We are currently moving our web services and information to Canada.ca.

The Treasury Board of Canada Secretariat website will remain available until this move is complete.

Payable at Year-End (PAYE)

Archived information

Archived information is provided for reference, research or recordkeeping purposes. It is not subject à to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.


March 17, 1995


Senior Full-Time Financial Officers


Payable at Year-End (PAYE)


This letter clarifies and amends the Policy on Payables at Year-End (PAYE), Chapter 5-5, Treasury Board Manual, Comptrollership Volume.

Please ensure that this information is communicated to the sections of your organisation which are involved with year end processing.

The Office of the Auditor General has expressed concern about many of the items We expect they will be followed up in this year's audit examination.



The intent of the policy is that determinable expenditures must be accrued in the period they were incurred rather than when they will be paid for, even if the charge causes.  The appropriation to be over expended.  The date of payment does not normally affect this rule.


1. Recording liabilities in the accounts - lapsing authorities
(page A-2)

Because liabilities accrued under PAYE related to lapsing appropriations represent approved spending authority, accurate measurement of the use, or non-use of this authority is essential.  To permit identification of recorded amounts for measuring use of this authority, liabilities related to lapsing authorities must normally be determined on the basis of individual debts.  However in exceptional situations where the total cost is known or can be reasonably estimated, but it is not practical, or cost effective to determine the distribution to individuals, liabilities may be calculated by group or class of recipient.  For example, suppose it has been determined that a bilingual bonus will be paid retroactively to 500 employees.  In this case, the total cost is known or can be reasonably estimated and it would not be cost effective to establish 500 individual PAYE entries.  This treatment would not apply to government downsizing costs when contractual arrangements have not yet been made with individual employees.  These costs will be recorded through a central provision.

2. Settlement and adjustment of PAYE liabilities (page A-6)

For lapsing authorities:

that if the settlement is less than the amounts accrued, the difference must be credited to the non tax revenue account "Adjustment to Payables at Year-End (PAYE)". If a liabilities was not set up in the old year, it can only be paid out of, or charged against a new-year appropriation


When the final invoices for the year are received, departments may, within the same appropriation, net the liabilities established under the PAYE policy. That is, if the settlement of a debt is less than the amount accrued the surplus may be applied against another PAYE debt that was under-estimated. This also applies to debts accrued in error and to debts which existed at March 31 of the previous year but which were not established as PAYE.

If the net of all settlements is higher than the amount accrued, the difference must be charged to the new-year appropriation.

If the net of all settlements is less than the amounts accrued, the difference must be credited to the non-tax revenue account "Adjustment to Payables at Year-End (PAYE)".  This amount will not be available for spending in the new year except where a reserved allotment for over-utilisation has been established. In this case amounts over-estimated or accrued in error may be available for spending in the new year provided that Treasury Board approval is obtained.

3. Transfer Payments Contributions (page A-12)

Addition to requirements:

- To assist in defining entitlement in multi-year contribution agreements, departments should consider writing annual expenditure caps into each contribution agreement.  Eligible costs would be defined as costs which qualify up to but do not surpass, the cap amount in the stated year.  Any project costs surpassing the cap would be the responsibility of the third party and would not become eligible in future years for reimbursement. Consequently, they would not be accrued by the department. However, to retain the flexibility to react to market forces; contract amendments to adjust the cap upward could be used if projects were to speed up. The decision to amend the contract under these circumstances, is entirely at the discretion of the program manager.  This would have to be done prior to March 3lst.  Any payment owing as a result would have to be accrued if payment could not be made prior to the April cheque issue cut-off.  In the event of projects slowing down, the original contract would state that the second and subsequent year caps could include the unspent portion of the previous year's capped amount.

4. Real Property (page A-16)

Where the transaction involves the acquisition of real property that is not already held in the name of the Crown, the amount owing is to be recorded as a payable at year-end if at March 31:

  • title to the property has been obtained and payment has not been made (for example through expropriation proceedings); or,
  • if for some reason title has no been obtained, the government has effective use and control over the real property.

Note: Departments are reminded that significant commitments must be reported separately to Treasury Board and they will be disclosed in the notes to the financial statements.

5. Ex Gratia Payments (page A- 18)

An ex gratia payment is one for which the government recognises no liability. Unless the government has agreed to make an ex: gratia payment, and the economic event occurred before March 31st, no liability can normally be accrued.

Queries regarding this policy can be directed to:

Louise Breton
Government Accounting Policy Division
300 Laurier Avenue West
8th Floor, West Tower
Ottawa, Ontario
KlA 1E4

Telephone: (613) 957-9675
FAX: (613) 952-9613

J.Q. McCrindell

Assistant Secretary
Financial and Contract Management Sector

Date modified: