Thinking of working during a leave?
November 07, 2016
There are a few things you need to pay attention to if you’re considering working in education while on a leave of absence. If you fall into any of the following categories, take note.
Working for the same employer
When you work during your leave, a tax rule may complicate matters. Ideally, you want your absence to be treated as one buyback opportunity. There are two requirements to qualify for this treatment:
you must have worked for the same employer for a 36-month period prior to your leave, and
the salary you earn for employment during your leave must be lower than your pre-leave salary.
If you don’t meet both of these requirements, the Income Tax Act requires us to set up multiple buybacks. This means you’ll have different tax treatments and will have to contact us for assistance.
If you’re employed with the same employer on a less-than-full-time contractual basis for any period during an approved leave, you’re ineligible to purchase additional service for the period the contract covers.
Working less than full-time
If you were on a part-time contract prior to your leave, you can only accumulate credit up to your pre-leave work percentage. For example, if you take a leave from a 50% position and choose to buy back your leave, the most credit you can accrue for that year is 50%.
So if you’re thinking of working during your leave, it’s important to know there’s a limit on how much service you can accrue.
Close to retirement
The rate of pay for occasional teaching can end up having a negative impact on your pension. Here’s why.
Your best-five years’ average salary is a key component of how we calculate your basic annual pension. Salaries are usually highest at the end of your career.
If you take a leave of absence close to retirement, and then work occasionally during that leave, it’ll lower your annual rate of salary for that year. Why? When determining your annualized pensionable salary for that school year, we use both your annual rate and occasional rate.
So working extra days can increase your credit. But if you're nearing retirement, it may also reduce your average best-five years' average salary and result in a smaller pension.
If you're in any of these situations, our advice is to be cautious. Contact us to see how working during a leave could affect your pension.
Contact us when you’re back
When you have multiple buybacks as a result of working during your leave, you won’t see any information in your Buyback Centre.
Why? We have to account for all service that occurred during your leave, and can only do that in the fall after you return to work.
Contact us to confirm your buyback costs, payment options and tax situation.