INFORMATION UPDATE
December 7, 2012
Separation Packages
Yesterday, December 6, we met with Air Canada to discuss outstanding issues related to the Heavy Maintenance Separation Packages. Issues discussed included the timing for the first round of cheques, corrections in the case of wrong addresses/returned cheques, statutory deductions and taxes.
Air Canada confirmed to us that they are working on a schedule to proceed with the payments, as per the arbitration award. The first cheques will be a lump sum (50% of your total payment) sent to your mailing address before the end of 2012. Starting in January 2013, the remaining 50% will be paid out in biweekly instalments (payments every two weeks) in an amount equal to two weeks of pay (calculated at your base rate of pay X 40 hours X 2), with the appropriate tax deductions.
Deductions will be for federal and provincial taxes only. There will be no deductions for CPP contributions or EI premiums.
Cheques will be sent along with a communication from Air Canada outlining your personal information, eligibility, what you will receive and taxation information.
Regarding RRSP transfers, the information provided was that the payments may be considered a retiring allowance under the Income Tax Act eligible for tax sheltering within an RRSP. The maximum amount of your total payment that may be transferred to an RRSP is $2000 per year of service prior to January 1, 1996.
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Air Canada will not handle this transfer to an RRSP on your behalf. You will be responsible for pursuing this by arranging such a transfer before February 28 of the year following the year in which you started to receive qualified retiring allowances payable in instalments.
It would be advisable to contact a professional financial advisor to discuss your personal situation regarding this issue.
Chuck Atkinson
President and Directing General Chairperson
District 140, IAMAW
