Special Payments

Special payments CPP Contributions1 EI Contributions1 Tax deductions
1.) Bonuses and retroactive pay increases Yes Yes Yes
2.) Director's fees paid to residents or non-residents      
- Fee Only Yes2 No Yes3
- Fee in addition to salary Yes/No4 Yes/No4 Yes
3.) Employees profit sharing plans (EPSP) No No No
4.) Overtime pay, including banked overtime payment Yes Yes Yes
5.) Prescribed plans or arrangements-on amounts received Yes/No6 Yes/No6 Yes
6.) Retroactive lump-sum payments Yes Yes Yes
7.) Retirement compensation arrangements (RCA) No No Yes
8.) Retiring allowances (also called severance pay) No No Yes5
9.) Salary deferral arrangements-on amounts received Yes Yes Yes
10.) Vacation pay, public holidays and lump-sum vacation payment Yes Yes Yes
11.) Wages in lieu of termination notice Yes Yes Yes
12.) Wage Loss Replacement Plans      
- Payments from uninsured plans Yes Yes Yes
- Payments from insured plans Yes Yes Yes
13.) 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 Yes7 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 from the employee’s income, do not deduct more contributions. Do not consider amounts deducted by previous employers during the same year unless there was a restructure or reorganization.

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

3Do not deduct income tax if you estimate that the total fee will not be more than the total claim amount on form TD1.

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

5Do not deduct income tax on the amount of eligible 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).

6To determine if you have to deduct CPP, EI, or both, check government policies.

7An 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.