Payroll Deductions Formulas for Computer Programs

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					                    Payroll Deductions
                         Formulas for
                   Computer Programs

                                 91st Edition
                    Effective January 1, 2010




T4127(E) Rev. 10
 Distribution of this publication
The printing of this guide has been discontinued. This decision reflected minimal requests in
recent years for a printed guide in favour of the electronic version. It also has resulted in cost
savings and benefits to the environment. The T4127 will still be available on our website at which
time you may print the document or download it to your personal computer.
Payroll deductions information is available on the Canada Revenue Agency (CRA)
Web site at www.cra.gc.ca/payroll.



 Electronic mailing lists – More ways to serve you!
If your business has access to the Internet, the CRA can now notify you immediately of any
changes. To get quick and easy access to the CRA’s latest information and new publications
including changes to payroll deductions, you can subscribe free of charge to any of the electronic
mailing lists. The CRA will add more electronic mailing lists to its Web site in the future.
To subscribe, visit the CRA web site at www.cra.gc.ca/lists. The CRA will send a reply asking
you to confirm the enrolment of your business. Once you have subscribed, you will get an email
whenever there is new information. It’s that simple!
More information on this convenient, free electronic subscription service is available at:
www.cra.gc.ca/lists.




                                          www.cra.gc.ca
  Table of Contents
                                                                                                                                             Page
What does this publication contain?............................................................................................5
Employers who have an establishment in the province of Quebec..................................................5
What’s new for January 1, 2010? ..................................................................................................5
Tax measures for 2010.....................................................................................................................5
Federal changes included in this edition .....................................................................................5
Indexing for 2010 ..............................................................................................................................5
Federal tax rates and income thresholds .........................................................................................6
Federal personal amounts for 2010..................................................................................................6
Canada Employment Credit for 2010 ...............................................................................................6
Federal labour-sponsored funds tax credit for 2010.........................................................................7
Federal surtax for income not earned in a province or territory .......................................................7
Tax relief for Canadian Forces and police........................................................................................7
Canada Pension Plan (CPP) for 2010 ...........................................................................................7
Employment Insurance (EI) for 2010 ............................................................................................7
Provincial and territorial tax changes effective January 1, 2010...............................................8
1. Alberta ..........................................................................................................................................8
2. British Columbia............................................................................................................................8
3. Manitoba .......................................................................................................................................9
4. New Brunswick .............................................................................................................................9
5. Newfoundland and Labrador ......................................................................................................10
6. Northwest Territories ..................................................................................................................10
7. Nova Scotia ................................................................................................................................10
8. Nunavut ......................................................................................................................................11
9. Ontario ........................................................................................................................................11
10. Prince Edward Island................................................................................................................13
11. Quebec .....................................................................................................................................13
12. Saskatchewan ..........................................................................................................................13
13. Yukon........................................................................................................................................13
Personal tax credits return (TD1 forms).....................................................................................15
Federal Form TD1, 2010 Personal Tax Credits Return..................................................................15
Indexing of personal amounts ........................................................................................................15
Provincial and territorial TD1 forms ................................................................................................15
Claim codes...................................................................................................................................16
Basic personal amounts and employment income from all sources ..............................................16
Federal, provincial, and territorial claim codes ...............................................................................16
Tax deductions from commission income ................................................................................21
Form TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions .........21
Remitting and reporting federal and provincial or territorial tax deductions ........................21
Payroll remittances (Form PD7A, Statement of Account for Current Source Deductions) ............21
Pay statements and T4 slips, Statement of Remuneration Paid....................................................21
Letters of authority ..........................................................................................................................21
General information .....................................................................................................................22
Rounding procedures .....................................................................................................................22
Mathematical symbol definition ......................................................................................................22
Tax deductions comparison............................................................................................................22
Validating the Business Number (BN) ............................................................................................25
Part A – Formulas to determine tax deductions on salary, wages, taxable benefits,
  pension income, commissions, and other non-periodic payments ...................................25
Option 1 – General tax formula ......................................................................................................25
  Outline of Option 1 .....................................................................................................................25

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Glossary..........................................................................................................................................26
Formula to calculate annual taxable income (A) ............................................................................27
Formula to calculate basic federal tax (T3).....................................................................................29
Formula to calculate the annual federal tax payable (T1) ..............................................................31
Tax calculation formula for bonuses, retroactive pay increases, or other non-periodic
  payments ....................................................................................................................................32
Formula to calculate annual basic provincial or territorial tax (T4) .................................................34
Formulas to calculate annual provincial or territorial tax deduction (T2) ........................................34
Formula to calculate the tax deductions (T) for the pay period ......................................................44
Option 1 – Tax calculation examples for periodic payments ..........................................................45
  Example – Assumptions and federal calculation .......................................................................45
  Testing Results – Example ........................................................................................................55
  Example for employees remunerated by commission only........................................................56
  Example for employees in the hotel and restaurant business in Quebec..................................58
Option 2 – Tax formula based on cumulative averaging ................................................................60
  Calculation of income .................................................................................................................60
  Calculation of tax for the pay period...........................................................................................60
  Special situations .......................................................................................................................60
  Formula to calculate annual taxable income (A) ........................................................................61
  Formula to calculate basic federal tax (T3) ................................................................................62
  Formula to calculate the federal tax payable (T1) ......................................................................63
  Formula to calculate provincial and territorial tax payable (T2)..................................................64
  Formula to calculate tax deductions (T) for the pay period........................................................64
Option 2 – Step-by-step example when calculating tax deductions separately on periodic
  and non-periodic payments ........................................................................................................65
  Step 1 – Calculation of annual tax on year to date income including B1 and B.........................65
  Step 2 – Calculation of annual tax on year to date income including B1 only ...........................66
  Step 3 – Calculation of tax deduction on current periodic payment (T) .....................................67
  Step 4 – Calculation of tax deduction on current bonus payment (TB) .....................................67
Option 2 – Examples when calculating the tax deductions on salary and non-periodic
  payments separately ..................................................................................................................67
Part B – Canada Pension Plan (CPP) .........................................................................................83
Employee and employer CPP contributions for 2010.....................................................................83
Formula to determine CPP contributions for employees receiving salary or wages......................83
Formula to determine CPP contributions for employees remunerated by commission only..........83
Year-end calculation of deductions for employee’s Canada Pension Plan (CPP)
  contributions ...............................................................................................................................85
Employee’s CPP basic exemption for various pay periods for 2010..............................................86
Part C – Employment Insurance (EI) ..........................................................................................87
Employee and employer EI premiums for 2010 .............................................................................87
Formula to calculate the EI premiums for 2010..............................................................................87
Year-end calculation of deductions for employee’s Employment Insurance premiums.................88
Part D – Summary Sheet ..............................................................................................................89




La version française de cette publication est intitulée Formules pour le calcul informatisé des
                         e
retenues sur la paie – 91 édition.




4                                                             www.cra.gc.ca
 What does this publication contain?
This publication contains the formulas you need to determine federal, provincial (except Quebec),
and territorial income taxes, Canada Pension Plan (CPP) contributions, and Employment
Insurance (EI) premium deductions. The formulas also allow you to calculate payroll deductions
for special cases such as commission, pension income, bonuses, and retroactive pay increases.
The formulas used in this publication to calculate statutory deductions have been approved for
purposes of the Income Tax Act, Canada Pension Plan, and Employment Insurance Act as well
as their related regulations and any amendments proposed to these acts. The formulas are valid
unless any adjustments are required because of changes to income tax rates, personal tax
credits, Canada Pension Plan pensionable earnings, contributions, or rate, or to Employment
Insurance insurable earnings, premiums, or rate.
For more information on income amounts that are subject to payroll deductions, see
the employers’ guide called Payroll Deductions and Remittances. If you have any questions about
the formulas contained in this publication, contact your tax services office or tax centre.
For the addresses and telephone numbers of your tax services office or tax centre, see
the listings in the government section of your telephone book.

