In certain situations, an employer may be paying an employee a larger than usual sum of money. The government has stipulated under which circumstances the employer can pay this out at a lower than usual tax rate. We've included below a list of the most common lump sum payments, with links to the CRA's website detailing what is permissible.
Taxes on lump sum payments are calculating using the following withholding rates:
|Lump Sum Payment Amount||All Provinces except Quebec||Quebec|
|Up to and including $5,000||10%||5%|
|Over $5,000 up to and including $15,000||20%||10%|
These rates are accurate for 2017. Look at current data on the CRA website by clicking this link.
Processing payroll with lump sum payments? Click here for information on how to over-ride taxes on the input sheet.