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Income Tax Regulations (C.R.C., c. 945)

Full Document:  

Regulations are current to 2022-11-16 and last amended on 2022-06-23. Previous Versions

PART ITax Deductions (continued)

Non-Periodic Payments

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    • (c) to (n) [Repealed, SOR/2001-221, s. 3]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

    • (h) a payment made under the

  • (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, or

      • (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

    • (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.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/78-2, s. 2
  • SOR/78-331, s. 3
  • SOR/78-449, s. 2
  • SOR/78-625, s. 2
  • SOR/79-359, s. 2
  • SOR/79-694, s. 2
  • SOR/80-382, s. 2
  • SOR/80-502, s. 2
  • SOR/80-683, s. 3
  • SOR/80-901, s. 2
  • SOR/80-941, s. 3
  • SOR/81-471, s. 4
  • SOR/83-349, s. 3
  • SOR/83-360, s. 1
  • SOR/83-692, s. 5
  • SOR/84-223, s. 1
  • SOR/84-913, s. 2
  • SOR/85-979, s. 1
  • SOR/86-629, s. 3
  • SOR/87-256, s. 1
  • SOR/87-471, s. 3
  • SOR/87-638, s. 2
  • SOR/88-153, s. 1
  • SOR/88-310, s. 2
  • SOR/89-147, s. 2
  • SOR/89-508, s. 3
  • SOR/90-161, s. 2
  • SOR/91-150, s. 2
  • SOR/91-279, s. 2
  • SOR/91-536, s. 2
  • SOR/92-51, s. 2
  • SOR/92-138, s. 2
  • SOR/92-667, s. 2
  • SOR/93-399, s. 1
  • SOR/94-238, s. 3
  • SOR/94-569, s. 2
  • SOR/94-686, s. 48
  • SOR/96-205, s. 1
  • SOR/96-464, s. 1
  • SOR/97-137, s. 1
  • SOR/97-531, s. 1
  • SOR/99-17, s. 3
  • SOR/99-18, s. 1
  • SOR/99-22, s. 2
  • SOR/2000-10, s. 1
  • SOR/2000-12, s. 1
  • SOR/2000-329, s. 1
  • SOR/2001-216, s. 10(F)
  • SOR/2001-221, s. 3
  • 2014, c. 20, s. 32
  • 2020, c. 12, s. 2 “44”
  • 2021, c. 26, s. 8
  •  (1) For the purpose of the description of C in subsection (2), plan payment means

    • (a) in the case of a disability assistance payment that is a lifetime disability assistance payment, the total amount of all the lifetime disability assistance payments that have been made or that may reasonably be expected to be made to the employee under the plan in their taxation year and that the employer has reasonable grounds to believe are described in paragraph (o) of the definition remuneration in subsection 100(1); or

    • (b) in the case of a disability assistance payment that is other than a lifetime disability assistance payment, the amount of the payment that is made to the employee under the plan and that is described in paragraph (o) of the definition remuneration in subsection 100(1).

  • (2) If an employer makes a disability assistance payment under a registered disability savings plan to an employee who is a resident of Canada, the employer shall, in lieu of the amount determined under section 102, deduct or withhold from the payment an amount determined by the formula

    (A – B) × C

    where

    A
    is the amount of the disability assistance payment that is made to the employee and that is described in paragraph (o) of the definition remuneration in subsection 100(1);
    B
    is
    • (a) if the beneficiary of the plan is deceased, nil, or

    • (b) the amount by which the total of the following amounts exceeds the total amount of all the disability assistance payments previously made to the employee in their taxation year and that are described in paragraph (o) of the definition remuneration in subsection 100(1):

      • (i) the amount determined for F in subsection 118(1.1) of the Act for the taxation year, and

      • (ii) the amount used under the description of B in subsection 118.3(1) of the Act for the taxation year; and

    C
    is
    • (a) if the plan payment does not exceed $5,000 and the amount is paid

      • (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,

    • (b) if the plan payment exceeds $5,000 but does not exceed $15,000 and the amount is paid