Employers who have an establishment in the province of Quebec
When we refer to the annual provincial or territorial tax deduction, factor (T2) in this publication,
this item does not apply to the province of Quebec. Quebec administers its own provincial
income tax and Quebec Pension Plan contributions. If you have any questions about the formulas
for Quebec, contact the Ministère du Revenu du Québec, at the following address:
  Ministère du Revenu du Québec
  3800 Marly Street
  Ste-Foy QC G1X 4A5
  Telephone:.........................1-800-567-4692
  Outside Canada: ...............1-418-659-4692



 What’s new for January 1, 2010?
The information contained in this 91st edition publication is effective January 1, 2010. It replaces
the 90th edition of the Payroll Deductions Formulas for Computer Programs. Significant changes
to the formulas and text in this publication appear with a shaded background.

Tax measures for 2010
This publication reflects some income tax changes recently announced which, if enacted by the
applicable legislature as proposed, would be effective January 1, 2010. At the time of publishing,
these proposed changes had not been legislated. We recommend that you use the new payroll
deductions tables and formulas in this publication for withholding, commencing with your first
payroll in 2010.



 Federal changes included in this edition
Indexing for 2010
The income tax thresholds and many of the personal amounts on the federal Form TD1, Personal
Tax Credits Return, are indexed for 2010. Indexing means that these values are adjusted based
on changes to the Consumer Price Index (CPI) factor. The federal indexing factor for 2010
is 0.6%. To calculate the indexed income thresholds and personal amounts for 2010, multiply the
appropriate federal amounts by 1.006. For more information on indexing, see page 15.



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Federal tax rates and income thresholds
Effective January 1, 2010, the federal tax rates are not changed. The income thresholds are
revised as follows:
    15% on income less than or equal to $40,970 (formerly $41,200);
    22% on income greater than $40,970, but less than or equal to $81,941 (formerly $82,399);
    26% on income greater than $81,941, but less than or equal to $127,021 (formerly $126,264);
     and
    29% on income greater than $127,021 (formerly $126,264).
The lowest tax rate used to calculate the federal non-refundable tax credits (factors K1, K2
and K4) remains unchanged at 15%.

                                   2010 federal tax rates and income thresholds

                        Annual taxable income A                                   Rate                 Constant
                        More than – Not more than                                  R                      K

                              $           0 – $ 40,970                             0.15                 $        0
                                  40,970 –          81,941                         0.22                   2,868
                                  81,941 – 127,021                                 0.26                   6,146
                                127,021 – and over                                 0.29                   9,956


Federal personal amounts for 2010
For 2010, some federal personal amounts are increased due to federal indexing. The 2010
federal indexing factor is 0.6%. Review the federal Form TD1 for complete information on all
personal amounts for 2010.

 Basic personal amount ............................................................................................... $10,382
 Child Amount...............................................................................................................    2,101
 Age amount.................................................................................................................    6,446
 Pension income amount .............................................................................................            2,000
 Education and textbook amount for each month (full-time) ........................................                               465
 Education and textbook amount for each month (part-time) ......................................                                 140
 Disability amount.........................................................................................................     7,239
 Spouse or common-law partner amount.....................................................................                      10,382
 Amount for an eligible dependant ...............................................................................              10,382
 Caregiver amount........................................................................................................       4,223
 Amount for an infirm dependant age 18 or older ........................................................                        4,223

For additional information, see the section called “Personal tax credits return (TD1 forms)”
on page 15.

Canada Employment Credit for 2010
The Canada Employment Credit (factor K4) is revised to the lesser of:
             (i) 0.15 × A; and
             (ii) 0.15 × $1,051
             Note
             For purposes of the Canada Employment Credit, A is the annual gross income from
             office or employment before deductions. This is the same amount you normally report in
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         box 14 of the T4 slip(s). As administrative relief, you are authorized to use the regular
         factor A (annual taxable income) for this calculation, except when the total income is
         superannuation or pension benefits.

Federal labour-sponsored funds tax credit for 2010
The federal labour-sponsored funds tax credit (factor LCF) for 2010 remains the lesser of $750
and 15% of the approved shares purchase.

Federal surtax for income not earned in a province or territory
The federal surtax rate for income, which is considered to be earned in Canada but not
considered to be earned in a province or territory, remains at 48%. This federal surtax applies to
deemed residents of Canada such as members of the Canadian Armed Forces who reside
outside Canada, Canadian residents with income from a permanent establishment in a foreign
country, and non-residents who have employment income taxable in Canada.

Tax relief for Canadian Forces and police
There is tax relief in the calculation of taxable income for certain members of the Canadian
Forces and police serving in high- and moderate-risk areas. This tax relief applies only to military
and police personnel. Since this change involves only governmental employers, the details have
not been included in this publication.


 Canada Pension Plan (CPP) for 2010
For 2010, the Canada Pension Plan maximum pensionable earnings are $47,200, and the basic
exemption for the year is $3,500. The contribution rate for employees is 4.95%.
An employee’s maximum contribution for the year is $2,163.15. The employer’s contribution is an
amount equal to the total of the employee’s contribution.
For insurance companies that need the year’s maximum pensionable earnings before rounding,
the amount for this year is $47,290.90.


 Employment Insurance (EI) for 2010
For 2010, the maximum annual insurable earnings are $43,200 and the premium rate is 1.73%
for a maximum annual premium of $747.36 for the country except for Quebec and 1.36% for
a maximum annual premium of $587.52 for Quebec. For 2010, the maximum earnings for the
Quebec Parental Insurance Plan (QPIP) are $62,500 with a rate of 0.506% for a maximum
annual premium of $316.25.
On March 1, 2005, the Quebec government and the federal government signed a final agreement
fixing the terms and conditions for implementing the Quebec Parental Insurance Plan (QPIP).
The Canada Revenue Agency (CRA) administers the requirements relating to Employment
Insurance (EI) premiums. The QPIP references in this publication are only for clarifying
EI requirements. All QPIP requirements should be confirmed with Revenu Québec, which
administers the provincial plan.
Employers will use the EI rate corresponding to the province of employment. A reduced EI rate
applies when the province of employment is Quebec and the regular EI rate applies when the
province of employment is other than Quebec. Quebec Parental Insurance Plan premiums,
insurable earnings, and exempt code if applicable will be reported on the T4 slip.
Generally speaking, if the remuneration is subject to EI premiums then it is also subject to
QPIP premiums. But there are exceptions where the remuneration is not insurable under the
Employment Insurance Act but still subject to QPIP premiums. If you are unsure if the
remuneration is one of these special cases then please consult with the Ministère du Revenu
du Quebec for a complete listing of remuneration that is subject to QPIP premiums.


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When an employee changes province of employment with the same employer during the year,
the maximum premium for the year will vary based on the province where the first $43,200
of insurable earnings are paid.
Example:
An employee makes $30,000 of insurable earnings in Ontario and changes his province
of employment to Quebec and makes an additional $40,000 with the same employer.
The employee's maximum premium is calculated as follows:
In Ontario:        $30,000         ×     1.73%      =     $519.00
In Quebec:         $13,200         ×     1.36%      =     $179.52
Totals:            $43,200                          =     $698.52
Canada Revenue Agency and Revenu Québec will reconcile adjustments to EI and QPIP
premiums for trans-border employees. It is anticipated that adjustments between the EI and
QPIP deductions will be resolved through the filing of the income tax return and an annual
year-end adjustment process.
As an employer, your contribution is 1.4 times the amount of the employee’s premiums for the
pay period, unless a reduced rate applies.


    Provincial and territorial tax changes effective
    January 1, 2010

1. Alberta
The provincial tax rate applicable to all taxable income for Alberta, remains at 10%.
Personal amounts have been indexed. The provincial indexing factor for 2010 is 0.3%.
To calculate the indexed amounts, multiply the appropriate personal amounts by 1.003. For more
information on indexing, see page 15.
Listed below are some of the revised non-refundable personal tax credits amounts for the
province of Alberta. Refer to Form TD1AB for complete information on personal amounts.
    The basic personal amount is revised to $16,825 (formerly $16,775).
    The spouse or common-law partner amount is revised to $16,825 (formerly $16,775).
Personal amounts will be multiplied by the province’s tax rate of 10%.

