Withholding rates for lump-sum payments
Combine all lump-sum payments that have been or are expected to be paid in the calendar year when determining the composite rate to use.
Use these federal and provincial or territorial composite rates:
- 10% (5% for Quebec) on amounts up to and including $5,000;
- 20% (10% for Quebec) on amounts over $5,000 up to and including $15,000; and
- 30% (15% for Quebec) on amounts over $15,000.
Recipients and employees may have to pay additional tax on these amounts when they file their returns. To avoid this, if a recipient or an employee requests it, you can deduct more tax:
- calculate the annual tax to deduct from the recipient's or the employee's yearly remuneration, including the lump-sum payment (see "Step by step calculation of tax deductions" in Part A of the T4032, Payroll Deductions Tables);
- calculate the annual tax to deduct from the recipient's or the employee's yearly remuneration, not including the lump-sum payment; and
- subtract the second amount from the first amount.
The result is the amount you deduct from the lump-sum payment, if the recipient requests it.
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