Payroll Information for Treasurers

Please read through all the information carefully prior to beginning your payroll tasks

Links and Duties

Government of Canada Links

You may wish to consult with information on the Service Canada website or the Canada Revenue Agency website.  Both of these have lots of relevant and important information.  Here are the links as well as the links to employers’ guides that you may find helpful.

Government of Canada

Please note this was formerly the Service Canada website. All the content has been moved to this new site.

Canada Revenue Agency

T4001 – Employers’ Guide – Payroll Deductions and Remittances

T4130 – Employers’ Guide – Taxable Benefits

T4032 – Payroll Deductions Tables for your province for the current year

Employer Duties

The congregation is the employer and as such has certain duties (usually performed by the treasurer).

The employer is responsible for deducting, remitting, and reporting payroll deductions.  CRA indicates that the following are the responsibilities the employer must follow:

  • Open and maintain a payroll deductions account.
  • Get your employee’s social insurance number (SIN).
  • Obtain a completed federal TD1, and if applicable, a provincial TD1.
  • Deduct CPP contributions, EI premiums and income tax from remuneration or other amounts including taxable benefits, and allowances you pay.
  • Remit these deductions along with the employer’s share of the CPP contributions and EI premiums.
  • Report the employees’ income and deductions on the appropriate T4 or T4A slip.  You must file an information return by the last day of February of the following calendar year.  See the T4 section below for more information and samples.
  • Complete and issue Record of Employment (ROE) when an employee leaves.
  • Keep records for a period of six years from the end of the last tax year to which they relate.

Remittances can be made by cheque (Receiver General), on-line or at your financial institution.  Check CRA website for your due dates.

Record of Employment Forms

Whenever an employee, including clergy, leaves their position and experiences an interruption of earnings, the employer must complete a Record of Employment (ROE) form.  You can transmit an ROE electronically, or you can complete a paper ROE form.  Be aware that there are deadlines for submitting a ROE.

For more information on ROE visit the Service Canada Web site or call Service Canada’s Business Service Centre Help Desk at 1-800-385-5470.

The Service Canada Web site also provides a guide on “How to Complete the Record of Employment Form”

Income

Compensation

The ELCIC has established a practice of compensating Rostered employees in a number of ways:

  • salary
  • housing (+ utilities)
  • education
  • pension and benefits
  • auto/travel
  • books
  • and possibly others.

Each of these may have a different treatment under the income tax act and for the purpose of calculating Canada Pension Plan (CPP) contributions, Employment Insurance (EI) or the ELCIC group pension and benefits.  This is described in the following sections and a calculation worksheet has been provided to assist with monthly calculations and to complete the T4.

Salary

The salary guidelines of your synod indicate a minimum base salary which will vary depending on the years of services and other relevant factors.  All other benefits and with holdings will be calculated on this amount (in addition to some others – keep reading).

Housing

Housing/accommodations may be provided in the form of either:

  • congregation owned house (parsonage) plus housing equity, or
  • housing allowance,

as an effective way to maximize the value of compensation due to preferential tax treatment for a clergy residence.   The following table provides some information regarding income tax, CPP and EI with respect to housing.  The housing amount is also included in the calculation for ELCIC pension and benefits.

 Taxable BenefitWith holding see more info below tableReporting
General InformationHousing provided is a taxable benefitIncome tax and CPP with holdings may be reduced as this income will be offset by the clergy residence deduction.All amounts need to be reported on the T4.
ParsonageEmployees living in a parsonage are attributed a taxable benefit at the fair market value of rent for similar accommodations in the area.Clergy should present a completed T1223 Clergy Residence Deduction form and then with holdings can be reduced.Include amount of taxable benefit in box 14 and box 30 do not include amount in box 26 if with holdings have been reduced
Housing EquityHousing equity as a cash payment is part of incomeIncome tax, CPP and EI must be deductedT4 box 14
Housing AllowanceHousing allowance as a cash payment is part of income. ELCIC recommends that such an allowance be paid at the fair market value of rent for similar accomodations in the area (annual review should be undertaken)Clergy needs to complete a T1213 Request to Reduce Tax Deductions At Source for Year(s). CRA will then issue a Letter of Authority and then with holdings can be reduced.include amount of taxable benefit in box 14 and box 30; do not include amount in box 26 if with holdings have been reduced.
UtilitiesUtilities paid by congregations are a taxable benefit and can include: hydro, natural gas, water, phone, cable and internet.with holdings can be reduce by the amount of utilities paidinclude amount paid as a taxable benefit in box 14 and box 40 do not include amount in box 26 if with holdings have been reduced.

