Special payments
CPP Contributions¹
EI Contributions¹
Tax deductions
Bonuses and retroactive pay increases
Yes
Yes
Yes
Director's fees paid to residents or non-residents
- Fee Only
Yes²
No
Yes³
- Fee in addition to salary
Yes/No⁴
Yes/No⁴
Yes
Employees profit sharing plans (EPSP)
No
No
No
Overtime pay, including banked overtime payment
Yes
Yes
Yes
Prescribed plans or arrangements-on amounts received
Yes/No⁵
Yes/No⁵
Yes
Retroactive lump-sum payments
Yes
Yes
Yes
Retirement compensation arrangements (RCA)
No
No
Yes
Retiring allowances (also called severance pay)
No
No
Yes⁶
Salary deferral arrangements-on amounts received
Yes
Yes
Yes
Vacation pay, public holidays and lump-sum vacation payment
Yes
Yes
Yes
Wages in lieu of termination notice
Yes
Yes
Yes
Wage Loss Replacement Plans
- Payments from uninsured plans
Yes
Yes
Yes
- Payments from insured plans
Yes
Yes
Yes
Worker's compensation awards
- Employee's salary paid before or after a worker's compensation board claims is decided
Yes
Yes
Yes
- Advances or loans equal to the workers' compensation award
No
No
No
- Amount paid in addition to an advance or loan before the claim is accepted
Yes
Yes⁷
Yes
- Top-up amounts paid after claim is accepted
Yes
No
Yes
- Top-up amounts paid as sick leave after the claim is accepted
Yes
No
Yes
¹ If you have already deducted the total yearly maximum contributions from the employee’s income, do not deduct more contributions. Do not consider amounts deducted by previous employers during the same year unless there was a restructure or reorganization.
² Do not deduct CPP contributions when the employment is performed totally or partly outside of Canada.
³ Do not deduct income tax if you estimate that the total fee will not be more than the total claim amount on form TD1.
⁴ Determination to deduct CPP, EI, or both, depends on the status of a resident director’s employment. Do not deduct EI on the fees portion.
⁵ To determine if you have to deduct CPP, EI, or both, check government policies.
⁶ Do not deduct income tax on the amount of eligible retiring allowance that is transferred directly to the recipient’s RPP or RRSP (up to the amount of the employee’s available RRSP deduction limit).
⁷ An amount you pay in addition to an advance or loan is not a top-up amount if you pay it while waiting for a decision on a workers’ compensation board claim. This amount is considered as employment income.
