Special Payments

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Special payments	CPP Contributions¹	EI Contributions¹	Tax deductions
1.) Advances	Yes	Yes	Yes
2.) Bonuses and retroactive pay increases	Yes	Yes	Yes
3.) Director's fees paid to residents or non-residents
- Fee Only	Yes²	No	Yes³
- Fee in addition to salary	Yes/No⁴	Yes/No⁴	Yes
4.) Employees profit sharing plans (EPSP)	No	No	No
5.) Overtime pay, including banked overtime payment	Yes	Yes	Yes
6.) Prescribed plans or arrangements-on amounts received	Yes/No⁵	Yes/No⁵	Yes
7.) Qualifying retroactive lump-sum payments⁶	Yes	Yes	Yes
8.) Retirement compensation arrangements (RCA)	No	No	Yes
9.) Retiring allowances (also called severance pay)	No	No	Yes⁷
10.) Salary deferral arrangements-on amounts received	Yes	Yes	Yes
11.) Vacation pay, public holidays and lump-sum vacation payment	Yes	Yes	Yes
12.) Wages in lieu of termination notice	Yes	Yes	Yes
13.) Wage Loss Replacement Plans
- paid by the employer	No	Yes	Yes
- paid by third party/trustee and the employer determines the eligibility of the benefits	No	Yes	Yes
- paid by third party/trustee and the employer does not determine the eligibility of the benefits	No	No	No⁸
14.) Worker's compensation awards
- Employee's salary paid before or after a worker's compensation board claims is decided	Yes	Yes	Yes
- Advances or loans equal to the workers' compensation award	No	No	No
- Amount paid in addition to an advance or loan before the claim is accepted	Yes	Yes⁹	Yes
- Top-up amounts paid after claim is accepted	Yes	No	Yes
- Top-up amounts paid as sick leave after the claim is accepted	Yes	No	Yes

¹If you have already deducted the total yearly maximum contributions for the employee's income, do not deduct more contributions. Do not consider amounts deducted by previous employers during the same year.

²Do not deduct CPP contributions when the employment is performed wholly or partly outside Canada.

³Do not deduct income tax if you pay only a director's fee, and you estimate that the total fee will not be more than the claim amount on Form TD1.

⁴Determination to deduct CPP, EI or both depends on the status of the resident director’s employment. Do not deduct EI on the fees portion.

⁵To determine if you have to deduct CPP, EI or both, see “Prescribed plans or arrangements”.

⁶Qualifying retroactive lump-sum payments may be subject to CPP and/or EI in addition to tax.

⁷Do not deduct income tax on the amount of retiring allowance that is transferred directly to the recipient’s RPP or RRSP (up to the amount of the employee’s available RRSP deduction limit).

⁸Although no withholding is required, the amounts are taxable and the third party/trustee must report the payments on a T4A slip.

⁹An amount you pay in addition to an advance or loan is not a top-up amount if you pay it while waiting for a decision on a workers’ compensation board claim. This amount is considered as employment income.