Income Tax Regulations

103 (1) Where a payment in respect of a bonus or retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer (including the bonus or retroactive increase) may reasonably be expected not to exceed $5,000 in the taxation year of the employee in which the payment is made, the employer shall deduct or withhold, in the case of an employee who reports for work at an establishment of the employer

• (a) in any province, 10 per cent, or

• (b) in Canada beyond the limits of any province or outside Canada, 15 per cent,

• (c) to (n) [Repealed, SOR/2001-221, s. 3]

of such payment in lieu of the amount determined under section 102.

(2) Where a payment in respect of a bonus is made by an employer to an employee whose total remuneration from the employer (including the bonus) may reasonably be expected to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld therefrom by the employer is

• (a) the amount determined under section 102 in respect of an assumed remuneration equal to the aggregate of

  • (i) the amount of regular remuneration paid by the employer to the employee in the pay period in which the remuneration is paid, and

  • (ii) an amount equal to the bonus payment divided by the number of pay periods in the taxation year of the employee in which the payment is made

minus

• (b) the amount determined under section 102 in respect of the amount of regular remuneration paid by the employer to the employee in the pay period

multiplied by

• (c) the number of pay periods in the taxation year of the employee in which the payment is made.

(3) Where a payment in respect of a retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer (including the retroactive increase) may reasonably be expected to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld therefrom by the employer is

• (a) the amount determined under section 102 in respect of the new rate of remuneration

minus

• (b) the amount determined under section 102 in respect of the previous rate of remuneration

multiplied by

• (c) the number of pay periods in respect of which the increase in remuneration is retroactive.

(4) Subject to subsections (4.1) and (5), where a lump sum payment is made by an employer to an employee who is a resident of Canada,

• (a) if the payment does not exceed $5,000, the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

  • (i) in Quebec, 5 per cent,

  • (ii) in any other province, 7 per cent, or

  • (iii) in Canada beyond the limits of any province or outside Canada, 10 per cent,

  • (iv) to (xiv) [Repealed, SOR/2001-221, s. 3]

  of such payment in lieu of the amount determined under section 102;

• (b) if the payment exceeds $5,000 but does not exceed $15,000, the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

  • (i) in Quebec, 10 per cent,

  • (ii) in any other province, 13 per cent, or

  • (iii) in Canada beyond the limits of any province or outside Canada, 20 per cent,

  • (iv) to (xiv) [Repealed, SOR/2001-221, s. 3]

  of such payment in lieu of the amount determined under section 102; and

• (c) if the payment exceeds $15,000, the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

  • (i) in Quebec, 15 per cent,

  • (ii) in any other province, 20 per cent, or

  • (iii) in Canada beyond the limits of any province or outside Canada, 30 per cent,

  • (iv) to (xiv) [Repealed, SOR/2001-221, s. 3]

  of such payment in lieu of the amount determined under section 102.

(4.1) For the purposes of a lump sum payment described in paragraph (6)(h), subsection (4) is to be read without reference to its paragraphs (b) and (c) and the portion of subsection (4) before subparagraph (a)(i) is to be read as follows:

• (4) Where a lump sum payment is made by an employer to an employee,

  • (a) the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

(5) Where the payment referred to in subsection (4) would be pension income or qualified pension income of the employee in respect of which subsection 118(3) of the Act would apply if the definition pension income in subsection 118(7) of the Act were read without reference to subparagraphs (a)(ii) and (iii) thereof, the payment shall be deemed to be the amount of the payment minus

• (a) where the payment does not exceed the amount taxable referred to in paragraph 117(2)(a) of the Act, as adjusted annually pursuant to section 117.1 of the Act, the lesser of $1,000 and the amount of the payment;

• (b) where the payment exceeds the amount referred to in paragraph (a) but does not exceed $61,509, $727;

• (c) where the payment exceeds $61,509 but does not exceed $100,000, $615; and

• (d) where the payment exceeds $100,000, $552.

(6) For the purposes of subsection (4), a lump sum payment means a payment that is

• (a) a payment described in subparagraph 40(1)(a)(i) or (iii) or paragraph 40(1)(c) of the Income Tax Application Rules,

• (b) a payment under a deferred profit sharing plan or a plan referred to in section 147 of the Act as a revoked plan, except a payment referred to in subparagraph 147(2)(k)(v) of the Act,

• (c) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146(1) of the Act out of or under a registered retirement savings plan of that annuitant, other than

  • (i) a periodic annuity payment, or

  • (ii) a payment made by a person who has reasonable grounds to believe that the payment may be deducted under subsection 146(8.2) of the Act in computing the income of any taxpayer,

• (d) a payment out of or under a plan referred to in subsection 146(12) of the Act as an amended plan other than

  • (i) a periodic annuity payment, or

  • (ii) where paragraph 146(12)(a) of the Act applied to the plan after May 25, 1976, a payment made in a year subsequent to the year in which that paragraph applied to the plan,

• (d.1) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146.3(1) of the Act under a registered retirement income fund of that annuitant, other than a payment to the extent that it is in respect of the minimum amount (within the meaning assigned by subsection 146.3(1) of the Act) under the fund for a year,

• (e) a retiring allowance,

• (f) a payment of an amount as, on account or in lieu of payment of, or in satisfaction of, proceeds of the surrender, cancellation or redemption of an income-averaging annuity contract,

• (g) a payment described in paragraph (n) of the definition remuneration in subsection 100(1),

• (h) a payment made under the

  • (i) Canada Recovery Benefits Act, or

  • (ii) Canada Worker Lockdown Benefit Act, or

• (i) a payment described in paragraph 153(1)(v) of the Act.

(7) For the purposes of subsection 153(1) of the Act, the amount to be deducted or withheld by a person shall be 50 per cent

• (a) of the contribution made by the person under a retirement compensation arrangement, other than

  • (i) a contribution made by the person as an employee,

  • (ii) a contribution made to a plan or arrangement that is a prescribed plan or arrangement for the purposes of subsection 207.6(6) of the Act,

  • (iii) a contribution made by way of a transfer from another retirement compensation arrangement under circumstances in which subsection 207.6(7) of the Act applies, or

  • (iv) a contribution that is an excluded contribution (as defined in subsection 207.5(1) of the Act); or

• (b) of the payment by the person to a resident of Canada of an amount on account of the purchase price of an interest in a retirement compensation arrangement.

(8) Every employer making a payment described in paragraph (n) of the definition remuneration in subsection 100(1) shall withhold — in addition to any other amount required to be withheld under Part I of these Regulations — on account of the tax payable under Part X.5 of the Act, an amount equal to

• (a) where the amount is paid in the province of Quebec, 12 per cent of the payment, and

• (b) in any other case, 20 per cent of the payment.

(9) The amount to be deducted or withheld by a person from any payment of an amount described in paragraph 56(1)(z.4) of the Act is

• (a) in the case of a payment to a resident of Quebec, 30% of the payment; or

• (b) in the case of a payment to a resident of Canada who is not a resident of Quebec, 50% of the payment.