Paid Leaves of Absence

Deferred salary leave (self-funded)

Section 47.16R1 of the Regulation respecting the Taxation Act provides information about self-funded leaves of absence. Under such a leave, any amounts accumulated by an employee in anticipation of the leave are paid to the employee during the employee's leave. Note that a self-funded leave is not a salary deferral arrangement or an employee benefit plan.

Any amounts, including interest, accumulated by an employee in anticipation of a self-funded leave of absence that you pay (or that a trustee pays) to the employee during the employee's leave are subject to the following in the year they are paid:

You must include the amounts in your total payroll used to calculate your health services fund contribution rate, your participation in workforce skills development and, if applicable, your contribution to the Workforce Skills Development and Recognition Fund (WSDRF) in the year in which they are paid.

The amounts are subject to Québec parental insurance plan (QPIP) premiums in the year in which they are earned and not in the year in which they are paid. Therefore, you must calculate the QPIP premiums in the year in which the amounts were earned, as if the total amount of the employee's salary or wages had been paid in the year.

Salary advance leave

Any amounts that you pay (or that a trustee pays) as salary or wage advances to an employee taking a salary advance leave are subject to the following in the year they are paid:

source deductions of income tax;
QPP contributions;
QPIP premiums;
the contribution to the health services fund;
the contribution related to labour standards.

You must include these amounts in your total payroll used to calculate your health services fund contribution rate, your participation in workforce skills development and, if applicable, your contribution to the WSDRF in the year in which they are paid.

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