Request to Reduce Deductions at Source

If your employee knows that they will be claiming their residence as a deduction when they file their tax return, they may wish to reduce the amounts withheld from their pay each month, as they anticipate that it will be refunded.  In order to reduce the withholdings the employee will need to file a T1213 annually.  Note that the T1213 lists several possible deductions; clergy residence is at the top of the second page. Please advise them to enter the amount and attach a copy of their previous year’s T1223 Clergy Residence Deduction form to CRA.

Do not reduce the withholdings until you have the Letter of Authority from CRA.

It is recommended that the T1213 be filed by November to allow sufficient time for CRA to issue the Letter of Authority for the following year.  Please note that filing the T1213 is not mandatory, and if not completed, the pay withholdings should not be reduced and the employee may get a refund accordingly when they file their return with a T1223 Clergy Residence Deduction form.

Clergy Residence Deduction

The employee has to complete Parts A and C of the T1223 and the employer has to complete Part B that will certify the employee has met the required conditions.  The employee should file a copy of the form with his or her income tax return and keep a copy of the signed form for their records.

For detailed information on the Clergy Housing Deduction, refer to Interpretation Bulletin IT-141R

Books

There are two options for book compensation:

1. Book Allowance – the flat-rate amount is a taxable benefit and must be included on the T4.  Income tax should be withheld; CPP and EI must be paid on this amount. If the employee intends to claim books purchased with the allowance as work expenses on their personal income tax return, the employer must complete form T2200 and the employee must keep receipts as CRA may request them when assessing the return.

OR

2. Book Reimbursement – When the employee submits receipts to the employer and is reimbursed for book purchases related to their employment responsibilities there is no taxable benefit assessed. (Note: Retention or disposal of the books at termination of employment is not a factor)

Note:  Pension and benefits are not paid on compensation for books.

Benefits

ELCIC Benefits

Continuing Education Plan (“CEP”)

Participation in CEP is required for all employees with a Call.

Refer to the CEP policy for rates and other information.  The policy and all related forms are on this website.

 

ELCIC Pension and Benefits

Employees are enrolled in the ELCIC pension and benefits plans bases on eligibility.  Please go to employment events – new plan member to review the eligibility and to complete the required forms.  Information on the contibution and premium rates.

Statutory Benefits

Canada Pension Plan (“CPP”) (Box 26 on the T4 Slip)

CPP pensionable income is earned income on which CPP premiums must be paid. This includes base salary plus the taxable benefits of life insurance premiums, housing equity allowance, and book allowance.  The exclusions from CPP Pensionable Income are the fair rental value of the parsonage and utilities or a housing allowance (where there is no parsonage) and as long as the employee is eligible for the clergy housing deduction and provides the required documents.

Please visit the Canada Revenue Agency website to determine eligibility and requirements for CPP contributions.

Employee cost of CPP

2017

2016

Employee contribution rate

4.95%

4.95%

Maximum pensionable earning for CPP (after basic exemption of$3,500)

$50,800

$51,400

Maximum employee annual contribution

$2,564.10

$2,544.30

Maximum employer annual contribution

$2,564.10

$2,544.30

As an employer, you have to contribute the same amount that you deduct from your employees pensionable income.  You stop deducting CPP contributions when you reach the maximum employee contribution.

There have been several changes to the CPP program.  Please visit the Services Canada website to become familiar with those.

EI Insurable Earnings (Box 24 on the T4 Slip)

EI insurable earnings are earned income on which EI premiums must be paid. This includes base salary, housing allowance, housing equity allowance, utilities allowance, book allowance, and auto allowance if taxable.  The exclusion from EI insurable earnings is the life insurance premiums paid by the employer.

There is no age limit for withholding EI premiums.