2. British Columbia
Effective January 1, 2010, the provincial tax rates for British Columbia are not changed.
The income thresholds, personal amounts and tax reduction values are indexed. The provincial
indexing factor for 2010 is 0.4%. To calculate the indexed amounts, multiply the provincial income
thresholds, appropriate personal amounts and tax reduction values by 1.004. For more
information on indexing, see page 15.
Effective January 1, 2010, the income thresholds for British Columbia are revised as follows:
    5.06% on income less than or equal to $35,859 (formerly $35,716);
    7.7% on income greater than $35,859, but less than or equal to $71,719 (formerly $71,433);
    10.50% on income greater than $71,719, but less than or equal to $82,342 (formerly $82,014);
    12.29% on income greater than $82,342, but less than or equal to $99,987 (formerly $99,588);
     and
    14.7% on income greater than $99,987.




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In its Budget Update 2009, the government of British Columbia announced an increase to the
basic personal amount and the spouse or common-law partner amount for 2010. Listed below are
some of the revised non-refundable personal tax credits amounts for the province of
British Columbia. Refer to Form TD1BC for complete information on personal amounts.
  The basic personal amount is revised to $11,000 (formerly $9,373).
  The spouse or common-law partner amount is revised to $9,653 (formerly $8,026).
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 5.06%.
The provincial labour-sponsored funds tax credit (factor LCP) for British Columbia remains the
lesser of $2,000 and 15% of the approved shares purchase.
Provincial tax reduction for British Columbia
The provincial tax reduction for British Columbia is indexed and is calculated as follows:
  Where net income is less than or equal to $17,354 (formerly $17,285), the reduction is equal to
   the lesser of (i) basic provincial tax, and (ii) $390 (formerly $389);
  Where net income is greater than $17,354 and less than or equal to $29,541.50 (formerly
   $29,441.25), the reduction is equal to the lesser of (i) basic provincial tax, and
   (ii) $390 – [(Annual net income – $17,354) × 3.2%];
  Where net income is greater than $29,541.50, the reduction is equal to $0.

3. Manitoba
The provincial tax rates and income thresholds for Manitoba remain as follows:
  10.8% on income less than or equal to $31,000;
  12.75% on income greater than $31,000, but less than or equal to $67,000; and
  17.4% on income greater than $67,000.
Listed below are some of the non-refundable personal tax credits amounts for the province of
Manitoba. Refer to Form TD1MB for complete information on personal amounts.
  The basic personal amount remains at $8,134.
  The spouse or common-law partner amount remains at $8,134.
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 10.8%.
The provincial labour-sponsored funds tax credit (factor LCP) for Manitoba remains the lesser
of $1,800 and 15% of the approved shares purchase.

4. New Brunswick
The income thresholds and personal amounts are indexed. The provincial indexing factor for
2010 is 2.0%. To calculate the indexed amounts, multiply the provincial income thresholds and
appropriate personal amounts by 1.020. For more information on indexing, see page 15.
Effective January 1, 2010, the income thresholds and provincial tax rates for New Brunswick are
revised as follows:
  9.3% (formerly 9.18%) on income less than or equal to $36,421 (formerly $35,707);
  12.5% (formerly 13.52%) on income greater than $36,421, but less than or equal to $72,843
   (formerly $71,415);
  13.3% (formerly 15.20%) on income greater than $72,843, but less than or equal to $118,427
   (formerly $116,105); and
  14.3% (formerly 16.05%) on income greater than $118,427.
Listed below are some of the non-refundable personal tax credits amounts for the province of
New Brunswick. Refer to Form TD1NB for complete information on personal amounts.
  The basic personal amount is revised to $8,777 (formerly $8,605).
  The spouse or common-law partner amount is revised to $7,453 (formerly $7,307).
                                          www.cra.gc.ca                                           9
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 9.3%.
The provincial labour-sponsored funds tax credit (factor LCP) for New Brunswick remains the
lesser of $2,000 and 20% of the approved shares purchase.

5. Newfoundland and Labrador
The provincial indexing factor for 2010 is 0.7%. To calculate the indexed amounts, multiply the
provincial income thresholds and appropriate personal amounts by 1.007. For more information
on indexing, see page 15.
Effective January 1, 2010, the provincial tax rates for Newfoundland and Labrador are not
changed. The income thresholds for Newfoundland and Labrador are revised as follows:
     7.7% on income less than or equal to $31,278 (formerly $31,061);
     12.8% on income greater than $31,278, but less than or equal to $62,556 (formerly $62,121);
      and
     15.5% on income greater than $62,556.
Listed below are some of the non-refundable personal tax credits amounts for the province of
Newfoundland and Labrador. Refer to Form TD1NL for complete information on personal
amounts.
     The basic personal amount is revised to $7,833 (formerly $7,778).
     The spouse or common-law partner amount is revised to $6,400 (formerly $6,356).
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 7.7%.
The provincial labour-sponsored funds tax credit (factor LCP) for Newfoundland and Labrador
remains the lesser of $2,000 and 20% of the approved shares purchase.

6. Northwest Territories
Effective January 1, 2010, the territorial tax rates for Northwest Territories are not changed.
The income thresholds and personal amounts are indexed. The indexing factor for 2010 is 0.6%.
To calculate the indexed amounts, multiply the territorial income thresholds and appropriate
personal amounts by 1.006. For more information on indexing, see page 15.
The income thresholds are revised as follows:
     5.9% on income less than or equal to $37,106 (formerly $36,885);
     8.6% on income greater than $37,106, but less than or equal to $74,214 (formerly $73,772);
     12.2% on income greater than $74,214, but less than or equal to $120,656
      (formerly $119,936); and
     14.05% on income greater than $120,656.
Listed below are some of the revised non-refundable personal tax credits amounts for
Northwest Territories. Refer to Form TD1NT for complete information on personal amounts.
     The basic personal amount is revised to $12,740 (formerly $12,664).
     The spouse or common-law partner amount is revised to $12,740 (formerly $12,664).
Personal amounts will be multiplied by the territory’s lowest non-zero tax rate of 5.9%.
The territorial labour-sponsored funds tax credit (factor LCP) for Northwest Territories remains
equal to 15% of the first $5,000 invested plus 30% of the remainder of the approved shares
purchase, with a maximum credit of $29,250 (the maximum approved shares purchase for
purposes of the credit is $100,000.)

7. Nova Scotia
The provincial tax rates and income thresholds for Nova Scotia remain as follows:
     8.79% on income less than or equal to $29,590;

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  14.95% on income greater than $29,590, but less than or equal to $59,180;
  16.67% on income greater than $59,180, but less than or equal to $93,000; and
  17.50% on income greater than $93,000.
The government of Nova Scotia introduced an increase of $250 to the basic personal amount
for 2010 and a proportional change to the other personal amounts. Listed below are some of
the non-refundable personal tax credits amounts for the province of Nova Scotia. Refer to
Form TD1NS for complete information on personal amounts.
  The basic personal amount is revised to $8,231 (formerly $7,981).
  The spouse or common-law partner amount is revised to $6,989 (formerly $6,778).
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 8.79%.
The provincial surtax payable for Nova Scotia remains as follows:
  Where the basic provincial tax payable (T4) is less than or equal to $10,000, the surtax
   payable (V1) is $0.
  Where the basic provincial tax payable (T4) is greater than $10,000, the surtax payable (V1)
   is 10% of the basic provincial tax payable in excess of $10,000.
The provincial labour-sponsored funds tax credit (factor LCP) for Nova Scotia remains the lesser
of $2,000 and 20% of the approved shares purchase.

8. Nunavut
Effective January 1, 2010, the territorial tax rates for Nunavut are not changed.
The income thresholds and personal amounts are indexed. The indexing factor for 2010 is 0.6%.
To calculate the indexed amounts, multiply the territorial income thresholds and appropriate
personal amounts by 1.006. For more information on indexing, see page 15.
The income thresholds are revised as follows:
  4% on income less than or equal to $39,065 (formerly $38,832);
  7% on income greater than $39,065, but less than or equal to $78,130 (formerly $77,664);
  9% on income greater than $78,130, but less than or equal to $127,021 (formerly $126,264);
   and
  11.5% on income greater than $127,021.
Listed below are some of the revised non-refundable personal tax credits amounts for Nunavut.
Refer to Form TD1NU for complete information on personal amounts.
  The basic personal amount is revised to $11,714 (formerly $11,644).
  The spouse or common-law partner amount is revised to $11,714 (formerly $11,644).
Personal amounts will be multiplied by the territory’s lowest non-zero tax rate of 4%.

9. Ontario
The income thresholds and personal amounts have been indexed. The provincial indexing factor
for 2010 is 0.7%. To calculate the indexed amounts, multiply the provincial income thresholds and
appropriate personal amounts by 1.007. For more information on indexing, see page 15.
Effective January 1, 2010, the provincial tax rates and income thresholds for Ontario are revised
as follows:
  5.05% (formerly 6.05%) on income less than or equal to $37,106 (formerly $36,848);
  9.15% on income greater than $37,106, but less than or equal to $74,214 (formerly $73,698);
   and
  11.16% on income greater than $74,214.
Listed below are some of the revised non-refundable personal tax credits amounts for the
province of Ontario. Refer to Form TD1ON for complete information on personal amounts.
                                          www.cra.gc.ca                                          11
     The basic personal amount is revised to $8,943 (formerly $8,881).
     The spouse or common-law partner amount is revised to $7,594 (formerly $7,541).
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 5.05% (formerly
6.05%).
The Ontario provincial surtax thresholds for 2010 are revised as follows:
     Where the basic provincial tax payable (T4) is less than or equal to $3,978 (formerly $4,257),
      the surtax payable (V1) is $0.
     Where the basic provincial tax payable (T4) is greater than $3,978 and less than or equal
      to $5,091 (formerly $5,370), the surtax payable (V1) is 20% of the basic provincial tax
      payable in excess of $3,978.
     Where the basic provincial tax payable (T4) is greater than $5,091, the surtax payable (V1) is
      the total of 20% of the basic provincial tax payable in excess of $3,978 and 36% of the basic
      provincial tax payable in excess of $5,091.
The provincial labour-sponsored funds tax credit (factor LCP) for Ontario is revised to the lesser
of $750 (formerly $1,125) and 10% (formerly 15%) of the approved shares purchase.
The Ontario Health Premium (OHP) is payable on annual taxable income in excess of $20,000. It
is designated by factor, V2. The OHP remains as follows:
     Where taxable income is less than or equal to $20,000, the premium is $0;
     Where taxable income is greater than $20,000 and less than or equal to $36,000, the premium
      is equal to the lesser of (i) $300, and (ii) 6% of taxable income greater than $20,000;
     Where taxable income is greater than $36,000 and less than or equal to $48,000, the premium
      is equal to the lesser of (i) $450, and (ii) $300 plus 6% of taxable income greater than
      $36,000;
     Where taxable income is greater than $48,000 and less than or equal to $72,000, the premium
      is equal to the lesser of (i) $600, and (ii) $450 plus 25% of taxable income greater
      than $48,000;
     Where taxable income is greater than $72,000 and less than or equal to $200,000, the
      premium is equal to the lesser of (i) $750, and (ii) $600 plus 25% of taxable income greater
      than $72,000; and
     Where taxable income is greater than $200,000, the premium is equal to the lesser of (i) $900,
      and (ii) $750 plus 25% of taxable income greater than $200,000.

The Ontario Health Premium is not reduced by the Ontario tax reduction (factor S). The Ontario
Health Premium is not related to the Employer Health Tax for Ontario. You include the Ontario
Health Premium in the total federal and provincial tax deducted on T4 Slips.

Provincial tax reduction for Ontario
The provincial tax reduction for Ontario has changed due to provincial indexing. When possible,
the employer or payer should implement the Y factor based on the total of the applicable amounts
shown on the employee’s or pensioner’s TD1ON form. If the Y factor is not used, any over
deduction of tax will be adjusted when the individual files an income tax return.
The revised provincial tax reduction amounts for 2010 are as follows:
     $206 (formerly $205) for the basic personal amount;
     $382 (formerly $379) for each dependant under age 19*, and
     $382 (formerly $379) for each dependant with a disability that the employee or pensioner
      has claimed on Form TD1ON.
 *Since the tax reduction for dependants under age 19 is not shown on the TD1ON,
  the employee or pensioner will have to provide the employer or payer with a written request
  to include such amounts.



12                                          www.cra.gc.ca
The reduction remains equal to twice the individual’s personal amounts minus the Ontario income
tax. The reduction cannot exceed the Ontario income tax otherwise payable and the reduction is
nil when the Ontario income tax exceeds twice the personal amounts.

10. Prince Edward Island
The provincial tax rates and income thresholds for Prince Edward Island remain as follows:
  9.8% on income less than or equal to $31,984;
  13.8% on income greater than $31,984, but less than or equal to $63,969; and
  16.7% on income greater than $63,969.
Listed below are some of the non-refundable personal tax credits amounts for the province of
Prince Edward Island. Refer to Form TD1PE for complete information on personal amounts.
  The basic personal amount remains at $7,708.
  The spouse or common-law partner amount remains at $6,546.
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 9.8%.
The provincial surtax payable for Prince Edward Island remains as follows:
  Where the basic provincial tax payable (T4) is less than or equal to $12,500, the surtax
   payable (V1) is $0.
  Where the basic provincial tax payable (T4) is greater than $12,500, the surtax payable (V1)
   is 10% of the basic provincial tax payable in excess of $12,500.

11. Quebec
There is no change to the 16.5% Quebec Tax Abatement rate for 2010.

12. Saskatchewan
Effective January 1, 2010, the provincial tax rates for Saskatchewan are not changed.
The income thresholds and personal amounts for Saskatchewan are indexed. The indexing factor
for 2010 is 0.6%. To calculate the indexed amounts, multiply the provincial income thresholds and
appropriate personal amounts by 1.006. For more information on indexing, see page 15.
The income thresholds are revised as follows:
  11% on income less than or equal to $40,354 (formerly $40,113);
  13% on income greater than $40,354, but less than or equal to $115,297 (formerly $114,610);
   and
  15% on income greater than $115,297.
Listed below are some of the non-refundable personal tax credits amounts for the province of
Saskatchewan. Refer to Form TD1SK for complete information on personal amounts.
  The basic personal amount is revised to $13,348 (formerly $13,269).
  The spouse or common-law partner amount is revised to $13,348 (formerly $13,269).
  The senior supplementary amount is revised to $1,153 (formerly $1,146).
  The child amount is revised to $4,944 (formerly $4,915).
Personal amounts will be multiplied by the province’s lowest non-zero tax rate of 11%.
The provincial labour-sponsored funds tax credit (factor LCP) for Saskatchewan remains the
lesser of $1,000 and 20% of the approved shares purchase.

13. Yukon
Effective January 1, 2010, the territorial tax rates for Yukon are not changed.



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The income thresholds and personal amounts are indexed. The indexing factor for 2010 is 0.6%.
To calculate the indexed amounts, multiply the territorial income thresholds and appropriate
personal amounts by 1.006. For more information on indexing, see page 15.
The income thresholds are revised as follows:
     7.04% on income less than or equal to $40,970 (formerly $41,200);
     9.68% on income greater than $40,970, but less than or equal to $81,941 (formerly $82,399);
     11.44% on income greater than $81,941, but less than or equal to $127,021
      (formerly $126,264); and
     12.76% on income greater than $127,021.
Yukon’s territorial Canada Employment Credit, designated as factor K4P, has been increased to
$1,051 (formerly $1,044).
Yukon will again be harmonized with all federal personal amounts. Listed below are some of the
revised non-refundable personal tax credits amounts for Yukon. Refer to Form TD1YT for
complete information on personal amounts.
     The basic personal amount is revised to $10,382 (formerly $10,375).
     The spouse or common-law partner amount is revised to $10,382 (formerly $10,375).
Personal amounts will be multiplied by the territory’s lowest non-zero tax rate of 7.04%.
The surtax payable for Yukon remains as follows:
     Where the basic territorial tax payable (T4) is less than or equal to $6,000, the surtax
      payable (V1) is $0.
     Where the basic territorial tax payable (T4) is greater than $6,000, the surtax payable (V1) is
      5% of the basic territorial tax payable in excess of $6,000.
The territorial labour-sponsored funds tax credit (factor LCP) for Yukon remains the lesser
of $1,250 and 25% of the approved shares purchase.




14                                           www.cra.gc.ca
  Personal tax credits return (TD1 forms)
Federal Form TD1, 2010 Personal Tax Credits Return
The federal Form TD1 has been revised for 2010. General refiling of the 2010 federal Form TD1
is not necessary, but a new employee, a new pensioner, or an individual who wishes to change
his or her federal claim amounts will have to complete the 2010 federal Form TD1.
The federal claim codes are in Chart 1 of the publication Payroll Deductions Tables and in
this publication under the heading “Federal, provincial, and territorial claim codes” on page 16.
A separate worksheet TD1-WS is available for employees or pensioners who want to calculate
partial claims for some of the federal personal tax credits amounts.

Indexing of personal amounts
Each year, certain personal tax credits amounts are subject to indexing based on changes to the
Consumer Price Index. Since only some of the amounts are indexed, we recommend that you
record separately in your payroll records each item shown on the employee’s or pensioner’s
TD1 form. This will allow you to automatically increase the applicable indexed claim amounts when
necessary. This also means you will not have to ask your employees or pensioners to file a new
TD1 form when indexing applies.
You can use the following method to calculate the value of TC or TCP when indexing applies:
1. Enter the total claim amount reported on TD1 form ......................................... $
2. Minus: any pension income amount, tuition fees, and full or part-time
   education amounts claimed on the TD1 form* ................................................. $
3. Amount subject to annual indexing (line 1 minus line 2) .................................. $
4. Enter the applicable indexing factor for the year .............................................. ×                     see **
5. Multiply line 3 by line 4 (rounded to the nearest dollar).................................... $
6. Enter the amount from line 2 (non-indexed amounts) ...................................... $
7. Revised factor TC or TCP (total of personal tax credits amounts)
   (line 5 plus line 6).............................................................................................. $
    * For the provinces of Alberta and Ontario only, do not include any amounts at line 2, since all
      Alberta and Ontario credits are subject to indexing.
   ** The federal indexing factor for 2010 is 1.006. This factor of 1.006 is also applied to
      Saskatchewan, Yukon, Northwest Territories, and Nunavut. Some changes to Yukon
      personal amounts are not directly attributable to indexing, as they have harmonized amounts
      with the federal values.
       The indexing factors for the other provinces are as follows: New Brunswick at 1.020,
       Newfoundland and Labrador at 1.007, Ontario at 1.007, Alberta at 1.003, and
       British Columbia at 1.004. There is no indexing applied to Nova Scotia, Prince Edward Island,
       and Manitoba.

Provincial and territorial TD1 forms
CRA provides a specific 2010 TD1 form for each province (except Quebec) and territory.
Employees should complete the provincial or territorial TD1 form that corresponds to their
province or territory of employment. Pensioners should complete the provincial or territorial
TD1 form that corresponds to their province or territory of residence.
New employees, new pensioners, and employees or pensioners who wish to change their
personal tax credits amounts must complete both the federal and applicable provincial or
territorial TD1 forms. An employee who changes province or territory of employment or
a pensioner who moves to another province or territory should complete the appropriate
provincial or territorial TD1 form.
An employee who lives in one province or territory but works in another one may be subject
to excessive tax deductions. If so, he or she can ask for a reduction in tax deductions

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by requesting a letter of authority from any tax services office. For more information,
see Chapter 4 of the employers’ guide called Payroll Deductions and Remittances.



 Claim codes
Basic personal amounts and employment income from all sources
You are required to deduct tax according to the claim code that corresponds to the claim amount
on line 13 of the TD1 form. If an employee states that his or her total expected income will be less
than the “Total claim amount” on line 13 of a TD1 form, do not deduct any federal, provincial or
territorial tax, as applicable. However, as an employer, if you know that the employee’s statement
is false, you must deduct federal and provincial or territorial tax from the employee’s salary.
It is a serious offence to accept a TD1 form that you know contains false or misleading
statements. If you are not sure whether or not a statement you receive on a TD1 form is false,
contact your tax services office for advice.

Claim Code 0
This code represents no claim amount allowed. If the federal claim code is “0” because the
employee is a non-resident, the provincial claim code must also be “0.”

Federal, provincial, and territorial claim codes
Some provincial claim code amounts will not correspond to the federal claim code amounts.
You will not find claim code amounts on Form TD1. A listing of claim codes and amount ranges
can be found below.

                                    2010 Federal claim codes

      Claim code            Total claim amount ($)          Option 1, TC =        Option 1, K1 =

       Code 0                  No claim amount               $        0.00        $       0.00
       Code 1                Minimum – 10,382.00                 10,382.00            1,557.30
       Code 2               10,382.01 – 12,366.00                11,374.00            1,706.10
       Code 3               12,366.01 – 14,350.00                13,358.00            2,003.70
       Code 4               14,350.01 – 16,334.00                15,342.00            2,301.30
       Code 5               16,334.01 – 18,318.00                17,326.00            2,598.90
       Code 6               18,318.01 – 20,302.00                19,310.00            2,896.50
       Code 7               20,302.01 – 22,286.00                21,294.00            3,194.10
       Code 8               22,286.01 – 24,270.00                23,278.00            3,491.70
       Code 9               24,270.01 – 26,254.00                25,262.00            3,789.30
       Code 10              26,254.01 – 28,238.00                27,246.00            4,086.90




16                                        www.cra.gc.ca
                    2010 Alberta claim codes

Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =
 Code 0         No claim amount              $        0.00    $       0.00
 Code 1       Minimum – 16,825.00                16,825.00        1,682.50
 Code 2      16,825.01 – 19,287.00               18,056.00        1,805.60
 Code 3      19,287.01 – 21,749.00               20,518.00        2,051.80
 Code 4      21,749.01 – 24,211.00               22,980.00        2,298.00
 Code 5      24,211.01 – 26,673.00               25,442.00        2,544.20
 Code 6      26,673.01 – 29,135.00               27,904.00        2,790.40
 Code 7      29,135.01 – 31,597.00               30,366.00        3,036.60
 Code 8      31,597.01 – 34,059.00               32,828.00        3,282.80
 Code 9      34,059.01 – 36,521.00               35,290.00        3,529.00
 Code 10     36,521.01 – 38,983.00               37,752.00        3,775.20


               2010 British Columbia claim codes

Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =

 Code 0         No claim amount              $        0.00    $       0.00
 Code 1      Minimum – 11,000.00                 11,000.00         556.60
 Code 2      11,000.01 – 13,118.00               12,059.00         610.19
 Code 3      13,118.01 – 15,236.00               14,177.00         717.36
 Code 4      15,236.01 – 17,354.00               16,295.00         824.53
 Code 5      17,354.01 – 19,472.00               18,413.00         931.70
 Code 6      19,472.01 – 21,590.00               20,531.00        1,038.87
 Code 7      21,590.01 – 23,708.00               22,649.00        1,146.04
 Code 8      23,708.01 – 25,826.00               24,767.00        1,253.21
 Code 9      25,826.01 – 27,944.00               26,885.00        1,360.38
 Code 10     27,944.01 – 30,062.00               29,003.00        1,467.55


                   2010 Manitoba claim codes

Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =
 Code 0         No claim amount              $        0.00    $       0.00
 Code 1       Minimum – 8,134.00                  8,134.00         878.47
 Code 2       8,134.01 – 9,827.00                 8,980.50         969.89
 Code 3       9,827.01 – 11,520.00               10,673.50        1,152.74
 Code 4      11,520.01 – 13,213.00               12,366.50        1,335.58
 Code 5      13,213.01 – 14,906.00               14,059.50        1,518.43
 Code 6      14,906.01 – 16,599.00               15,752.50        1,701.27
 Code 7      16,599.01 – 18,292.00               17,445.50        1,884.11
 Code 8      18,292.01 – 19,985.00               19,138.50        2,066.96
 Code 9      19,985.01 – 21,678.00               20,831.50        2,249.80
 Code 10     21,678.01 – 23,371.00               22,524.50        2,432.65




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                       2010 New Brunswick claim codes

