# Pay Raise 2021



## AKa (5 Mar 2021)

The pay raise is official with CANFORGEN 2021 released today.

https://www.canada.ca/en/department...2021/03/caf-members-receive-pay-increase.html

And there was great joy and celebration...


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## coolintheshade (5 Mar 2021)

Hi all.....I guess this is finally happening. Good timing with Tax time and relocations. Pls find attached an xls script to help you calculate how much you can expect.

Cheers


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## Dhillongs (28 Mar 2021)

does anyone know if this applies to released veterans currently receiving ELB since the announced date?


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## brihard (28 Mar 2021)

Dhillongs said:


> does anyone know if this applies to released veterans currently receiving ELB since the announced date?



If you released after the raise takes effect, then ELB/IRB should adjust to the new pay rate effective when you released, yes. If you released prior to the first day of the raise, then no.


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## Dhillongs (31 Mar 2021)

brihard said:


> If you released after the raise takes effect, then ELB/IRB should adjust to the new pay rate effective when you released, yes. If you released prior to the first day of the raise, then no.


thank you for clearing that up


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## Kilted (31 Mar 2021)

Is there anyway that this could have been given on a separate pay so that it did not cause everyone to be taxed at a significantly higher level?


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## ModlrMike (31 Mar 2021)

Unfortunately, no. Income is taxed in the year in which it is paid, not necessarily earned. This is why people need to be very careful about choosing a retirement date when there are payments due.


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## ballz (31 Mar 2021)

Kilted said:


> Is there anyway that this could have been given on a separate pay so that it did not cause everyone to be taxed at a significantly higher level?



No but they could have actually calculated the proper source deductions instead of just deducting it at the highest tax rate for everyone which is what appears to have happened.

In any case, take solace in the fact that it doesn't matter. Your tax bill is calculated on Dec 31st based on all of your income for the year. If they over-deducted at source (which appears to have happened here, definitely did to me) then you'll get the rest back when you do your taxes.


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## dapaterson (31 Mar 2021)

Deductions made by software systems have to comply with CRA standards, which get wonky when there are one-time spikes in pay.

If you wish to dig into how it's calculated, the policy document is online at: 






						Payroll Deductions Formulas - 117th Edition Effective January 1, 2023 - Canada.ca
					

Payroll Deductions Formulas - 117th Edition Effective January 1, 2023




					www.canada.ca


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## blacktriangle (31 Mar 2021)

So long CAF, and thanks for all the backpay...


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## Weinie (1 Apr 2021)

ballz said:


> No but they could have actually calculated the proper source deductions instead of just deducting it at the highest tax rate for everyone which is what appears to have happened.
> 
> In any case, take solace in the fact that it doesn't matter. Your tax bill is calculated on Dec 31st based on all of your income for the year. *If they over-deducted at source (which appears to have happened here, definitely did to me) then you'll get the rest back when you do your taxes.*


Yup, except that I and others could have taken that 20% of over taxation and invested it for 9 months. So, double loss.


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## ballz (3 Apr 2021)

dapaterson said:


> Deductions made by software systems have to comply with CRA standards, which get wonky when there are one-time spikes in pay.
> 
> If you wish to dig into how it's calculated, the policy document is online at:
> 
> ...



While I knew source deductions had to comply with CRA requirements, I didn't realize the method for lump-sum payments was so... overly simplistic (chalk it up to no experience doing payroll).

I'm surprised to find myself accusing CRA of approaching something too simply, but yes, they basically treat it like you're going to get that lumpsum payment every month for the entire year, in effect source deducting you at the highest marginal rates. So even if you make $30k a year, if you get a $10k lump sum it gets taxed as if you make $120k a year. That method disadvantages people as @Weinie has pointed out, or if they just needed the extra money for something (anything... it's their money). 

In any case, I'm always happy to learn something new.


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## Navy_Pete (3 Apr 2021)

ballz said:


> While I knew source deductions had to comply with CRA requirements, I didn't realize the method for lump-sum payments was so... overly simplistic (chalk it up to no experience doing payroll).
> 
> I'm surprised to find myself accusing CRA of approaching something too simply, but yes, they basically treat it like you're going to get that lumpsum payment every month for the entire year, in effect source deducting you at the highest marginal rates. So even if you make $30k a year, if you get a $10k lump sum it gets taxed as if you make $120k a year. That method disadvantages people as @Weinie has pointed out, or if they just needed the extra money for something (anything... it's their money).
> 
> In any case, I'm always happy to learn something new.


There is a form you can fill in to request a change in deductions (ie if you live in Ontario but work in QC, to be taxed at the ON rate), but not sure if you can do it for a one time thing like this.

This is why I prefer it when it comes in November/December, so you can get it back quickly, but not going to complain about getting a backpay (that I had no idea was coming until the message came out) when I feel pretty lucky to have a steady job.


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## Milhouser911 (2 Jul 2021)

Any updates on how this affects folks on retired folks, or those on a VAC voc rehab program?  I received the actual lump sum for the time I was serving, but I haven't seen my pension amount or ELB updated yet.

Scott


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## CountDC (24 Aug 2021)

doesn't that happen in Jan of each year?  Maybe misread something.

Wonder why they label this as 2021 pay increase when it only went to 2020?  Can't wait to see what we get in 2025.


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## Messerschmitt (16 Feb 2022)

Reviving this thread.
Anyone has submitted to CRA a tax revision for the previous tax years so that you can pay tax on the backpay according to each tax year? 