Employee cost of EI

2017

2016

Employee premium rate

1.63%

1.88%

Maximum insurable earnings for EI  $51,300

$50,800

Maximum employee annual contribution  $836.19

$955.04

Maximum employer contribution  $1,170.67

$1,337.06

As an employer, your EI premium is 1.4 times the EI premium deducted for each employee.  You stop deducting EI premiums when you reach the yearly maximum employee contribution.

TD1

It is recommended that each employee complete a TD1 each year.

Other Benefits

There may be a number of expenses that the congregation pays for such as:

  • communication technology (phone, internet etc);
  • moving expense for a new call;
  • convention attendance costs.

These costs are not a taxable benefit as they are required to complete the duties of employment.  Any personal portion within these costs that the congregation pays for must be reimbursed by the employee or assigned a taxable benefit.  For example, spouse travelling to convention, personal use of a cell phone etc.  would be reported on the T4 slip in Box 14 and Box 40.

Workers Compensation

Please check the labour law website in your jurisdiction to determine if workers compensation premiums are required.  In most cases they may not be, but it could depend on your unique circumstances.  The Canadian Council of Christian Charities issued a Bulletin in April 2014 which has a helpful article for your reference.

Supply, Interns & Other

Pastoral Supply

Pastoral Supply

Any payment for pastoral supply is considered employment income and subject to deductions as per CRA payroll deduction and exemption guidelines i.e. EI, CPP, Income Tax .  ELCIC Pension Plan contributions may also be required if the clergy is a member of the plan.  If you do not know if the individual is a member of the ELCIC pension plan, please call GSI.  A T4 is required.

Interns

Interns

An intern assigned to a congregation is an employee of that congregation, and any payment to an intern is considered employment income and subject to deductions as per CRA payroll deduction and exemption guidelines – please remember to budget accordingly.  Interns are not eligible for ELCIC pension and group benefits so no deductions or remittances to GSI are required.

Other Income

Other Income to be reported on a T4A

A T4A slip and summary form will have to be completed if you pay income for honoraria for services provided to your congregation, research grants, scholarships, study grants, fellowships, bursaries and prizes, and the total of all payments in the calendar year were more than $500.  You will have to obtain the recipients social insurance number and address.

Information on T4A filing can be obtained from the Canada Revenue Agency website and is outlined in the publication “RC4157 (E), Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary Form”.  The T4A slip is available in a PDF or PDF fillable form which can be downloaded.

Retiring Allowance

All eligible and non-eligible retiring allowance amounts must be reported on a T4.

Taxable Benefits

General Introduction

Taxable benefits are those benefits or allowances paid by the employer on behalf of the employee that must be recorded on the T4. The payment is made either to the employee (cash) or directly to the creditor who supplied the goods or services to the employee (non-cash).  If the employer pays an expense directly to a supplier on behalf of an employee, and the expense is not deductible on the employee’s personal tax return, the total amount paid by the employer must be included in the income of the employee.

When you pay or provide a taxable benefit or allowance to your employee in addition to salaries and wages, you have to include the value of the benefit in the employee’s income.  This applies to all cash and non-cash benefits or allowances that are taxable.

To determine the total amount subject to payroll deductions, you must add the taxable benefit or allowance to the employee’s income each pay period and withhold deductions in the normal manner.  For tax purposes, if a non-cash benefit is of such a large value that withholding of income tax will cause undue hardship, you can spread the withholding over the balance of the year.

Life Insurance Premiums

The life insurance and accidental death coverage for employees is included in a bundled benefit within the ELCIC Group Benefits Plan.  According to CRA, if these premiums paid by an employer on behalf of an employee, they are taxable and pensionable (CPP must be deducted) but are not insurable (EI is not deducted).

On the T4 slip, this benefit would be reported in Box 14 “Employment Income” and also in included in Box 40 “Other Information – Other Taxable Benefits & Allowances”.  To calculate the taxable benefit please use the worksheet on the forms and worksheets page of this website.

