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BACK Yesterday, the Vancouver Local learned that the corporation intends to
take statutory deductions at the rate of 10% from your severance payout.
This is different from the 5% you agreed to when you signed your
severance agreement. What
are statutory deductions? These are deductions for Canada Pension (CPP),
Employment Insurance (EI), and Income Taxes. They are required
deductions that all employers must take off an employee's pay and remit
to Revenue Canada. In the case of our severance, the 10% deduction only
includes CPP and El. For anyone taking out any amount of their severance
in cash, income taxes will be over and above the 10%. Why
did Canada Post change its mind? First it was 15%, then 5%, and now its
10%. The actual deductions that Revenue Canada
requires are 1.98% for El and 4.95% for CPP, for a total of 6.93%. At a
payroll consultation yesterday the Union asked why the decision was made
to increase these deductions to 10%. The response ‑ 5% was not
enough. Clearly, 5% does not meet the statutory requirement. However,
equally clearly, 10% is too much. Perhaps it is easier for management to
deal with even numbers. Is
there an upside? Yes. Theoretically, both CPP and El are deducted from pay only up to
certain maximums. For CPR the maximum earnings are $40,500,
after which no more CPP deductions should be taken from any future pay.
Or, put another way, once $1,83 1.50 in CPP deductions is reached, there
should be no more deductions until January 2005. For El, the maximum earnings are $39,000.
Once again, when this amount of gross income is reached, there should be
no more El deductions from your pay. The maximum El payable for the year
is $819.00. After that maximum has been reached, there should be no more
El deductions from your pay. Again, this will remain so until January
2005. This is where the new
"year‑to‑date" (YTD) column on the ‑pay stub
will be of use. It will be easier to keep track of where you are in
relation to the maximums. Once the maximums are reached, future pay
cheques will be larger by the amount of the missing deductions for CPP
and El. Is
there a downside? Yes. For many members who are both
full‑time and receiving a substantial severance payout, a 10%
statutory deduction from your severance pay will most likely result in
an overpayment of statutory deductions for the year. This single
deduction may put some of our members in a situation where they have
overpaid their CPP and El, despite the yearly maximums. This is a result
of Canada Post already taking deductions for six months of the year, and
their insistence on this 10% deduction from our severance pay. If
this occurs, this overpayment will be recovered by a member when they
file their taxes for 2004. The overpayment becomes the equivalent to
taxes paid for the 2004 year. And one final note ‑ once a member reaches. the maximum CPP earnings of $40,500, deductions for CPC Pension become a larger percentage of your earnings. Up to $40,500 of the required CPC Pension deduction is 4.4%. For earnings over the maximum, the required deduction is 7.9%. A
note of caution here do not start looking at your pay cheques
and making inquiries about the deductions taken. Canada Post does some
sort of averaging based on your expected earnings for the year.
Therefore, each individual pay cheque deduction may not equal 4.4% or
7.9%. You need to look at the entire year to determine whether they have
deducted the correct amount for the year. Once
again, the Corporation shows its complete disregard for its employees'
needs by not letting us know we will have less money until one week
prior to its payout. These numbers are readily available to the public
on the Revenue Canada website. Canada Post is a major employer that
should have been fully aware of the necessary statutory deductions,
right from the beginning. The
Local has already heard from some of its members about the problems that
will result from this arbitrary deduction. Several members' financial
institutions have already filled out their RRSP contribution forms,
complete with the amount of money they were told by Canada Post they
would receive. Another member had committed the cash to a down payment
of a residence. There will be numerous variations of the inconvenience
that this additional deduction will cause. The Vancouver Local is waiting to hear from National
Office for their position on this In
Solidarity, Laurie
Keddie Secretary-Treasurer db/CUPE-3338 |