     Claim code      Total claim amount ($)        Option 1, TCP =   Option 1, K1P =
      Code 0            No claim amount              $        0.00    $       0.00
      Code 1          Minimum – 8,777.00                  8,777.00         816.26
      Code 2          8,777.01 – 10,724.00                9,750.50         906.80
      Code 3         10,724.01 – 12,671.00               11,697.50        1,087.87
      Code 4         12,671.01 – 14,618.00               13,644.50        1,268.94
      Code 5         14,618.01 – 16,565.00               15,591.50        1,450.01
      Code 6         16,565.01 – 18,512.00               17,538.50        1,631.08
      Code 7         18,512.01 – 20,459.00               19,485.50        1,812.15
      Code 8         20,459.01 – 22,406.00               21,432.50        1,993.22
      Code 9         22,406.01 – 24,353.00               23,379.50        2,174.29
      Code 10        24,353.01 – 26,300.00               25,326.50        2,355.36


                  2010 Newfoundland and Labrador claim codes

     Claim code      Total claim amount ($)        Option 1, TCP =   Option 1, K1P =

      Code 0              No claim amount            $        0.00    $       0.00
      Code 1          Minimum – 7,833.00                  7,833.00         603.14
      Code 2          7,833.01 – 9,524.00                 8,678.50         668.24
      Code 3          9,524.01 – 11,215.00               10,369.50         798.45
      Code 4         11,215.01 – 12,906.00               12,060.50         928.66
      Code 5         12,906.01 – 14,597.00               13,751.50        1,058.87
      Code 6         14,597.01 – 16,288.00               15,442.50        1,189.07
      Code 7         16,288.01 – 17,979.00               17,133.50        1,319.28
      Code 8         17,979.01 – 19,670.00               18,824.50        1,449.49
      Code 9         19,670.01 – 21,361.00               20,515.50        1,579.69
      Code 10        21,361.01 – 23,052.00               22,206.50        1,709.90


                     2010 Northwest Territories claim codes

     Claim code      Total claim amount ($)        Option 1, TCP =   Option 1, K1P =

      Code 0            No claim amount              $        0.00    $       0.00
      Code 1          Minimum – 12,740.00                12,740.00         751.66
      Code 2         12,740.01 – 14,931.00               13,835.50         816.29
      Code 3         14,931.01 – 17,122.00               16,026.50         945.56
      Code 4         17,122.01 – 19,313.00               18,217.50        1,074.83
      Code 5         19,313.01 – 21,504.00               20,408.50        1,204.10
      Code 6         21,504.01 – 23,695.00               22,599.50        1,333.37
      Code 7         23,695.01 – 25,886.00               24,790.50        1,462.64
      Code 8         25,886.01 – 28,077.00               26,981.50        1,591.91
      Code 9         28,077.01 – 30,268.00               29,172.50        1,721.18
      Code 10        30,268.01 – 32,459.00               31,363.50        1,850.45




18                                 www.cra.gc.ca
                 2010 Nova Scotia claim codes

Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =
 Code 0         No claim amount              $        0.00    $       0.00
 Code 1      Minimum – 8,231.00                   8,231.00         723.50
 Code 2       8,231.01 – 9,831.00                 9,031.00         793.82
 Code 3       9,831.01 – 11,431.00               10,631.00         934.46
 Code 4      11,431.01 – 13,031.00               12,231.00        1,075.10
 Code 5      13,031.01 – 14,631.00               13,831.00        1,215.74
 Code 6      14,631.01 – 16,231.00               15,431.00        1,356.38
 Code 7      16,231.01 – 17,831.00               17,031.00        1,497.02
 Code 8      17,831.01 – 19,431.00               18,631.00        1,637.66
 Code 9      19,431.01 – 21,031.00               20,231.00        1,778.30
 Code 10     21,031.01 – 22,631.00               21,831.00        1,918.94


                    2010 Nunavut claim codes

Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =

 Code 0         No claim amount              $        0.00    $       0.00
 Code 1      Minimum – 11,714.00                 11,714.00         468.56
 Code 2      11,714.01 – 13,940.00               12,827.00         513.08
 Code 3      13,940.01 – 16,166.00               15,053.00         602.12
 Code 4      16,166.01 – 18,392.00               17,279.00         691.16
 Code 5      18,392.01 – 20,618.00               19,505.00         780.20
 Code 6      20,618.01 – 22,844.00               21,731.00         869.24
 Code 7      22,844.01 – 25,070.00               23,957.00         958.28
 Code 8      25,070.01 – 27,296.00               26,183.00        1,047.32
 Code 9      27,296.01 – 29,522.00               28,409.00        1,136.36
 Code 10     29,522.01 – 31,748.00               30,635.00        1,225.40


                    2010 Ontario claim codes

Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =
  Code 0        No claim amount              $        0.00    $       0.00
  Code 1     Minimum – 8,943.00                   8,943.00         451.62
  Code 2      8,943.01 – 10,870.00                9,906.50         500.28
  Code 3     10,870.01 – 12,797.00               11,833.50         597.59
  Code 4     12,797.01 – 14,724.00               13,760.50         694.91
  Code 5     14,724.01 – 16,651.00               15,687.50         792.22
  Code 6     16,651.01 – 18,578.00               17,614.50         889.53
  Code 7     18,578.01 – 20,505.00               19,541.50         986.85
  Code 8     20,505.01 – 22,432.00               21,468.50        1,084.16
  Code 9     22,432.01 – 24,359.00               23,395.50        1,181.47
  Code 10    24,359.01 – 26,286.00               25,322.50        1,278.79




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                  2010 Prince Edward Island claim codes

     Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =
      Code 0         No claim amount              $        0.00    $       0.00
      Code 1       Minimum – 7,708.00                  7,708.00         755.38
      Code 2       7,708.01 – 9,308.00                 8,508.00         833.78
      Code 3       9,308.01 – 10,908.00               10,108.00         990.58
      Code 4      10,908.01 – 12,508.00               11,708.00        1,147.38
      Code 5      12,508.01 – 14,108.00               13,308.00        1,304.18
      Code 6      14,108.01 – 15,708.00               14,908.00        1,460.98
      Code 7      15,708.01 – 17,308.00               16,508.00        1,617.78
      Code 8      17,308.01 – 18,908.00               18,108.00        1,774.58
      Code 9      18,908.01 – 20,508.00               19,708.00        1,931.38
      Code 10     20,508.01 – 22,108.00               21,308.00        2,088.18


                     2010 Saskatchewan claim codes

     Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =

      Code 0         No claim amount              $        0.00    $       0.00
      Code 1       Minimum – 13,348.00                13,348.00        1,468.28
      Code 2      13,348.01 – 15,193.00               14,270.50        1,569.76
      Code 3      15,193.01 – 17,038.00               16,115.50        1,772.71
      Code 4      17,038.01 – 18,883.00               17,960.50        1,975.66
      Code 5      18,883.01 – 20,728.00               19,805.50        2,178.61
      Code 6      20,728.01 – 22,573.00               21,650.50        2,381.56
      Code 7      22,573.01 – 24,418.00               23,495.50        2,584.51
      Code 8      24,418.01 – 26,263.00               25,340.50        2,787.46
      Code 9      26,263.01 – 28,108.00               27,185.50        2,990.41
      Code 10     28,108.01 – 29,953.00               29,030.50        3,193.36


                          2010 Yukon claim codes

     Claim code   Total claim amount ($)        Option 1, TCP =   Option 1, K1P =

      Code 0         No claim amount              $        0.00    $       0.00
      Code 1       Minimum – 10,382.00                10,382.00         730.89
      Code 2      10,382.01 – 12,366.00               11,374.00         800.73
      Code 3      12,366.01 – 14,350.00               13,358.00         940.40
      Code 4      14,350.01 – 16,334.00               15,342.00        1,080.08
      Code 5      16,334.01 – 18,318.00               17,326.00        1,219.75
      Code 6      18,318.01 – 20,302.00               19,310.00        1,359.42
      Code 7      20,302.01 – 22,286.00               21,294.00        1,499.10
      Code 8      22,286.01 – 24,270.00               23,278.00        1,638.77
      Code 9      24,270.01 – 26,254.00               25,262.00        1,778.44
      Code 10     26,254.01 – 28,238.00               27,246.00        1,918.12




20                              www.cra.gc.ca
 Tax deductions from commission income
Form TD1X, Statement of Commission Income and Expenses for
Payroll Tax Deductions
Form TD1X remains unchanged for 2010. The form is to be used for both federal and provincial
or territorial tax purposes.



