Newsletter no. 95-LR, Quebec Simplified Pension Plans
December 20, 1995 - Limited Release
In this newsletter, we provide you, as representatives of financial institutions operating in Quebec, with information about registering Quebec simplified pension plans (QSPP) under the Income Tax Act (the Act). As well, we explain some of the obligations a QSPP administrator has under this act.
What is a QSPP?
A QSPP is a pension plan subject to the Supplemental Pension Plans Act and the Income Tax Act. The provincial regulations that permit a QSPP to exist came into force on June 2, 1994. As a result, a QSPP is exempted from a number of requirements of the Supplemental Pension Plans Act. The QSPP was designed to reduce the administrative burden on employers, its distinguishing characteristic being that it is administered by a financial institution.
In close co-operation with us, Retraite Québec [Footnote 1] has written a jointly approved pro-forma QSPP text and made it available to financial institutions. The text is dated March 31, 1995, and is made up of:
- Part 1, which applies to all employers participating in the plan;
- Part 2, which describes the provisions applicable to a specific employer; and
- Part 2 that includes a power-sharing agreement with the employee's association and describes the provisions applicable to a specific employer.
We recommend that you base your QSPP design on this pro-forma text. By doing so, you will help make our registration process more efficient.
How to register a QSPP
In addition to registering your QSPP with Retraite Québec, you must also register your plan with us for purposes of the Income Tax Act. To do so, send us the following documents:
- a completed Form T510, Application for Registration of a Pension Plan; and
- certified copies of:
- the plan text and any other documents that contain the terms of the plan;
- all trust deeds, insurance contracts, and other documents relating to the funding [Footnote 2] of benefits under the plan; and
- all resolutions and by-laws relating to the above documents.
If you have based your plan text on the approved pro-forma plan discussed above, indicate in Part 2 all the permissible variables when you apply to register your plan.
If your plan is a multi-employer plan [Footnote 3] (MEP), and if it defines participating employer in such terms that allow other employers to participate, you do not have to provide us with a separate Part 2 each time a new employer joins your plan. Please note that not all plans to which more than one employer contributes are MEPs.
If you do not base your plan on the approved pro-forma plan, you may want to show us how your plan differs. This will help us review your registration request.
For more details on the registration process, see the guide called Registering your Pension Plan. You can get this publication from our Web site at canada.ca/cra-forms or by calling us at 1-800-959-5525.
We will notify you that if, in the calendar year, your QSPP is multi-employer plan, it is subject to the anti-avoidance rule outlined in subsection 147.1(14) of the Act. Generally, this rule considers all multi-employer pension plans in which an employer participates as a single multi-employer plan for purposes of testing the pension credit limits set out in subsection 147.1(9) of the Act.
QSPP administrator obligations
As the QSPP administrator, you are ultimately responsible for administering your plan under the Income Tax Act. You must administer your QSPP according to the terms of the plan as it is registered.
By provincial regulation, the plan year-end is December 31. Section 8409 of the Income Tax Regulations requires you to file Form T244, Registered Pension Plan Annual Information Return, for each plan, not each employer, no later than 180 days after the plan year-end. You can get this form from our Web site at canada.ca/cra-forms or by calling us at 1-800-959-5525.
If you amend your QSPP, you have to file Form T920, Application to Amend a Registered Pension Plan, no later than 60 days after you amend it.
If your plan is a MEP, we do not consider your QSPP to be amended when an employer joins or ceases to participate in the plan.
If your plan is not a MEP, it should define each participating employer. Therefore, each time an employer joins or ceases to participate in your plan, you have to amend the plan.
Each participating employer has to report a pension adjustment (PA) on or before the end of February every year. As a result, you may have to provide them with contribution information. For more information, you can direct employers to the guide called Employers' Pension Adjustment Calculation Guide, which they can obtain at canada.ca/cra-forms or by calling us at 1-800-959-5525.
We have included an appendix at the end of this newsletter to help you determine if prospective participating employers already participate in other registered plans. If they do and you accept their participation in your plan, you will need to communicate with the plan administrators of the other registered plans to ensure everyone respects the PA limits under the Act. The appendix may also alert employers about their obligations under the Act.
If you fail to administer a QSPP as described above, we may have to revoke the registration of the plan.
Where to get help
If you have questions about registering QSPPs under the Act, please call:
613-954-0419 (service in English)
(Each participating employer should complete this appendix if the Quebec simplified pension plan administrator requests it.)
As a participating employer in a Quebec simplified pension plan (QSPP), you have the following obligations under the Income Tax Act:
- You have to determine if an individual in your employ is, or was at any time after 1989, a connected person. According to subsection 8500(3) of the Income Tax Regulations, a connected person is generally one who:
- owns directly or indirectly 10% or more of the issued shares of any class of the capital stock of the employer or a related corporation;
- does not deal at arm's length with the employer; or
- is a specified shareholder of the employer by reason of paragraph 248(1)(d) of the Income Tax Act.
You must file Form T1007, Connected Person Information Return, with Canada Revenue Agency no later than 60 days after the date the individual joins the plan, unless you have previously filed this return for the individual. *
- You have to calculate and report a pension adjustment (PA) annually for each participating member. *
Please acknowledge or provide us with the following information:
1. Will any employees participating in this QSPP make contributions or accrue benefits simultaneously under another registered pension plan or deferred profit-sharing plan sponsored by you or another employer who does not deal with you at arm's length?
If yes, provide the plan name and Canada Revenue Agency registration number(s) of any such plan(s). List on a separate sheet if necessary.
2. Will connected persons as defined above participate in this QSPP?
If yes, I agree to file Form T1007, Connected Person Information Return, within 60 days of the date the individual joins the plan. *
3. I agree to calculate and report a PA for each participating member under the plan.
* For more information, please see the Employers' Pension Adjustment Calculation Guide, which is available at canada.ca/cra-forms or by calling us at 1-800-959-5525.
(Please sign and return to your QSPP administrator.)
Authorized signature of the employer
- [Footnote 1]
- Retraite Québec administers provincial pension benefits legislation.
- [Footnote 2]
- The Income Tax Regulations outline what is permitted as funding media for a QSPP.
- [Footnote 3]
- We usually consider a registered pension plan to be a multi-employer plan if, at the beginning of the year, it is expected that no more than 95% of the active plan members will work for any one of the employers or group of related employers at any time during the year. If this is not the case, we consider the plan to be a single-employer plan.
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