To deduct or not deduct? Income tax from RRSP and reporting on T4

[PalpatablePalpatine]

If an employer makes contributions into a Group RRSP, which is considered a cash contribution, as the employee is free to withdraw the amount prior to retirement or termination of employment - must income tax be deducted along with CPP and EI, at source?

If income tax is not deducted at source, does that affect how it is reported on the T4 - should the amount be excluded from Box 14 and only entered into Box 40, or does it still get reported to both despite not deducting income tax at source? The CRA website is not clear on this. 

[TurboTaxSusan]

No, an employer doesn't have to deduct income tax at source on the contributions they make to your employee's RRSPs they you have reasonable grounds to believe that the employee can deduct the contribution for the year. For more details, see Chapter 5 of Guide T4001, Employers' Guide – Payroll Deductions and Remittances.

You would still report the taxable amount in box 14 and box 40, as it’s still a taxable benefit.

If you have further questions about payroll taxes, we would recommend visiting the QuickBooks community or the Intuit Profile support site. Unlike TurboTax, both QuickBooks and Profile can be used to create T4 slips, so you’ll likely find more people knowledgeable about the subject there.

[PalpatablePalpatine]

If the employer’s contribution to an employee’s RRSP is not a matching contribution but instead is a direct allocation from company funds, is it still considered an employer contribution under Canadian tax law?

[TurboTaxSusan]

As I mentioned above, TurboTax can’t be used for creating payroll slips, so we don’t have anyone on our team that is knowledgeable in those matters. 

We would recommend asking your question on the QuickBooks community or the Intuit Profile support site. Or you can consult with an accountant or bookkeeper.