| Special Payments |
CPP Contributions1 |
EI Premiums1 |
Tax Deductions |
| 1. Bonuses and retroactive pay increases |
Yes |
Yes |
Yes |
| 2. Director’s fees paid to residents of Canada or to non-residents |
|
| + Fee only |
Yes2 |
No |
Yes3 |
| + Fee in addition to salary |
Yes/No4 |
Yes/No4 |
Yes |
| 3. Employees Profit Sharing Plan (EPSP) |
No |
No |
No |
| 4. Overtime pay, including banked overtime pay |
Yes |
Yes |
Yes |
| 5. Retirement Compensation Arrangements (RCA) |
No |
No |
Yes |
| 6. Retiring allowances (also called severance pay) |
No |
No |
Yes5 |
| 7. Retroactive lump-sum payments |
Yes |
Yes |
Yes |
| 8. Salary deferral arrangements on amounts earned |
Yes |
Yes |
Yes |
| 9. Prescribed plans or arrangements on amounts received |
Yes/No6 |
Yes/No6 |
Yes |
| 10. Vacation pay, public holidays, and lump-sum vacation payments |
Yes |
Yes |
Yes |
| 11. Wages in lieu of termination notice |
Yes |
Yes |
Yes |
| 12. Wage loss replacement plans |
|
| + Payments from uninsured plans |
Yes |
Yes |
Yes |
| + Payments from insured plans |
Yes |
Yes |
Yes |
| 13. Workers’ compensation awards |
|
| + Employee’s salary paid before or after a workers’ compensation board claim 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 |
Yes |
Yes7 |
Yes |
| + Top-up amounts paid after the claim is accepted |
Yes |
No |
Yes |
| + Top-up amounts paid as sick leave |
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 and you have obtained CRA approval to do so.
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 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).
⁶ To determine if you have to deduct CPP, EI, or both, check government policies.
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.
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