Paid Leaves of Absence

Deferred salary leave (self-funded)

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

Any amounts, including interest, that you pay (or that a trustee pays) an employee taking a deferred salary leave are subject to the following in the year they are paid:

The interest that accrues over the year constitutes employment income and must be paid in that year.

End of note

You must include the amounts in your total payroll used to calculate your health services fund contribution rate and your participation in workforce skills development in the year 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. As a result, 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

Under a salary advance leave, the amounts are advanced to an employee during the employee's leave and repaid by the employee after the leave. Note that a salary advance leave is not a salary deferral arrangement or an employee benefit plan.

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
the contribution to the WSDRF (if applicable)

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