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BACK
to Bulletins and Publications Last week a bulletin was
issued called "SEVERANCE
PAY AND STATUTORY DEDUCTIONS". The Local received last
minute notice that Canada Post was going to change the amount of
statutory deductions that will be taken from our severance pay from 5%
to 10% and a bulletin went out in haste. Within that bulletin there
is an error in the maximum rate for Employment Insurance (EI) deductions
that may be taken in the 2004 year. It stated that the maximum deduction
for El is $819.00. The actual maximum is $772.20. The maximum earnings
that apply to El deductions remains at $39,000. A quick review of the
other maximum will be repeated here: Canada Pension Plan (CPP)
maximum earnings are $40,500 and the maximum deductions are $1831.50.
Once the maximum for each of CPP and El is reached (for some members the
severance payment will do that) no future deductions should come off
your pay cheque until the 2005 year. Payroll has advised that
the 10% statutory deduction only applies to any portion going to an RRSP.
The Local believes this also applies to amounts towards buying back of
elective service, but has been unable to confirm with Payroll. In other
words, 10% may be calculated on either of those amounts. Those members
who take all of their money in cash will be subject to all the normal
statutory deductions such as El, CPP, and Income Tax. I have now received my pay
stub and found that the statutory deductions equal approximately 10% of
the portion which was transferred to my RRSP. However, it is disturbing
to find that no income taxes were deducted from the cash portion. The
10% statutory deductions were used to reduce the amount of cash, rather
than to reduce the RRSP contribution. Pay
close attention to your pay stubs. If no income tax was taken from cash amounts that you
receive, put aside some money for your taxes because you will most
certainly owe Canada Revenue Agency (CRA) on that amount of money for
the 2004 tax year. ‑ The amount you owe will depend on your total
income for the year which will, in turn, determine which tax bracket you
are in. The Vancouver Local would
like you to pay attention to the amount of trust you can put into the
corporation by the ease with which it broke a contract. They made you
sign your severance option document with the following disclaimer: You also acknowledge that you have read and
understood the terms of this form, that you have had the opportunity to
obtain any necessary independent financial or other advice, and agree to
be bound by its terms. So does that mean that
Canada Post is NOT bound by its terms? Didn't they get financial advice
before they came up with this form? In Solidarity, Laurie
Keddie Secretary-Treasurer db/CUPE-3338 BACK to Bulletins and Publications |