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 summary report must be filed by the last day of February following the taxation year.
Reporting for 1997 is required by February 28, 1998, and is based on the pension accruals for calendar year 1997. The 1997 pension accrual is based on covered earnings paid in calendar year 1997. 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 1997. 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 or Long Term Disability benefits in 1997, 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.
Please note the following changes to the PA calculation in 1997:
- The $1,000 offset in the formula has been replaced with a $600 offset.
- If a participant terminated employment during 1997 and was not entitled to a vested pension benefit from the Pension Plan (i.e. the participant completed less than 2 years of membership in the Plan), the Pension Adjustment for this participant is determined without regard to the termination. The special rule applicable to non-vested terminations in the years prior to 1997 has been eliminated.
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.
Since a historical record of Pension Adjustments must be kept, please send our office a listing in February 1998 showing the name, social insurance number and 1997 Pension Adjustment amount for each participant on your 1997 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 1997, 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.