Pretty unfair to have to pay 2021 tax on the whole lump sum that was suppose to be received from 2017 through March 2021. Almost all of us were in a lower tax bracket in 2017 through March 2021, yet we pay the highest tax in 2021 on money that were owed to us.

What is the procedure?


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## SupersonicMax (16 Feb 2022)

You can’t.  You have to pay the amount for this tax year.  See note here: Qualifying retroactive lump-sum payments - Canada.ca

“An amount paid under normal collective bargaining, such as negotiated back pay, is not a qualifying amount.”


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## Good2Golf (18 Feb 2022)

SupersonicMax said:


> You can’t.  You have to pay the amount for this tax year.  See note here: Qualifying retroactive lump-sum payments - Canada.ca
> 
> “An amount paid under normal collective bargaining, such as negotiated back pay, is not a qualifying amount.”


Luxury…

Imagine having to pay taxes on 20 months of pension because team DND Pension screwed up , lost your file then sent the arrears payment conveniently to you in mid-January after they got back from Christmas leave… 😠

_Edit to explain_: 20 months was 8 months of retirement year pension income thrown in with 12 months of next year full pension income.  It wasn’t pretty and not a single bit of accountability from the Pension office.


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## ueo (19 Feb 2022)

Has anyone heard what or if those on pension might expect?


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## dapaterson (19 Feb 2022)

ueo said:


> Has anyone heard what or if those on pension might expect?


If you are in receipt of a CFSA annuity, a CAF pay raise is only relevant if you receive any retro pay.  In that case, your best 5 years will change and your annuity will be adjusted.

Otherwise, your CFSA annuity only increases once you reach the threshold for indexing.


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## Rifleman62 (19 Feb 2022)

My grandson is owed $40,000 back pay as calculated by a accounting geek. His unit has screwed up his pay almost from day one. On deployment he received zero pay on various months. He CT'd to RegF recently and his pay is still FU.


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## Blackadder1916 (19 Feb 2022)

Good2Golf said:


> Luxury…
> 
> Imagine having to pay taxes on 20 months of pension because team DND Pension screwed up , lost your file then sent the arrears payment conveniently to you in mid-January after they got back from Christmas leave… 😠
> 
> _Edit to explain_: 20 months was 8 months of retirement year pension income thrown in with 12 months of next year full pension income.  It wasn’t pretty and not a single bit of accountability from the Pension office.



Definitely not trying to defend the Pension Office (been there, f****ed over by them), but did anyone mention that the prior year amount could be treated as a QRLSP?  It should have been automatic, the CRA form that is used is completed by the "payer", however "should" doesn't seem to be in the Pension Office dictionary.

The previous years tax returns won't be reassessed to account for the back payment, however it can be treated differently in the current year's return.  From the form T1198 -



> To the recipient: We will not reassess your returns for prior years to include this income. However, you can ask us to tax the parts for the prior years as if you received them in those years. You have to include the whole payment on the appropriate line of your return for the year. See the back of this form for details





> What is a qualifying retroactive lump-sum payment (QRLSP)? A QRLSP is a lump-sum payment paid to an individual (other than a trust) in a year that relates to one or more prior eligible taxation years throughout which the individual was a resident of Canada. To be a qualifying amount, the payment must have been paid after 1994 from one of the following sources:
> • income from an office or employment received under:
> . . .
> • *benefits from a superannuation or pension plan* (other than non-periodic benefits such as lump-sum withdrawals)
> ...


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## Good2Golf (19 Feb 2022)

Blackadder1916 said:


> Definitely not trying to defend the Pension Office (been there, f****ed over by them), but did anyone mention that the prior year amount could be treated as a QRLSP?  It should have been automatic, the CRA form that is used is completed by the "payer", however "should" doesn't seem to be in the Pension Office dictionary.
> 
> The previous years tax returns won't be reassessed to account for the back payment, however it can be treated differently in the current year's return.  From the form T1198 -


Pursued that with CRA, actually, BA, but it turned out that the Pension Office laziness/ineptitude went far enough to screw me because they integrated the backpay into the first monthly payment, so there was no separate qualifying QRLSP to which a T1198 couple be applied.


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## Messerschmitt (22 Feb 2022)

Blackadder1916 said:


> Definitely not trying to defend the Pension Office (been there, f****ed over by them), but did anyone mention that the prior year amount could be treated as a QRLSP?  It should have been automatic, the CRA form that is used is completed by the "payer", however "should" doesn't seem to be in the Pension Office dictionary.
> 
> The previous years tax returns won't be reassessed to account for the back payment, however it can be treated differently in the current year's return.  From the form T1198 -


Is this done through the OR? And I'm confused by "won't be reassessed" but "treated differently". So what exactly changes? Will the taxable income be less for 2021 and account for 2018-2020 back pay? Isn't this a "reassessment" though?

And if I pursue this, I cannot file my taxes using a tax program in 2021 as per the form?


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## SupersonicMax (22 Feb 2022)

Messerschmitt said:


> Is this done through the OR? And I'm confused by "won't be reassessed" but "treated differently". So what exactly changes? Will the taxable income be less for 2021 and account for 2018-2020 back pay? Isn't this a "reassessment" though?
> 
> And if I pursue this, I cannot file my taxes using a tax program in 2021 as per the form?


That’s for pensions, not backpay.  Backpay will be taxed in the year it has been received.


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## Messerschmitt (22 Feb 2022)

SupersonicMax said:


> That’s for pensions, not backpay.  Backpay will be taxed in the year it has been received.


Convenient for the state in terms of taxes...

Guess I'll have to use up some of my RRSP to pull myself down under the 26% tax.


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