 Remitting and reporting federal and provincial or
 territorial tax deductions
Payroll remittances (Form PD7A, Statement of Account for Current
Source Deductions)
You report the combined federal and provincial or territorial tax deductions on payroll remittance
forms. Also, make periodic remittances to the Canada Revenue Agency (CRA) of federal and
provincial or territorial tax, Canada Pension Plan (CPP) contributions, and Employment
Insurance (EI) premiums.

Pay statements and T4 slips, Statement of Remuneration Paid
You show the combined federal and provincial or territorial tax deductions on your pay
statements. Also, you file only one T4 slip per employee no later than the last day of February of
each year. The T4 slip will show combined federal and provincial or territorial tax deductions.

Letters of authority
The Canada Revenue Agency will continue to issue letters of authority to reduce federal and
provincial or territorial tax deductions, for example, in respect of support payments.


 Payroll Deductions Online Calculator
Important features of the Payroll Deductions Online Calculator include:
  The Payroll Deductions Online Calculator is an interactive web application that calculates
   payroll deductions for all pay periods, provinces (except for Quebec), and territories. You will
   find a link to the Payroll Deductions Online Calculator at www.cra.gc.ca/payroll.
  The new Payroll Deductions Online Calculator applies the exact taxable income amount to
   determine the tax deductions. The calculations are more accurate than those produced by
   the Tables on Diskette (TOD);
  The Payroll Deductions Online Calculator offers the same features as the current CD version
   of the Tables on Diskette (TOD), without the hassle of downloading or installing the program.
   The online calculator is compatible with all users’ operating systems.



 Tables on Diskette (TOD) for January 1, 2010
Tables on Diskette (TOD), is a stand-alone computer program that calculates payroll deductions
for all pay periods, provinces (except for Quebec), and territories. TOD gives you easy access
to information you need, without the burden of paperwork. TOD is available free of charge to all
employers.




                                          www.cra.gc.ca                                          21
 General information
Any deviation from the formulas
If you deviate from the formulas, rates, and constants we provide, other than for converting to the
related pay period, you have to submit the details to your tax services office or tax centre for
approval.

Rounding procedures
For all mathematical calculations in this publication, use the following rounding rules except
where we specify otherwise.

For income tax deductions
When the figure calculated for an employee’s income tax deduction for a certain pay period has
three or more digits after the decimal point, increase the second digit after the decimal point by
one if the third digit is five or greater, and drop the third digit. If the third digit after the decimal
point is less than five, drop the third digit.

For Canada Pension Plan (CPP) basic exemption and contributions
An employee’s basic exemption for a pay period is determined by dividing the annual basic
exemption by the number of pay periods in the calendar year. If the figure has three or more
digits after the decimal point, drop the third digit after the decimal point.
When the employee’s contribution to CPP for the pay period has three or more digits after the
decimal point, increase the second digit after the decimal point by one if the third digit is five or
more, and drop the third digit. If the third digit after the decimal point is less than five, drop the
third digit.

For Employment Insurance (EI) premiums
When the employee’s or employer’s EI premium for the pay period has three or more digits after
the decimal point, increase the second digit by one if the third digit is five or more, and drop the
third digit. If the third digit after the decimal point is less than five, drop the third digit.

Mathematical symbol definition
The mathematical symbols we use in this publication and their definitions are as follows:

  Symbol       Definition
      >        is greater than
      <        is less than
      ≥        is greater than or equal to
      ≤        is less than or equal to
       /       Division
      ×        Multiplication
  ( ) or [ ]   Parentheses and brackets indicate that the quantities enclosed are calculated before
               the remainder of the formula.

Tax deductions comparison
When the tax deductions amount using Option 1 in this publication is compared to the tax
deductions amount contained in the Payroll Deductions Tables (T4032), the amounts will not
necessarily be identical. Any difference results from the fact that amounts in the
Payroll Deductions Tables are based on:
(i) the mid-point of the range of remuneration under the “Pay” column;
(ii) the federal tax credit for Canada or Quebec Pension Plan contributions and Employment
     Insurance premium deductions is based on the amount determined in item (i); and




22                                           www.cra.gc.ca
(iii) the mid-point of the “Claim code” amounts on federal, provincial, and territorial TD1 forms are
      used, except for code 1 where the actual basic personal non-refundable tax credit amount is
      used. For claim code 0, no personal tax credits amounts are used when calculating the tax
      deduction amounts.

Lump-sum payments
Composite tax rates to be used for lump-sum payments are provided in the employers’ guide
called Payroll Deductions and Remittances, in the section called “Withholding rates for lump-sum
payments.” Depending on the total income, the composite rates are given as 10%, 20%, or 30%
(5%, 10%, or 15% in Quebec).
Frequently, the tax rates above will not produce the proper amount of tax payable on the
lump-sum payment. This difference occurs because there are various federal, provincial, and
territorial income thresholds, as well as provincial or territorial surtaxes and tax reductions.
To avoid deficient or excess tax deductions that can result from lump-sum payments, you can, as
an alternative, use the tax calculation for non-periodic payments contained in Option 1.

Registered retirement income fund (RRIF)
The following is our position on how the trustee of a registered retirement income fund (RRIF)
should calculate the amount of tax to deduct when amounts above the minimum are paid out in
the year.
We consider all periodic payments made from an RRIF, following an election to make withdrawals
that are above the yearly minimum, to be a blended payment. In such cases, the elected part is
subject to tax deductions. Use the withholding rates for lump-sum payments to determine the
amount of tax to deduct. The withholding rates for lump-sum payments will also apply when an
individual makes a lump-sum withdrawal that is greater than the minimum during the year.

Registered retirement savings plans (RRSPs)
Contributions you make to an employee's RRSP and RRSP administration fees that you pay on
behalf of your employee are considered to be a taxable benefit to the employee. This does not
include an amount you withheld from the employee's remuneration and contributed for the
employee.
If GST/HST applies to the administration fees, include it in the value of the benefit.
Payroll Deductions
RRSP taxable benefits are pensionable and insurable. Deduct CPP contributions and
EI premiums.
Your contributions to the employee's RRSP are considered non-cash benefits and are not
insurable in cases where the employees cannot withdraw the amounts from a group RRSP until
they retire or cease to be employed.
Where you allow the employee to withdraw RRSP funds under the Home Buyers Plan or Lifelong
Learning Plan, we still consider the contributions to be non-cash benefits.
Although the benefit is taxable and has to be reported on the T4 slip, you do not have to deduct
income tax at source on the contributions you make to employees' RRSPs. However, you must
have reasonable grounds to believe that the employee can deduct the contribution for the year.

Information returns
You will need to complete separate T4 slips when an employee has worked in more than one
province during the year.
For instructions on which tax tables to use, see the publication called Payroll Deductions Tables,
under the heading, “Which provincial or territorial tax table should you use?”




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Information Returns Electronic Filing
Since January 2006, three options are available:
T4 Web forms: This convenient filing option is for employers who have to file 1 to 3 original or
amended T4 slips. With T4 Web forms, all you need is a compatible browser to complete, print,
and submit a T4 information return.
T4 and T1204 desktop applications: These downloadable desktop applications let you create,
save, and print an electronic T4 or T1204 information return.
Internet file transfer (XML): Since January 2006, Internet File Transfer (XML) is available for the
following information returns: Originals and amended – T1204, T4, T4A, T4A-NR, T4RIF and
T4RSP; Originals only – T4E. You may also file multiple returns within a single submission
(maximum 610 Kb). Clients will require a payroll Business Number (RP) and Web Access Code
(WAC) when filing these returns to CRA.
We invite you to visit our Web site at: www.cra.gc.ca/eservices.

