Letting us know
Contributions to another pension plan during your leave can have an impact on your taxes. Call us at 1-800-668-0105 if you worked, or are planning to work, during your leave.
We know taxes aren’t the most exciting topic. But it’s important to understand the connection between paying for your leave, your RRSP contribution room and your taxable income.
You have until April 30 of the year following the end of your leave to tell us you want to pay for it, and five years to pay for it. But if you wait until after April 30 to tell us, your tax situation gets a bit more complicated.
Before April 30
I told you before the April 30 deadline. Now what?
If you tell us you intend to pay for your leave before the deadline, you won’t need approval from the Canada Revenue Agency (CRA).
We’ll calculate a pension adjustment (PA) for each calendar year of your leave. This will reduce your RRSP contribution room, whether you pay for all, some or none of your leave. If the amount of your PA is greater than your RRSP contribution room, your contribution room will go to zero the following calendar year.
Why is my PA greater than the cost of my leave?
Because the expected improvement to the future value of your pension is greater than the actual cost of your leave.
If you’re like many full-time teachers with a salary of about $85,000 and your leave costs about $10,000, your PA will be about $15,000.
The bottom line
When you’re working and contributing to the plan, the T4 you receive from your employer every year includes a PA.
Once you tell us you plan to pay for your leave (or you make a payment), we’ll send you an additional PA for each calendar year of your leave. We’ll issue this as a T4A within 30 to 60 days.
If you’ve already filed your taxes for the year of your leave, you’ll need to fill out this form and file it with the CRA.