Lump sum tax calculations

A Lump Sum tax calculation may be used when issuing one time single payment amount to an employee. If payments are made on a more frequent basis or the annual income is expected to be larger than the allowable exemptions, the Bonus Tax Calculation should be considered. It will likely be more accurate at the end of the year. Examples of one-time payouts include:

  • Retiring Allowance
  • Payments made under RESP (Registered education savings plan)
  • Payments made under a pension plan or pooled RRPP
  • Death Benefit
  • Previous year salary adjustment
  • Deferred Profit Sharing payment

For a full list of payments eligible for lump sum taxation, please visit CRA and Revenu Quebec’s website.

Lump Sum Amount Tax Rates

The Dayforce Compliance Centre displays the rates for your convenience.

Note: Rates are subject to change. Please visit CRA and Revenu Quebec’s website to confirm current rates.

Important:
  • The Lump Sum Tax Calculation option does not take any pre-taxed (I.e. RRSP) deductions or taxable benefits into consideration before applying the tax.
  • If a lump sum payment is paid in installments, use the rate applicable for the grand total of the payout.
  • If multiple lump sum payments are paid in a calendar year, add the total of all lump sum payments together to determine the correct rate to use. Apply the tax rate applicable to the grand total.

Resources:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/spcl/lmpsm/menu-eng.html
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/spcl/lmpsm/wthhldng-eng.html http://www.revenuquebec.ca/en/entreprise/retenues/devez_vous/types_de_remunerations/paiements.aspx