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News - Update for Procedure Regarding DPSP Forfeitures |
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| | We are undertaking an adjustment in our processes to better align the administration of our group savings plans with requirements for all registered plans.
Currently, all lump-sum payments from registered plans are subject to withholding taxes. This includes non-vested benefits (forfeitures) returned to DPSP sponsors from accounts belonging to plan members who exited the plan. As a result, effective January 2006, any funds returned from your DPSP as a result of a plan member's leaving will have applicable withholding taxes applied.
Please note: Any forfeitures that remain in the plan and are re-distributed to existing plan members are not subject to withholding taxes.
We will be issuing the appropriate tax slips at year-end to outline forfeitures returned to sponsors, forfeitures reallocated, and any taxes withheld. The following chart indicates the applicable tax rates.
| FOR RESIDENTS* OF |
FORFEITURE AMOUNT |
FEDERAL TAX |
PROVINCIAL TAX |
TOTAL |
| Quebec |
Up to $5,000 |
5% |
16% |
21% |
| $5,000 to $15,000 |
10% |
20% |
30% |
| Over $15,000 |
15% |
20% |
35% |
| All other provinces |
Up to $5,000 |
10% |
0% |
10% |
| $5,000 to $15,000 |
20% |
0% |
20% |
| Over $15,000 |
30% |
0% |
30% |
* Applicable tax rates may vary for non-residents of Canada. |
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