires each employer participating in the Canadian Christian School Pension Plan to report a pension Adjustment (PA) for each employee who accrued benefits under the Plan during the previous calendar year. The PA must appear on the participant’s T4 slip, and an accompanying report must be filed by the last day of February following the taxation year.
Reporting for 1996 is required by February 28, 1997, and is based on the pension accruals for calendar year 1996. The 1996 pension accrual is based on covered earnings paid in calendar year 1996. Accordingly, it is necessary for each participating Board (or its designate) to understand and complete the calculations and record keeping to ensure accurate reporting for 1996. The reported Pension Adjustment will reduce the participant’s overall personal RRSP contribution room dollar-for-dollar. It is therefore important that the necessary calculations be completed accurately.
To assist you in the calculations of PAs, we have enclosed the following exhibits:
I. Pension Adjustment Formula for the Canadian Christian School Pension Plan
II. A sample calculation for an employee with a $12,500 salary
III. A sample calculation for an employee with an $82,000 salary
If you have any employees who received Short Term Disability benefits in 1996, include the period of disability in calculating the Pension Adjustment. The rate of earnings at the time of disability, not the amount of disability benefit, should be used in the calculation.
The Canadian Christian School Pension Plan registration number with Revenue Canada (0283812) must also be printed on the T-4. Instructions as to where to print the PA and the plan’s registration number on the T-4 are included in the employer’s guide from Revenue Canada that should be available from your local district tax office.
If any Participants terminated employment during 1996 and were not entitled to a vested pension benefit from the Pension Plan (i.e., they had completed less than 2 years of membership in the Plan), the Pension Adjustment for these individuals will be the lesser of:
A. The participant’s contribution deducted from their pay during the 1996 calendar year; or
B. The regular PA calculation.
If B. above is a negative number, the PA is to be reported as zero.
In the event of the death of a participant, a Pension Adjustment of zero is reported.
Since a historical record of Pension Adjustments must be kept, please send our office a listing in February 1997 showing the name, social insurance number and 1996 Pension Adjustment amount for each participant on your 1996 payroll. This information will be used in the future to determine if plan design and benefit changes comply with government regulations.
Where participants worked at two or more schools during 1996, one of the schools will be required to make a special Pension Adjustment calculation. We will be contacting you if your school is the one that must make a special calculation.