Under Review

Canadian Payroll - Taxable benefit that does not have Tax deducted

This benefit is an employer paid RRSP to match EE RRSP deduction. Because we do not have to tax it based on information below, we do not make it subject to tax.  Unfortunately because we do not tax it the amount does not show up in Box 14. 

This what I got from Canadian payroll Association:

Employer contributions to an employee's RRSP are considered to be a taxable benefit to the employee.

RRSP taxable benefits are pensionable and insurable and subject to CPP contributions and EI and QPIP premiums.

Employer contributions to an employee's RRSP are considered non-cash benefits and are not insurable provided that

  • the employee cannot withdraw the amounts from a Group RRSP until they retire or cease to be employed; or
  • the employee can withdraw the RRSP funds under a Home Buyers Plan or a Lifelong Learning Plan only.

Although the benefit is taxable and has to be reported on the T4/RL-1 slip, employers do not have to deduct income tax at source on the contributions they make to employees' RRSP’s.

The reason for this is that both the employee and employer amount of an RRSP are deducted before tax on the employee's tax return so there is, in effect, no tax on either side. 

We need a way for the amount to show up in Box 14 without taxes being taken.