The amount you can subtract from an employee's gross remuneration is limited to the amount that the employee can deduct with respect to an RPP contribution made in the year for service before 1990. Once you have reached this limit, you must stop reducing the employee's gross remuneration to take into account the deduction for the RPP contribution paid for service before 1990.

Employee who did not contribute to an RPP

If, during the period in which the service was rendered, the employee either did not contribute to any registered pension plan (RPP) or contributed to another RPP and the contributions were paid under an agreement signed before March 28, 1988, the employee can deduct an amount equal to the least of the following amounts:

• the total amount of the contributions (excluding optional contributions to a defined contribution RPP) made in the year or in a previous year, minus the total of the amounts deducted with respect to these contributions for any previous year;
• $5,500;
• $5,500 multiplied by the number of years of service before 1990 for which the employee made the contributions referred to in the first point, minus the total of the amounts deducted with respect to these contributions for any previous year and with respect to optional contributions before 1987.

Employee who contributed to an RPP

An employee who contributed to an RPP during the period in which the service was rendered can deduct an amount equal to the lesser of the following amounts:

• the total amount of the contributions (excluding optional contributions to a defined contribution RPP and the contributions paid by an employee who did not contribute to an RPP) made in the year or a previous year, minus the total of the amounts deducted with respect to these contributions for any previous year;
• $5,500, minus the total of the amounts deducted in the year with respect to the contributions paid by an employee who did not contribute to an RPP and with respect to contributions for current service and for past service after 1989.