Employment income showing in T4 different compare to salary credited per payslip

[roger1726]

I am working with Indian IT MNC company on work permit ( LMO based). The employment income shwoing in T4 is different compare to salary credited in bank account( and payslips). The salary showing in payslips and credited in bank accounts are correct and more than what is showing in T4 certificate.

I checked with payroll dept and they said that it because I am working on work permit and I am exempted from taxation for some portion of salary as per subsection 6(6) of the Income TAX act. based on CRA ,section 33. My T4 indicates just the amount on which I am required to pay taxes.

Has anyone faced similar problem? has all person working on workpermit tax exempted for some portion of salary as per above law? will it affect my CEC application?

 

[Andy2109]

T4 Employment income is not equal to net monthly salary credited to account (with deductions in place).
Net salary showing up in payslip is what is credited to account.
Salary showing in payslip and credited into account is more than what is showing in T4 ? Can you elaborate on this?

 

[jsm0085]

I am working with Indian IT MNC company on work permit ( LMO based). The employment income shwoing in T4 is different compare to salary credited in bank account( and payslips). The salary showing in payslips and credited in bank accounts are correct and more than what is showing in T4 certificate.

I checked with payroll dept and they said that it because I am working on work permit and I am exempted from taxation for some portion of salary as per subsection 6(6) of the Income TAX act. based on CRA ,section 33. My T4 indicates just the amount on which I am required to pay taxes.

Has anyone faced similar problem? has all person working on workpermit tax exempted for some portion of salary as per above law? will it affect my CEC application?

Not a chance. Good luck - you will need it !

 

[roger1726]

Andy2109 ,

yes, Salary showing in payslip and credited into account is more than what is showing in T4.For example: X - Y = Z

X= actual salary per month ( salary given in employment reference letter )
Y= portion of the salary tax exempted as per subsection 6(6) of the Income TAX act. based on CRA ,section 33 ( portion of salary which will not be included while calculating tax)
Z= salary on which tax will be calculated ( salary showing in T4 as employment income )

Eventhough I am earning salary x ( x>Z ) , tax is calculated on salary Z and it is reflected in T4.

subsection 6(6) of the Income TAX act. based on CRA ,section 33 (if person is working on work permit and maintaining residence in home country)
http://www.cra-arc.gc.ca/E/pub/tp/it91r4/it91r4-e.txt

SUMMARY
Generally, all benefits received or enjoyed by an employee from an office or
employment are taxable. Subsection 6(6) provides an exception to this general
rule by allowing certain benefits related to special work sites or remote work
locations to be excluded from income.

Seniors please provide your inputs and suggestions.Please confirm whether my employer doing TAX calculation correct or not.

 

[crama123]

Hi

I too worked in Canada on a work permit but really never heard of special exemptions for employee's on work permit. My understanding is that your payslip should have your gross salary as well as all the exemptions you get in regards to tax benefits. May be some tax consultant can help you better. I used to do this while in Ottawa and they charged some 20$ to file my return.

 

[roger1726]

My payroll dept informed today that with T4 2012 there will be extra tab for tax exempted income.

X = Y + Z ( actual salary= tax exempted salary in T4+ employment income in T4 )

Thanks , I will contact some good TAX consultant to get better idea of it.

 

[jes_ON]

It shouldn't be a problem at all, it's a non-taxable benefit. This is one reason why letters of employment are supposed to describe salary PLUS BENEFITs. But since it will be indicated on your T4, there should be no confusion.