Prescribed salary deferral plans or arrangements

A salary deferral arrangement is a plan or arrangement made between an employee and an employer. Under such an arrangement, an employee postpones receiving salary and wages to a later year. Treat the deferred salary and wages as employment income in the year the employee earns the amount. Report it on the employee’s T4 slip for that year.

Prescribed plans or arrangements

Prescribed plans or arrangements are not covered by the above salary deferral rules. Treat the deferred amounts in these cases as income in the year the employee receives them. Report the income on the employee’s T4 slip for that year. 

To find out how to report pension adjustments under these circumstances, go to Pension Adjustment (PA).

If you have employees who participate in a prescribed plan, deduct Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and income tax in the following way.


You have to deduct both CPP and EI from the interest income earned under these plans or arrangements.

CPP contributions

Deduct CPP contributions from both of the following:

EI premiums

Deduct EI premiums from the participant's gross salary (including deferred amounts) while the person is working. Do not deduct more than the yearly maximum.

Do not deduct EI premiums when you pay these to the participant during the leave period.

Box 24 – EI insurable earnings – Enter the amount of insurable earnings on which you calculated the employee's EI premiums.

The EI premium for this income is based on the gross amount, while the amount reported in box 14 is the net amount. The insurable earnings cannot be the same as the amount in box 14.

Income tax

Deduct income tax from both of the following amounts:

The interest income and other amounts earned by the deferred amount are employment income paid to the participant and must be reported in box 14 on the T4 slip.

Withdrawal from the prescribed plan

When a participant withdraws from the plan because they cease to be employed, you have to consider the withdrawal as employment income. Deduct CPP contributions and income tax, but not EI premiums.


Custodians and trustees who administer a prescribed plans have the same responsibilities as an employer for deducting and remitting deductions, and reporting the income and the deductions.

For more information, see Reporting salary deferral plans or arrangements amounts.

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