Answers to your questions about Payroll
We are preparing to pay annual performance bonuses to our employees. Several employees have asked us not to withhold income tax because it is the end of the last year and they would like to pay any income tax required when filing their personal income tax return.
Can we do that?
Reply:
A bonus, as for any other employment income, is subject to all legal deductions (EI, QPP, QPIP, income tax) at the time of payment.
If an employee wishes to reduce his income tax at the source of any credit not available on TD1 or TP-1015.3, he may submit Form T1213 Source Tax Withholding Reduction Request for the year (s) years at his Canada Revenue Agency tax services office for approval Also TP-1016-Application for a reduction of Quebec income tax deductions to Revenu Quu00e9bec.
In the event of approval, the Canada Revenue Agency and Revenu Quu00e9bec will respectively send a letter authorizing the employer to reduce the tax withheld at source, according to a formula specified on the authorization form.
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