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Last updated: January 07 2015
PIER Into The Future
With mixed feelings of elation and dread, accounting, bookkeeping and tax specialists across Canada begin the annual ritual of preparing for 26 million tax returns.
For employers, nothing causes more trouble, or takes up more time, than the dreaded PIER (Pensionable and Insurable Earnings Review) that materializes in March and April – just when time is at its greatest premium.
The best time to eliminate discrepancies in your clients PIER is now, while you still have an opportunity to adjust January 15 payroll remittances and ensure that all the numbers balance and are reported properly on your clients' T4 slips.
Pensionable and insurable earnings go wrong for a number of reasons however first and foremost among these is Employee Benefits. Here’s a short check list of some of the more common employee benefits that are subject to CPP, EI or both.
Source Deductions – Taxable Benefits and Allowances1
| Taxable Allowance/Benefit | CPP | EI | Include2 GST/HST |
| Automobile Standby/Operating expense benefit | Yes | No | Yes |
| Automobile Allowances - cash | Yes | Yes | No |
| Cell Phone – non-cash | Yes | No | Yes |
| Gifts and Awards - cash | Yes | Yes | No |
| Gifts and Awards – non-cash | Yes | No | Yes |
| Group Term Life Insurance Policies | Yes | No | No |
| Interest Free / Low Interest Loans | Yes | No | No |
| Meals – Overtime Allowance | Yes | Yes | Yes |
| Meals – Overtime non-cash | Yes | No | Yes |
| Social Events – non-cash | Yes | No | Yes |
| Tool Allowance | Yes | Yes | Yes |
| Transit Passes - cash | Yes | No | Yes |
| Transit Passes – non-cash | Yes | No | Yes |
| Tuition Fees - cash | Yes | Yes | Yes |
| Uniforms and Special Clothing – non-cash | Yes | No | Yes |
1 Source – CRA website
2 GST/HST added where applicable
January 30th Deadline - Spousal Loans for Investment Purposes
As tax and financial planners become more aware of attribution rules and various ways to share the tax burden on investment income between spouses it is important to note that not only must the paperwork and money trail be well documented, interest must be paid.
January 30, 2015 is the deadline for payment of interest on spousal loans, at the prescribed rate at the time of the loan, in order to avoid finding out that all the plans were for nothing and Attribution rules will apply.
Payment should be made by cheque from a bank account controlled by the debtor spouse in order to maintain a proper paper trail and separation of finances. This will assist in keeping all spousal loans and investment income exactly where the financial advisor planned on having it taxed.
