General requirements 

4. If my employee does not require any specific deductions, must I nonetheless ask that he or she complete form TD1?

Yes, Employees are usually required to complete form TD1, even if they have no deductions. It is evidence if our agents ever conduct an audit. You will have proof on‑hand that your employee completed the form, and it must usually be signed.

5. Must I obtain the social insurance numbers of all my employees, even those who do not have their social insurance card?

Yes. Unfortunately, you must ask your employees to obtain their social insurance card because you are required, as an employer, to have their social insurance number. If they do not have a social insurance card, then they have three days from the start of their employment to request one from a Service Canada Centre and you must request proof that they have done so or see the card they received.

6. My employee lives in Quebec but reports to our place of business in Ontario. Which tax tables should I use?

If the employee reports for work at your place of business in Ontario, use the Ontario Payroll Deductions Tables. The employee's province of employment is the province where your business is located.

7. What are cash equivalents?

That is something that can easily be converted to cash. It might be a gift certificate or gift card. It is considered to be almost like money, hence the term cash equivalents.

CPP/EI 

8. I have an employee who will turn 60 years old in June. He told me that he will no longer have to pay Canada Pension Plan (CPP) contributions because he will start to receive his CPP pension. Is that true?

Yes it's true. Employees between 60 and 70 years of age can apply for CPP retirement pension. However, your employee must show you the award letter from Human Resources and Skills Development Canada (HRSDC) to prove that he no longer has to make CPP contributions. He must also let you know when the pension becomes payable (in this case it's June). You will have to deduct CPP contributions until the end of May, the month before the month that the pension becomes payable. If the employee doesn't apply for a CPP retirement pension, you have to deduct contributions until the end of the month in which the employee turns 70.

Note: The requirements are different for Québec Pension Plan. For more information contact Revenu Québec.

9. If the employer pays contributions to an employee's RRSP, are those contributions subject to CPP and EI deductions?

Yes. Contributions you make to your employee's RRSP are generally paid in cash and are pensionable and insurable. Deduct CPP contributions and EI premiums.

However, your contributions are considered non-cash benefits and are not insurable if:

• your employees cannot withdraw the amounts from a group RRSP until they retire or cease to be employed; or
• you allow the employees to withdraw RRSP funds only under the Home Buyers' Plan or Lifelong Learning Plan.

10. For CPP and EI, does the employer stop paying their portions of CPP and EI once the employee reaches their maximum contribution?

Yes. The employer must stop paying their portions of CPP and EI once the employee reaches their maximum contribution.

Taxable benefits 

11. Why do automobile benefits, free board and lodging, or gifts have to be included in the employee's income? They are non-cash benefits.

Under the Income Tax Act, employment income includes not only compensation in cash, but also non-cash benefits like automobile benefits, free board and lodging, or gifts. These are all considered benefits that increase an employee's net worth.

12. We have an employee with clergy status and we pay him a monthly allowance for his residence that he owns. Can we subtract the clergy housing allowance from his monthly gross pay?

Yes, you can subtract the housing allowance of a member of the clergy, who owns or rents the accommodation. In order to do so, the employee must provide you with a tax waiver letter (letter of authority) from a tax services office. You can reduce the income on which you have to deduct tax by the amount listed in the letter. To request a tax waiver letter, the employee must complete Form T1213, Request to Reduce Tax Deductions at Source, and send it to his tax services office. The employee must include documents that support his position why less tax should be deducted at source. (Keep all letters of authority with your payroll records so our officers can examine them).

13. Our charity organizes a fundraiser by drawing for a trip for two to Cuba, in which all employees can participate by purchasing tickets. The draw is solely to raise funds for our charitable campaign. As an employer, must I report a taxable benefit for the employee who wins the trip?

No. Although you are an employer, you do not need to report that on the employee’s T4 slip because it is a type of lottery and anybody could win.