How public service pay works

Income tax is calculated based on the province where you report to work.

If you are an employee who works in a province other than the one in which you reside, you may owe income tax upon filing your income tax return. If you think this may be your situation, you have the option of having additional income tax deducted at source.

If the Pay Centre serves your organization and you wish to initiate an additional income tax deduction, you must send it a pay action request form along with either a completed:

• TD1 personal tax credits return form if you reside in a province or territory outside of Quebec
• TP-1015.3-V source deductions return form if you reside in Quebec

Working in one province and residing in another Related information

• Departments and agencies served by the Pay Centre

If your province of work is other than Quebec, you will notice only one income tax deduction on your pay stub (Quebec income tax, or QIT). If your province of work is Quebec, you will notice both provincial and federal (Canada income tax, or CIT) deductions on your pay stub.

In all provinces except Quebec, federal and provincial income tax appear as a single deduction on your pay stub. To confirm that you are paying the correct amount of income tax, consult the provincial and territorial tax tables established by Canada Revenue Agency.

Under certain circumstances, you may request a reduction in the amount of income tax to be withheld from your pay by your employer. You may apply in writing to the District Taxation Office at Canada Revenue Agency or to Revenue Quebec, providing details of your situation. If approved, you will receive a “letter of authority” to this effect.

If Public Service Pay Centre serves your organization, send it a copy of this letter, along with a pay action request form, to ensure that it makes the appropriate adjustments to the income taxes withheld from your salary.

If you work in Quebec and live in Ontario, New Brunswick or Nova Scotia, you may ask to have the Cross Province indicator activated in Phoenix. Once this is done, you will pay provincial income tax according to the applicable rates for your province of residence rather than the higher Quebec rates. In all other circumstances, you need to obtain a letter of authority from your tax services office.

Conversely, if you live in one province but report to a place of business in another, you may not have enough tax deducted. If this is the case, you may “request more tax deductions” by completing the federal TD1 form and sending it to compensation.

How to request that income tax be withheld at a reduced rate Related information

• Departments and agencies served by the Pay Centre

The letter of authority from Canada Revenue Agency or Revenue Québec provides particulars as to the exemption amount and the period that the authority covers. If this period expires or the exemption amount changes, you must reapply for a reduction to the income tax withheld at a reduced rate.

If you wish to have additional federal income tax withheld from your earnings, and the Public Service Pay Centre serves your organization, complete and submit the following forms to it:

• TD1 Personal tax credits return, indicating the additional amount you want to have deducted
• Pay action request form

If the Pay Centre serves your organization, you are a resident of Quebec, and you wish to have a specific amount of additional Quebec income tax deducted at source, complete and submit the following forms to the Pay Centre:

• TP-1015.3-V Source deductions return
• Pay action request form

How to request that income tax be withheld at a higher rate Related information

• Departments and agencies served by the Pay Centre

Your request to have additional income tax withheld will continue to apply until such time as you decide to change the amount and complete a new TD1 Personal tax credits return to change your federal income tax or TP-1015.3-V source deductions return to change your Quebec income tax deduction.

Earnings you receive are taxable in the year in which you are paid.

If your estimated total annual income is less than your total claim amount, complete the "Total income less than total claim" amount on the reverse side of the TD1 Personal tax credits return.

If your organization is served by the Pay Centre, forward to it the return, along with a pay action request form.

Tax exemptions and income tax Related information

• Departments and agencies served by the Pay Centre

A pay increment increases your pay rate to the next highest horizontal pay rate on the pay scale. A pay increment period is set out in your collective agreement. If your collective agreement does not specify a period of time, the pay increment period defaults to 12 months.

Refer to section A.2.5 of the Directive on Terms and Conditions of Employment

A new pay increment date will be set as per your collective agreement or terms and conditions of employment. The new pay increment date will correspond with the date of your promotion.

Refer to section A.2.5.4 of the Directive on Terms and Conditions of Employment

Generally, upon deployment to a new position that has the same increment period as the former position, the pay increment date will remain the same. The date will, however, change if you are a seasonal employee or are appointed to a position with a different increment period (that is, the increment period is shorter or longer).

Refer to section A.2.5.4.1 of the Directive on Terms and Conditions of Employment

While acting in a position you will continue to receive pay increments at your substantive (basic) level. You may also be entitled to receive a pay increment at the acting level. This will depend on where your substantive position lies on the rate scale.

Refer to section A.2.6.4 of the Directive on Terms and Conditions of Employment

If you receive a pay increment or a salary revision at your substantive level, your acting pay rate will be recalculated and adjusted accordingly. If the recalculated rate is less than your existing acting pay, you will continue to receive the higher rate.

Refer to section A.2.6.4 of the Directive on Terms and Conditions of Employment

When a pay increment and a pay revision are effective on the same date, the pay increment will apply first, followed by the pay revision.

How the Pay Centre treats a pay increment and a revision due the same date Related information

• Departments and agencies served by the Pay Centre

The system is automated to apply pay increments when they are due in accordance to the collective agreements.

How the Pay Centre knows when your pay increment is due Related information

• Departments and agencies served by the Pay Centre

Your manager or the individual with delegated authority will notify you at least two weeks, but not more than six weeks, before the due date if your pay increment is going to be denied.

Refer to section A.2.5.6 of the Directive on Terms and Conditions of Employment

If your pay increment was denied, you will be eligible for a pay increment on the date that the next increment would become due. Your manager or the individual with delegated authority may request payment of the increment on the first day of any month before that date.