      • (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, or

    • (c) if the plan payment exceeds $15,000 and the amount is paid

      • (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.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/2016-30, s. 2
  • 2021, c. 23, s. 82

Deductions not Required

  •  (1) [Repealed, SOR/2001-221, s. 4]

  • (2) No amount shall be deducted or withheld from a payment in accordance with any of sections 102 to 103.1 in respect of an employee who was neither employed nor resident in Canada at the time of payment except in respect of

    • (a) remuneration described in subparagraph 115(2)(e)(i) of the Act that is paid to a non-resident person who has in the year, or had in any previous year, ceased to be resident in Canada; or

    • (b) remuneration reasonably attributable to the duties of any office or employment performed or to be performed in Canada by the non-resident person.

  • (3) No amount shall be deducted or withheld from a payment made by a person during the lifetime of an annuitant referred to in paragraph (a) of the definition annuitant in subsection 146(1) of the Act out of or under a registered retirement savings plan of the annuitant where, at the time of the payment, the annuitant has certified in prescribed form to the person that

    • (a) a written agreement has been entered into to acquire a home by either

      • (i) the annuitant, or

      • (ii) a disabled person who is related to the annuitant and who is entitled to the credit for mental or physical impairment under subsection 118.3(1) of the Act;

    • (b) the annuitant intends that the home be used as a principal place of residence in Canada for the annuitant or the disabled person, as the case may be, within one year after its acquisition;

    • (c) the home has not been previously owned by the annuitant, the annuitant’s spouse or common-law partner, the disabled person or the spouse or common-law partner of that person;

    • (d) the annuitant was resident in Canada;

    • (e) the total amount of the payment and all other such payments received by the annuitant in respect of the home at or before the time of the payment does not exceed the dollar amount specified in paragraph (h) of the definition regular eligible amount in subsection 146.01(1) of the Act;

    • (f) except where the annuitant certifies that he or she is a disabled person entitled to the credit for mental or physical impairment under subsection 118.3(1) of the Act or certifies that the payment is being withdrawn for the benefit of such a disabled person, the annuitant is a qualifying homebuyer at the time of the certification; and

    • (g) where the annuitant has withdrawn an eligible amount, within the meaning assigned by subsection 146.01(1) of the Act, before the calendar year of the certification, the total of all eligible amounts received by the annuitant before that calendar year does not exceed the total of all amounts previously designated under subsection 146.01(3) of the Act or included in computing the annuitant’s income under subsection 146.01(4) or (5) of the Act.

  • (3.01) For the purpose of subsection (3), the annuitant is a qualifying homebuyer at a particular time unless

    • (a) the annuitant had an owner-occupied home in the period beginning on January 1 of the fourth calendar year preceding the particular time, and ending on the thirty-first day before the particular time; or

    • (b) the annuitant’s spouse or common-law partner, in the period referred to in paragraph (a), had an owner-occupied home that was inhabited by the annuitant at any time during the annuitant’s marriage to the spouse or the annuitant’s common-law partnership with the common-law partner.

  • (3.1) For the purpose of subsection (3.01), an individual shall be considered to have had an owner-occupied home at any time where the home was owned, whether jointly with another person or otherwise, by the individual at that time and inhabited by the individual as the individual’s principal place of residence at that time.

  • (4) For the purposes of subsections (3), (3.01) and (3.1), home means

    • (a) a housing unit;

    • (b) a share of the capital stock of a cooperative housing corporation, where the holder of the share is entitled to possession of a housing unit; and

    • (c) where the context so requires, the housing unit to which a share described in paragraph (b) relates.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/78-449, s. 3
  • SOR/78-754, s. 1
  • SOR/89-508, s. 4
  • SOR/92-176, s. 1
  • SOR/92-667, s. 3
  • SOR/93-81, s. 1
  • SOR/94-238, s. 4
  • SOR/94-246, s. 1
  • SOR/94-686, ss. 49(F), 79(F)
  • SOR/97-470, s. 2
  • SOR/99-19, s. 1
  • SOR/2001-188, ss. 1, 14
  • SOR/2001-221, s. 4
  • 2013, c. 34, s. 376
  • SOR/2016-30, s. 3
 
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