TO: All Participating School Boards and Principals
FROM: Howard Van Mersbergen, Executive Secretary-Treasurer
Important T4 Slip Reporting Information Requirements for Pension Adjustments
Canada Customs and Revenue Agency has notified us of a change to be made in the determination of Pension Adjustments. The change applies only to participants who work less than a full calendar year including those who join the Pension Plan during the calendar year, those who separate from employment and those who work on less than a full-time basis. The enclosed exhibits include information on how to determine the Pension Adjustments for these participants.
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 2000 is required by February 28, 2001, and is based on the pension accruals for calendar year 2000. The 2000 pension accrual is based on covered earnings paid in calendar year 2000. 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 2000. 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 based on a partial year of employment
- A sample calculation based on a full year of employment
- A sample calculation based on less than full time employment
If you have any employees who received Short Term Disability or Long Term Disability benefits in 2000, 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:
- The $600 offset in the formula still applies. However, it may be prorated – see the exhibits for more information.
- If a participant terminated employment during 2000 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 must be determined.
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 an historical record of Pension Adjustments must be kept, please send our office a listing in February 2001 showing the name, social insurance number and 2000 Pension Adjustment amount for each participant on your 2000 payroll. This information will be used in the future to determine if plan design and benefit changes comply with government regulations.
In prior years, where participants worked at two or more schools, one of the schools was required to make a special Pension Adjustment calculation and we contacted you if your school was the one to make a special calculation. With the new prorating of the $600 offset, there is no need for a special Pension Adjustment calculation because each school will prorate according to the percent of full time the employee worked.