To all Chairpersons and Members of Employment Insurance Boards of Referees
Subject: Per Diem Source Deductions
We have recently standardized the per diem remittance process to ensure that all source deductions are being made according to the Canada Revenue Agency (CRA) guidelines and to ensure timely and accurate payment to Board members.
Remuneration received by Chairpersons and members of the Board of Referees (excluding reimbursement of expenses) is considered income from an office or from employment. Therefore, income tax must be deducted from this income (see the Financial and Administrative Services Policies for Board members at http://www.ae-ei.gc.ca/eng/board/policy/fas_toc.shtml Financial and Administrative Services - Table of Contents).
The CRA has confirmed that both Federal and Provincial taxes must be deducted for Board members as per the Income Tax Act. You will find further Payroll Deductions and Remittances information available at this link: http://www.cra-arc.gc.ca/E/pub/tg/t4001/t4001-e.html Employers' Guide - Payroll Deductions and Remittances.
If you disagree with the deduction of both taxes, you should contact the CRA directly.
All Board members must complete TD1's if they have not done so or if they wish to update the current information. All new Board members just commencing their appointments must also complete a TD1. This is not an Appeals directorate policy but is stipulated by the Canada Revenue Agency. The form can be obtained from the Board Assistant or at the following link: http://www.cra-arc.gc.ca/E/pub/tg/t4001/t4001-e.html#P769_78729 Form TD1, Personal Tax Credits Return.
Board members work intermittently and often have other employment earnings and as a result there is no way for Finance staff to advise at which rate source deductions must be applied. Source deduction rates are based on overall annual income and are provided at 15%, 22%, 26% and 29%. Consequently, you must decide the rate you wish to have per diem taxes deducted within the guidelines stipulated by CRA and provide this information to the Board assistant. Keep in mind that in order to avoid outstanding amounts at year end, we recommend you ensure deductions are sufficient according to your individual circumstances. This information will be documented by the Board Assistant and used when processing requisitions for payment.
If you have any questions, please do not hesitate to contact your Board assistant who will forward your question to the Regional Consultant for follow up.