Under the current provisions of the Regulations, when an employee who works in Quebec (and therefore contributes to the Quebec Pension Plan at a higher rate than that of the CPP) is transferred by their employer before the end of the calendar year to a location outside of Quebec, an insufficient amount of total CPP and QPP contributions may have been made which, in turn, may impact future benefits. The new regulation introduced in 2021 helps address this.
When an employee moves to a province outside of Quebec in a calendar year, a new Canada Revenue Agency (CRA) requirement ensures sufficient contributions to CPP are withheld for employees.
This differs from the usual CPP, which is 5.25% of the pensionable income.
Example: An employee works in Quebec from January 2021 to March 2021. In Quebec, the employee and employer were contributing Quebec Pension Plan (QPP) in the amount of 5.70%. If the employee moves to Ontario in April 2021, the employee and employer have to contribute an adjusted CPP determined by formula below. The CPP needs to be adjusted for the higher QPP collected during stay in Quebec:
C = The lesser of:
(i) $2,898.00 – [(DQ x (0.0525/0.0570)*) + D]; and
(ii) 0.0525 × [PI –($3,500 / P)]
If the result is negative, C = $0.
* No rounding required for this factor.
Making the adjustment in QuickBooks Desktop Payroll
We will use the example of an employee ("John Doe") who follows the scenario laid out above.
1. In Quickbooks Desktop, navigate to Employees, then Tax table.
2. Change the province from Quebec to Ontario in the drop-down menu:
A warning screen displays:
3. Select Yes to proceed.
4. It is necessary to provide a T4 for both Quebec and Ontario. Create a new employee entry for the same employee with slight name variation (for example, “John M. Doe”, adding the middle name or an initial).
5. For the new employee just created, assign the new province and check the box Moved out of Quebec during this tax year in the tax table window:
6. Complete the Effective date, Company Quebec Pension Plan, and Employee Pension Plan fields.
7. Select OK.
The CPP will be adjusted in the paycheques.