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 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/NO⁶
Yes/NO⁶
Yes
Retroactive lump-sum payments
Yes
Yes
Yes
Retirement compensation arrangements (RCA)
No
No
Yes
Retiring allowances (also called severance pay)
No
No
Yes⁵
Salary deferral arrangements on amounts earned
Yes
Yes
Yes
Vacation pay, public holidays, and lump-sum vacation payments
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 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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