Transfer from Quebec to Ontario
Employees who transfer from Quebec, while working for the same employer under the same business entity, will require a reconciliation of QPP and CPP contributions. Employers must use the YTD QPP employee contributions when calculating any remaining CPP to be deducted.
The Canada Revenue Agency (CRA) has confirmed that Box 26 will be populated by pensionable earnings up to the YMPE, even if the employee has contributed at least the maximum dollars toward QPP before transferring outside of Quebec.
If an employer transfers an employee from Quebec to another part of Canada during the tax reporting year, a new reconciliation process has been established to ensure that the pensionable earnings and CPP contributions are accurately reported.
The employee will be credited with a year to date amount that is the result of:
Year-to-date QPP contributions x (CPP contribution rate ÷ QPP contribution rate)
CPP contributions would commence from this value until either the maximum annual CPP contribution has been reached or to the end of the year.
|Example (2019 Rates):
An employee’s year-to-date QPP contributions prior to being transferred to Ontario is $1,050.24.
$1,050.24 x (5.10 ÷ 5.55) = $965.09
The employee will have no more than $1,783.81 deducted for CPP contributions.
$965.09 + $1,783.81 = $2,748.90
This new reconciliation process came into effect on January 1, 2019. For the 2019 reporting year, CRA expects employers to make a best effort to be compliant. For the 2020 reporting year, employers must ensure payroll systems and processes are fully compliant.
Additional details on this requirement are available in the following CRA publications:
QPP contributions - EMPLOYEE TRANSFERRING TO QUEBEC
- Guide T4001 Employers’ Guide Payroll Deductions and Remittances
- Guide T4127 Payroll Deductions Formulas
Employees who transfer into Quebec, while working for the same employer under the same business entity, will require a reconciliation of CPP and QPP contributions.
When an employee is transferred from another jurisdiction to a Quebec establishment, the year to date contribution paid into CPP is taken into consideration. The following formula is applied:
Year-to-date CPP contributions x weighting factor
The weighting factor is the result of the current year QPP contribution rate divided by the current year CPP contribution rate, rounded to four decimal places.
5.55 ÷ 5.10 = 1.0882
The result of this formula is the year-to-date amount the employee will be credited with and QPP contributions will carry on from this value.
Example (2019 Rates):
Jacques earned $20,000 in New Brunswick and paid CPP contributions of $965.04 prior to moving to Quebec.
Jacques will be given credit for a year-to-date amount of $965.04 x 1.0882 = $1,050.16
If his earnings in Quebec are $45,000 he will contribute a total of $1,941.29 towards QPP for the year.
$1,050.16 + $1,941.29 = $2,991.45
An employee who has already contributed $2,748.90 in CPP contributions prior to moving to Quebec will not be required to contribute to the QPP as he attained the maximum for 2019.
Prior to her transfer to Quebec in October Melanie had contributed the maximum CPP contribution of $2,748.90 for 2019. There will be no QPP contributions required for the current year.
$2,748.90 x 1.0882 = $2,991.45
When an employee has worked outside of Quebec during the year special reporting is required on the RL-1 slip to report the previous CPP contributions and pensionable earnings. The following footnote reporting is required:
- Footnote B-1 CPP contribution
- Footnote G-2 Pensionable earnings under the CPP