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Example 1 - First or once-a-year bonus payment

Donna earns a salary of $400 per week. In September, you gave her a bonus of $300. Her province of employment is British Columbia. The claim code that applies to her TD1 and TD1BC forms is "1".

Step 1: Divide the bonus by the number of pay periods in the year ($300 ÷ 52 = $5.77).

Step 2: Add the $5.77 to the current pay rate of $400. As a result, the adjusted pay rate for the year is $405.77 per week.

Step 3: In the T4032, Payroll Deductions Tables, see Part D, "Federal tax deductions," and Part E, "Provincial tax deductions." Turn to the "Weekly (52 pay periods)" table to find the increased weekly tax you should deduct on the additional $5.77 per week.

Calculate as follows:

Find the federal and provincial tax that you deduct on $405.77 per week.
Subtract the federal and provincial tax that you deduct on $400 per week.

The result is the tax you have to deduct on the additional $5.77 per week.

Step 4: Multiply the additional tax you deduct per week by 52 (the number of pay periods in the year). This gives you the amount of income tax to deduct from the bonus of $300.