Travel with Personal Vehicle

Employees required to travel with their personal vehicle, as part of their work duties can be compensated by one of the following options:

1. Vehicle Expenses KM Rate Paid – When the employee is required to use their own vehicle a per kilometer rate as set by CRA may be paid.  There is an initial rate for the first 5,000 km driven and lower rate for km driven thereafter. These amounts are updated annually and can be found on the CRA website.

Tax tip           Reimbursement of work related expenses or km rates paid are not a taxable benefit.  Employee must keep a log of work travel (see below for log information).

OR

2.  Vehicle Allowance – When the employee is required to use their own vehicle the employer may provide a flat annual amount for the cost of using the vehicle.

Tax tip           The amount of the allowance is considered a taxable benefit and must be included on the T4.  Income tax should be withheld; CPP and EI must be paid on this amount.  If the employee intends to claim vehicle expenses on their personal income tax return, the employer must complete form T2200 and the employee must keep a log of work travel if the vehicle is also used for personal travel (see below for log information).

Note:  Pension and benefits are not paid on compensation for travel.

Notes on keeping a log:  Each trip should have an entry that includes:

  • date of trip/visit
  • number of KM
  • general destination i.e. name of hospital, home of a member of congregation (specific name or address not required), coffee shop etc.
  • general purpose of meeting i.e. business meeting, counselling, care visit etc

Summary of Taxable Benefits

Here is a quick checklist for taxable benefits

Taxable Benefit
Benefits Subject to DeductionBenefits Subject to DeductionBenefits Subject to DeductionT4 RequirementsT4 Requirements
Pensionable
CPP
Insurable
EI
Taxable
Income Tax
Income BoxTaxable Benefit Box
Life Insurance PremiumsYesNoYesBox 14Box 40
ParsonageNo*YesNo *Box 14Box 30
Housing Allowance
No*YesNo *Box 14Box 30
Utilities AllowanceNoYesNoBox 14Box 40
Housing Equity AllowanceYesYesYesBox 14
Book AllowanceYesYesYesBox 14Box 40
Vehicle Allowance - flat monthly amountYesYesYesBox 14Box 40
Vehicle Allowance - reimbursed for actual work kilometresNoNoNoN/AN/A
Telephone/Internet - personal use portion if paid by employerYesYesYesBox 14Box 40

* with letter of authority

CRA Filings Related to Employees

T4 - General Filing Information

Employers have to file their T4 information return by the last day of February following the calendar year to which the information return applies.  If the last day of February is a Saturday, Sunday, or a statutory holiday, your information return is due the next business day.

You have to give two copies of the slips to your employees by the last day of February following the calendar year to which the slips apply.

A T4 information return includes the T4 slips and the related T4 summary form. For more information on how to file a T4 return, see the publication “RC4120 – Employer’s Guide – Filing the T4 Slip and Summary  on the CRA web site.

T4 slips and summaries can be filed electronically or on paper.

To file electronically, go to the CRA website and use “my Business Account” or if you are not set up with an account you will need a Web access code (WAC), which can be obtained by calling CRA help desk at 1.877.322.7849.  If you are technology savvy there are a few different internet filing options available.

You can file up to 50 T4 slips on paper.  These returns should be mailed to the Ottawa Technology Centre, CRA, 875 Heron Road, Ottawa, ON, K1A 1G9.  If the T4 slips are handwritten, please make sure they are neat and legible.

You can download PDF or PDF fillable form from the CRA website at:

Completing the T4

Employer’s Name: Enter the name of the employer as registered with CRA and used to remit employee deductions. Generally, this will be the name of your congregation.

Employee’s Name and Address:  Print or type the employee’s last name in capital letters, followed by the first name and initials. Do not enter the title of office or courtesy title of the employee. Enter the employee’s address, including the province or territory, postal code, and country if other than Canada.

Year: Enter the four digits of the calendar year in which you paid the remuneration to the employee.

Box – Void: Enter an “X” in this box only if the T4 is cancelled. Otherwise leave blank.

Box 10 – Province of Employment: Enter one of the following abbreviations to indicate the province or territory in which the employee reported to work.

