Amount paid to a custodian or to a trustee

An amount that you pay to a custodian or a trustee of an employee benefit plan, or a trustee of a profit-sharing plan or an employee trust is not subject to source deductions of income tax or to Québec parental insurance plan (QPIP) premiums.

However, it is subject to the following at the time it is paid:

• Québec Pension Plan (QPP) contributions
• the contribution to the health services fund
• the contribution related to labour standards
• the contribution to the Workforce Skills Development and Recognition Fund (WSDRF) (if applicable)

Similarly, you must include this amount in your total payroll used to calculate your health services fund contribution rate and your participation in workforce skills development.

Amount paid by a custodian or a trustee

As a rule, where a custodian or a trustee pays amounts to one of your current or former employees, the amounts are not subject to source deductions or employer contributions.

Exceptions

An amount paid by the custodian of an employee benefit plan is subject to source deductions of income tax, unless the amount is a return of an amount contributed by the employee to the plan.

An amount paid by the trustee of a profit-sharing plan (except an amount referred to in the following paragraph) is subject to QPP contributions only if the amount can reasonably be attributed to an amount paid to the trustee before May 13, 1994.

A single payment made by the trustee of a profit-sharing plan in full satisfaction of all of an individual's rights in the plan is subject to a source deduction of income tax of 14% (if the payment is $5,000 or less) or 19% (if the payment is more than $5,000) to the extent that the payment must be included in the individual's income in the year it was received.