Refer to section A.2.5.6 of the Directive on Terms and Conditions of Employment

Collective agreements and terms and conditions of employment found in the relevant authorities provide for various types of leave without pay. Consult the appropriate terms governing your specific type of leave to determine how your absence may affect your pay increment date.

A new pay increment date will be set as per your collective agreement or terms and conditions of employment. The increment date will align with the date of your promotion.

Refer to section A.2.5.6 of the Directive on Terms and Conditions of Employment

If you are appointed within one year of a lay-off, the period between the last pay increment date and the lay-off date is used to determine the new pay increment date.

Refer to section A.2.5.6 of the Directive on Terms and Conditions of Employment

A revision is a vertical change in the pay rate that applies to a specific group. It is an amount equal to what would have been paid had the rate been in effect on the effective date.

A retroactive revision covers the period from the effective date of the revision up to and including the day before the collective agreement is signed or when an arbitral award is rendered.

Your new rate of pay will be in the salary row immediately below the row which shows the rate of pay you were receiving prior to the revision. Refer to the pay administration section of your collective agreement.

Employees, former employees, or in the case of death, the estates of former employees who were employed during the retroactive period, are all entitled to a retroactive revision. Refer to the pay administration section of your collective agreement.

We will recalculate your rate of pay using the revised rates of pay for promotions, demotions deployments (transfers) or acting situations that were effective during the retroactive period. Refer to the pay administration section of your collective agreement.

With the exception of a change in employment involving a lower pay rate, your pay rate will remain higher than the recalculated rate. It will be set at the rate closest to, and not less than, your previous pay rate. Refer to the pay administration section of your collective agreement. If you change jobs and switch categories, you will only be paid up to the maximum offered in the new category.

The Pay Centre will notify the underwriters of these programs.

Notifying the underwriters of disability insurance, long-term disability insurance or workers compensation programs in case of a retroactive adjustment Related information

• Departments and agencies served by the Pay Centre

The following list includes some, but not all, entitlements and allowances that we will adjust in the event of a retroactive revision:

• extra-duty pay
• additional hours worked
• vacation pay
• garnishments
• maternity leave allowance
• parental leave allowance
• educational leave allowance
• leave with income averaging
• vacation leave and extra-duty pay cash-out
• severance pay
• salary for the month of death

Unless the agreement specifies a longer timeframe, the Public Service Labour Relations Act requires the employer to implement the provisions of the new collective agreement within 90 days after its signing. The Pay Centre’s priorities during this period are to:

1. verify and validate that your pay rate is updated accurately
2. generate payments for the retroactive period
3. request adjusted payments for any allowances or entitlements affected by the revised pay rate
   1. if applicable, the Pay Centre notifies the insurance underwriters for Disability Insurance, Long-term Disability Insurance and the Workers Compensation Board of any pay-rate changes
   2. where applicable, we provide the Government of Canada Pension Centre with the information needed to revise your pension entitlement

Estimated wait time for receiving payment for a retroactive revision Related information

• Departments and agencies served by the Pay Centre

The pay increment will be applied first, followed by the pay revision. Refer to the pay administration section of your collective agreement.

Order in which the Pay Centre applies a pay increment and a revision issued on the same date Related information

• Departments and agencies served by the Pay Centre

Salary protection might apply if you are:

• subject to downward reclassification or conversion to a level with a lower maximum rate of pay
• declared surplus or laid-off and are appointed to a level with a lower maximum rate of pay within a year

Situations in which salary protection applies More information

• Section A.2.4.2.2 of the Directive on Terms and Conditions of Employment and A.2.4.2.7 of the Directive on Terms and Conditions of Employment
• Refer to the Work Force Adjustment Directive that applies to various collective agreements

In such cases, salary protection will apply to your pay rate. Protection will continue until the position becomes vacant or until the maximum of the reclassified level becomes greater than your former maximum pay rate.

Refer to section A.2.4.2.2 of the Directive on Terms and Conditions of Employment

In such cases, salary protection will apply to your pay rate. Protection will continue until you are promoted or deployed, or transferred, to a position with a higher maximum pay rate.

At times, a delinquent debtor does not opt to make voluntary arrangements to repay a debt to the Crown. In such cases, action to recover, or set off, the debt from any sum of money owing to the employee or to the estate of the employee under a specific statute or regulation may be initiated.

A statutory set-off generally involves a debt that is owed to the Crown. A garnishment applies when you owe a debt to a creditor or to maintain family-support arrangements.

Some typical types of debts to the Crown include:

• income tax arrears
• Canada Student Loan
• overpayment of Employment Insurance benefits received

The recovery of the debt to the Crown will take precedence over a garnishment.

Whenever possible, we will recover salary overpayments of less than 10% in a lump sum from your next payment. If the overpayment is large and its immediate recovery would cause you financial hardship, the delegated authority within your department may instead direct that a minimum of 10% of your gross salary entitlement be recovered every pay. Employees with overpayments over 10% of their gross biweekly pay, eligible for flexibility measures, will receive a letter advising them of the amount owing, the cause of the overpayment and the flexible repayment options available to them. If the acknowledgement letter is not returned within the deadline specified in the overpayment letter, the recovery at the default rate will start immediately.

Please contact the Client Contact Centre for assistance.

If requested and in exceptional circumstances, the departmental delegated authority may allow for this.

You can ask for a larger amount to be taken from your biweekly pay to apply it towards the recovery of your overpayment.

You will receive a letter notifying you of your overpayment. This letter will provide details about the overpayment, instructions to acknowledge the overpayment and repayment options, if applicable.

Repaying an overpayment in an amount that is greater than 10% of your gross salary Related information

• Departments and agencies served by the Pay Centre