  • AB – Alberta
  • BC – British Columbia
  • MB – Manitoba
  • NB – New Brunswick
  • NL – Newfoundland & Labrador
  • NS – Nova Scotia
  • NT – Northwest Territories
  • NU – Nunavut
  • ON – Ontario
  • PE – Prince Edward Island
  • QC – Quebec
  • SK – Saskatchewan
  • US – United States
  • YT – Yukon
  • ZZ – Other than Canada or US

Box 12 – Social Insurance Number: Enter the employee’s social insurance number (SIN) as it appears on the employee’s SIN card.

Box 14 – Employment Income: Report the total employment income paid before deductions. This includes the total of all salary, wages, bonuses, vacation pay, allowances and the value of all taxable benefits. Include each of the amounts that are also reported in the “Other Information” area of the T4 supplementary.

Box 16 and 17 – Employee’s CPP/QPP Contributions: Enter the amount deducted from the employee’s earnings for contributions to the Canada Pension Plan (CPP) or Québec Pension Plan (QPP). Make the entry under CPP (Box 16) or QPP (Box 17) depending on the province of employment. Do not enter the employer’s share of premiums.

Box 18 – Employee’s EI Premiums: Enter the amount of Employment Insurance (EI) deducted from the employee’s earnings. Do not enter the employer’s share of premiums.

Box 20 – Registered Pension Plan (RPP) Contributions: Enter the total amount deducted from the employee’s earnings for contributions to the ELCIC Pension Plan for Clergy and Lay Workers, or other registered pension plan. This amount will include any additional voluntary contributions deducted from the employee’s earnings during the year. Do not include the employer’s contribution to the registered pension plan in this box.

Box 22 – Income Tax Deducted: Enter the total income tax deducted from the employee’s earnings. This includes federal, provincial (except for Québec) and territorial taxes that apply. Do not include any amount withheld under the authority of a “garnishee” or a “requirement to pay” which applies to the employee’s previously assessed tax arrears.

Box 24 – EI Insurable Earnings: Enter the amount of insurable earnings you used to calculate the employee’s EI premiums. Leave this box blank if:

  • There are no insurable earnings;
  • Insurable earnings are the same as employment income in Box 14; or
  • Insurable earnings are over the maximum for the year.

Box 26 – CPP/QPP Pensionable Earnings: This box must always be completed.  Enter the total amount that was used to calculate the employee’s CPP of QPP contributions, up to the mzximum pensionable earnings for the year.  This is applicable for all employees between the ages of 18 an 70.  Ensure that pensionable non cash taxable benefits are included as well.

Box 28 – CPP/QPP and EI Exempt: Leave box blank if you entered an amount in Box 16, 17 or 26. Enter an “X” under “CPP/QPP” if the earnings were exempt for the entire period.

Do not complete the EI part of this box if you entered an amount in box 18 or 24.  Enter an “X” under “EI” if the earnings were exempt for the entire period.

Box 29 – Employment Code: Leave this box blank.

Box 44 – Union Dues: Use this box only if you and the union agree that the union will not issue receipts for union dues of employees.

Box 46 – Charitable Donations: Enter the amount you deducted from the employee’s earnings for donations to registered charities in Canada.

Box 50 – RPP Registration Number: Enter the seven-digit registration number issued for an employee’s pension plan. The registration number for the ELCIC Pension Plan for Clergy and Lay Workers is 0533240.

Box 52 – Pension Adjustment: The amount of an employee’s pension adjustment is the total of:

  • the Employee’s 7% mandatory contributions to the plan for the year; plus
  • the Employee’s voluntary contributions to the plan during the year, plus
  • the Employer’s 8% contributions to the plan for the year.

Leave box 52 blank if the employee died during the year.

Box 54 – Business Number: Enter the 15-digit Business Number (BN) that you use when remitting employee deductions.

Other Information Area: At the bottom of the T4 supplementary, additional information regarding taxable benefits is reported for government statistical purposes. On the back of the T4, there is a listing of benefits and the corresponding box numbers. Most congregations will need to note the following two benefits in particular:

  • Box 30 – Housing, Board and Lodging: If the congregation provided an employee with free or subsidized housing, or board and lodging, enter the taxable amount in box 30.  The amount reported in Box 30 is also included in Box 14 “Employment Income”.
  • Box 40 – Other Taxable Allowances and Benefits:  Report the total of all taxable benefits such as life insurance premiums ,  utilities allowance or utilities paid by congregation  (might include: hydro, natural gas, water, phone, cable and internet) and taxable vehicleallowance.  For Québec residents only, health and dental premiums paid by the employer must also be included as taxable benefits on the Releve 1. The total amount reported in Box 40 is also to be included in Box 14 “Employment Income”.

