Canadian Payroll Reporter - sample

5 Canadian HR Reporter, a Thomson Reuters business 2017 Calculating income tax on banked overtime pay QUESTION: We are paying out banked overtime hours to an employee whose employment is terminating. To calculate the amount of income tax to deduct, can we use the lump-sum tax rates? ANSWER: No. You can only use the lump-sum tax rates for very specific types of payments, such as retiring allowances, severance pay and pay- outs from a registered retirement savings plan, registered pension plan, deferred prof- it-sharing plan or a registered retirement income fund. To calculate the amount of income tax to deduct from a lump-sum payment of banked overtime, use the bonus method of taxation. For more information on this method, re- fer to the Canada Revenue Agency's website at www.canada.ca/en/revenue-agency/ services/tax/businesses/topics/payroll/ payroll-deductions-contributions/spe- cial-payments/bonuses-retroactive-pay- increases-irregular-amounts.html. CPR | December 2017 ASK AN EXPERT Annie Chong MANAGER OF CARSWELL'S PAYROLL CONSULTING GROUP annie.chong@thomsonsreuters.com | (416) 298-5085 ANSWER: Rules for paying employees are governed by employment standards laws in the jurisdiction in which the employee works. For federally regulated employers, the Canada Labour Code applies. None of the jurisdictions address employ- ee notice for pay-cycle changes in their leg- islation or regulations. Employers planning to change their pay cycle should give em- ployees ample notice of the change so that they can adjust their finances accordingly, if necessary. The amount of notice may depend on the employer's size, as well as other factors. Whether changing pay cycles or not, all employers must ensure that they follow em- ployment standards rules for when to pay employees, as the following table shows: ANSWER: You will not find a box or code on the T4 or RL-1 (for Quebec employers) because deductions for garnishee orders are not required to be reported to the Canada Revenue Agency or Revenu Québec on year- end reporting forms. However, it is still very important to keep accurate records of garnishee deductions and payments to the applicable court or maintenance enforcement program to veri- fy that you complied with the garnishment order. Required notice for changing pay cycle QUESTION: We are changing our pay cycle from biweekly to semi-monthly. How much notice are we required by law to give em- ployees of the change? Year-end reporting requirements for garnishments QUESTION: We take deductions from some employees' pay to fulfill garnishee orders. Where do we report these deductions at year end? I cannot find a box or code for them on the T4 or RL-1. 1 This applies to regular wages. Different requirements may apply for other payments, such as vacation pay or wages paid upon termination of employ- ment. It is also important to note that in some jurisdictions, different requirements may apply due to collective agreements or employment standards board rulings. 2 Employers must pay employees on a regularly established payday. 3 Employers are required to establish a "recurring pay period and a recurring payday." 4 The time frame is once a month for senior managers and contract workers. Employers may pay new employees their first pay within one month after they begin employment. 5 Amounts that an employee earns for bonuses, overtime or other earnings in excess of regular wages in the week before the employer pays regular wages may be paid with the next regular payment (or at the time set out in a particular collective agreement or decree, if one applies). If a payday falls on a statu- tory holiday, the employee must be paid on the working day before the holiday. 6 Employers may only pay employees monthly if the employees are paid a salary expressed as a monthly wage or for a period longer than a month. Jurisdiction Maximum Pay Period Length 1 When Employers Must Pay Wages Canada Labour Code not specified 2 within 30 days of employee becoming entitled to them Alberta one work month within 10 consecutive days of pay period ending British Columbia semi-monthly within eight days of pay period ending Manitoba semi-monthly within 10 working days of pay period ending New Brunswick 16 days on payday, pay wages owing up to seven days before payday Newfoundland and Labrador semi-monthly within seven days of pay period ending Northwest Territories one month within 10 days of pay period ending Nova Scotia semi-monthly within five working days after pay period ends Nunavut one month within 10 days of pay period ending Ontario not specified 3 no later than regularly established payday Prince Edward Island 16 days include all wages owing up to five days before payday Quebec 16 days 4 on payday 5 Saskatchewan monthly, semi-monthly, every 14 days 6 within six days of pay period ending Yukon 16 consecutive calendar days within 10 days of pay period ending

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