Vacation pay and public holidays

When you pay vacation pay, how you calculate deductions will depend on whether your employee takes holidays. When part of the pay period includes a public holiday (such as Christmas day) calculate deductions as you normally would.

Note

Vacation pay rates and paid statutory holidays vary from province to province.

The employee takes holidays

The following procedures apply when you pay vacation pay and your employee takes holidays.

Note

If your employee takes holidays but does not receive vacation pay at that time, see The employee does not take holidays.

CPP contributions

Deduct CPP contributions from vacation pay in the same way as you would from regular pay. Do not change the pay period table you would normally use. Do not deduct more than the maximum employee contribution for the year.

EI premiums

Deduct EI premiums from vacation pay in the same way as you would from regular pay. Do not deduct more than the maximum employee premium for the year.

Income tax

When you calculate the amount of income tax to deduct, use the tax table that applies to the period of vacation. For example, for one week of paid vacation, use the weekly tax deduction table. If your payroll is biweekly and the employee is paid one week of vacation pay and one week of regular pay, use the biweekly tables. If the employee is paid one week of vacation pay and the second week is unpaid, also use the biweekly tables.

The employee does not take holidays

The following procedures apply when you pay vacation pay and your employee does not take holidays.

CPP contributions

To deduct CPP contributions, use the bonus method. Do not deduct more than the maximum employee contribution for the year.

EI premiums

Deduct EI premiums from vacation pay in the same way as you would from regular pay. Do not deduct more than the maximum employee premium for the year.

Income tax

Use the bonus method.

Vacation pay trust

Include in the employee's income any contributions you make to a trust for vacation credits that an employee earns in the year. Deduct CPP/QPP contributions, EI/QPIP premiums, and income tax from this amount as if you had paid the amount directly to the employee.

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