Box 55 – Employee’s PPIP Premiums:  Enter the PPIP premiums that you deducted for employees working in Quebec.

Box 56 – PPIP Insurable Earnings:  For employees working in Quebec, enter the total amount used to calculate the employee’s PPIP premiums up to the maximum.  Leave box blank if there are no insurable earnings, the insurable earnings are the same as the employment income in box 14, or the insurable earnings are over the maximum for the year.

Completing the T4 Summary

Use the T4 Summary, to report the totals of the amounts reported on the related T4 slips.  In the boxes at the top of the form, enter the 15-digit Business Number (BN), your organization’s name and address information.

Year – Enter the two last digits of the calendar year for which you are filing the return.

Line 14 – Employment Income: Add the amounts reported in Box 14 of all the T4 slips and enter the total on line 14.

Line 16 – Employees CPP Contributions: Add the amounts reported in Box 16 of all the T4 slips and enter the total on line 16.

Line 18 – Employees EI Premiums: Add the amounts reported in Box 18 of all T4 slips and enter the total on line 18.

Line 19 – Employer EI Premiums: Enter the employer’s share of Employment Insurance premiums. Multiply the employee’s total premiums reported in line 18 by 1.4 and enter this number on line 19.

Line 20 – Registered Pension Plan Contributions: Add the amounts reported in Box 20 of all T4 slips and enter the total on line 20.

Line 22 – Income Tax Deducted: Add the amounts reported in Box 22 of all T4 slips and enter the total on line 22.

Line 27 – Employer CPP Contributions: Enter the employer’s share of CPP contributions. The employer’s premiums are equal to the employees’ premiums as reported on line 16.

Line 52 – Pension Adjustment: Add the amounts reported in Box 52 of all the T4 slips and enter the total on line 52.

Lines 76 and 78 – Person to Contact: Enter the name and telephone number of a person who can be contacted to clarify any of the information on the T4 Summary or T4 Slips.

Line 80 – Total Deductions Reported: Add the amounts reported on lines 16, 18, 19, 22, and 27 of the T4 Summary form and enter the total on line 80.

Line 82 – Remittances: Enter the total amount of remittances to the Receiver General for the year.

Difference: Subtract Line 82 from Line 80 and enter this amount under “Difference”.  If the result on line “Difference” is zero, leave lines 84 and 86 blank.

Line 84 – Overpayment: If the result on line “Difference” is negative, enter the result on Line 84, “Overpayment.” Attach a note indicating the reason for the overpayment.

Line 86 – Balance Due:  If the result on line “Difference” is positive, enter it on line 86, “Balance Due”.

Amount Enclosed: If there is a balance due, attach a cheque made payable to “Receiver General”.

Line 88 – Total Number of T4 Slips Filed: Enter the total number of T4 slips that are included with the T4 Summary form.

Certification: A current officer of the organization must sign the T4 information return.

Completing the T1223 - Clergy Residence Deduction Form

For an individual to be eligible for the clergy residence deduction they must meet both the “status test” and “function test” as defined by CRA. Part B of form T1223 must be completed by the employer to certify that the employee fits the criteria.

To satisfy the “status” test, the employee must belong to a recognized clergy group of their religious order. The recognized clergy groups in the ELCIC are the three recognized rosters: bishops, ordained ministers and diaconal ministers. The employee must be on one of these rosters to satisfy the status test.

To satisfy the “function” test, the rostered employee must minister to a congregation or be in full-time administration with the religious order and the clergy employee must be recognized by the religious order to provide the Sacraments. Chaplains in hospitals, correctional facilities and the military are considered to be ministering to congregations. Teachers in educational institutions are specifically excluded by CRA from being allowed the clergy residence deduction.

 

For further information, refer to CRA’s Interpretation Bulletin IT-141R (Consolidated).