Use and requirement of Social Insurance Number (SIN)
An individual (employee or pensioner) has to provide a Social Insurance Number (SIN) to an
employer or payer. An employer or payer has to make a reasonable effort to obtain a SIN from an
individual. An individual without a SIN has to apply for one at the nearest office of Service
Canada within 15 days of the date the employer or payer requests it. After receiving the SIN, an
individual has 15 days to provide it to the employer or payer.
An individual who, for any reason, does not comply with these requirements is liable for a fine or
penalty for each failure. An employer or payer who fails to provide a SIN on an information slip is
also liable for a fine or penalty.
An employer or payer, who knowingly uses, communicates, or allows a SIN to be communicated
for any purpose other than that for which it was provided, is guilty of an offence, and is liable for a
fine or imprisonment, or both.
If an individual fails to respond to a request for a SIN, leave the SIN field of the information slip
(T4, T4A, etc.) blank until the SIN is provided.
If an individual refuses to provide a SIN, the information slips prepared should contain all zeros
(000-000-000) in the SIN field.
For more information about the use and requirement of the SIN, see our Information
Circular 82-2, Social Insurance Number Legislation That Relates to the Preparation of Information
Slips.

Validation of the Social Insurance Number (SIN)
Service Canada uses the SIN and employee information we provide them to maintain accurate
records of employee contributions and earnings. To minimize the enquiries you receive, we
recommend that you include a SIN validity check as part of your payroll program.
A SIN has nine digits. The first eight digits are the basic number while the ninth digit is a check
digit. You can check whether or not a SIN is valid by using the following verification method.
Example
The employee provides Social Insurance Number 193-456-787. You can check the validity of the
number by calculating the check digit as follows:
Basic number (first eight digits)                                                                                               Check digit
193 456 78............................................................................................................                7
Make a number from each alternate position to the left
  beginning at the second digit ............................................................ 9 4                       6    8
Add the number to itself........................................................................ 9 4                   6    8
Sum ...................................................................................................... 18 8 12         16
Cross-add the digits in the sum (1 + 8 + 8 + 1 + 2 + 1 + 6) = ..............................                               27
Add each alternate digit beginning at the first digit (1 + 3 + 5 + 7) = ...................                                16

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Total......................................................................................................................   43
If the total is a multiple of 10, the check digit should be 0; otherwise
    subtract the total calculated (43) from the next highest number
    ending in zero (50) ............................................................................................          50
The check digit is (50 – 43) ..................................................................................                7 =   7

Social Insurance Numbers that do not pass the validation check
If the SIN provided by an individual does not pass the verification check, the preparer should
confirm the SIN with the employer who received the original number. If you are unable to obtain
the correct number for the employee, DO NOT LEAVE the SIN field on the information slip blank.
Instead, report the SIN that was provided, even if it is not a valid number. Frequently, even an
incorrect number will enable us to find a match so that we can correct the record and ensure the
employee receives proper credit for the deductions.

Validating the Business Number (BN)
The Business Number is a nine-digit registration number and account identifier, for example:
12345 6782 RP0001.
You can check the validity of the registration part of the Business Number by using the same
standard formula used for the Social Insurance Number. For validation purposes, use only the
first nine digits of the Business Number.



 Part A – Formulas to determine tax deductions on
 salary, wages, taxable benefits, pension income,
 commissions, and other non-periodic payments

Option 1 – General tax formula
The general formula contained in this option determines the federal and provincial or territorial tax
deductions on salary, wages, taxable benefits, pension income, commissions, and other periodic
payments. The general formula can also be used to calculate the tax on a bonus or other
non-periodic payment.
We use Option 1, with the exception of a few factors, to determine the tax deductions amounts
contained in the Payroll Deductions Tables (T4032) and Payroll Deductions Supplementary
Tables (T4008) for each province and territory, and in Canada beyond the limits of any province
or outside Canada.

Outline of Option 1
In general, the Option 1 steps are as follows:
1. Determine the net taxable income for the pay period (remuneration minus allowable
   deductions) and multiply it by the number of pay periods in the year to get an estimated
   annual taxable income amount. This annual taxable income amount is factor A.
2. Calculate the basic federal tax on the estimated annual taxable income, after allowable
   federal personal tax credits. The basic federal tax is factor T3.
3. Calculate the annual federal tax payable. This is factor T1.
4. Calculate the basic provincial or territorial tax on the estimated annual taxable income, after
   allowable provincial or territorial personal tax credits. The annual basic provincial or territorial
   tax is factor T4.
5. Calculate the annual provincial or territorial tax deduction. This is factor T2.
6. Add the federal and provincial or territorial tax and divide the result by the number of pay
   periods to find the estimated federal and provincial or territorial tax deductions for a pay
   period. This is factor T.

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Special rules apply to determine the annual income for employees remunerated by commissions.
A calculation is provided to determine the tax deductions for bonuses, retroactive pay increases,
and other non-periodic payments. For more details, see the example on page 32.
     Note
     If an employee or a pensioner has income from another source from which no tax has been
     deducted (for example, investment income or support payments), a possible tax liability could
     exist when filing an individual income tax return for the year. The employee or pensioner may
     ask for additional tax deductions, factor L, using Form TD1.

Glossary
Factor        Meaning (refer to the formulas for complete details)
A            Annual taxable income
A1           Annual net income used to determine the Manitoba and British Columbia tax
             reduction
B            Bonus, retroactive pay increase, vacation pay when vacation is not taken, and
             accumulated overtime payment
B1           Gross bonus, retroactive pay increase, or other non-periodic payments year-to-date
C            Canada (or Quebec) Pension Plan contributions for the pay period
D            Employee’s year-to-date CPP contribution with the employer
D1           Employee’s year-to-date Employment Insurance premium with the employer
E            Total commission expenses deductions reported on Form TD1X
EI           Employment Insurance premiums for the pay period
F            Payroll deductions for employee contributions to a registered pension plan (RPP),
             a registered retirement savings plan (RRSP), or a retirement compensation
             arrangement (RCA)
F1           Annual deductions such as child care expenses and support payments, etc.,
             authorized by a tax services office or tax centre
F2           Alimony or maintenance payments required by a legal document to be
             payroll-deducted authorized by a tax services office or tax centre
F3           Employee registered pension plan or registered retirement savings plan contributions
             deducted from the current non-periodic payment. You can also use this field or
             design another to apply other tax deductible amounts to the non-periodic payment,
             such as union dues
F4           Employee registered pension plan or registered retirement savings plan contributions
             deducted from the year-to-date non-periodic payments. You can also use this field or
             design another to apply other tax deductible amounts to the non-periodic payment,
             such as union dues.
G            Gross commissions amount including gross salary
HD           Annual deduction for living in a prescribed zone as indicated on Form TD1
I            Gross remuneration for the pay period
I1           Total remuneration for the year reported on Form TD1X
IE           Insurable earnings for the pay period including insurable taxable benefits, bonuses,
             and retroactive pay increases
K            Federal constant
KP           Provincial or territorial constant
K1           Federal non-refundable personal tax credit
K1P          Provincial or territorial non-refundable personal tax credit
K2           Federal Canada (or Quebec) Pension Plan contributions and Employment Insurance
             premium tax credits for the year
K2P          Provincial or territorial Canada Pension Plan contribution and Employment Insurance
             premiums tax credits for the year
K2Q          Quebec Pension Plan contributions, Employment Insurance premiums, and Quebec
             parental insurance plan premiums federal tax credits for the year
K3           Other federal tax credits, such as medical expenses and charitable donations
             authorized by a tax services office or tax centre
K3P          Other provincial or territorial tax credits, such as medical expenses and charitable
             donations authorized by a tax services office or tax centre

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K4           Canada Employment Credit
K4P          Provincial or territorial Canada Employment Credit (applies to Yukon only)
L            Additional tax deductions requested for the pay period
LCF          Federal labour-sponsored funds tax credit
LCP          Provincial or territorial labour-sponsored funds tax credit
M            Accumulated federal and provincial or territorial tax deductions (if any) to the end of
             the last pay period
M1           Year-to-date tax deducted on all payments included in B year-to-date
P            The number of pay periods in the year
PI           Pensionable income for the pay period, or the gross income plus any taxable
             benefits for the pay period, including bonuses and retroactive pay increases where
             applicable
PR           The number of pay periods remaining in the year
R            Federal tax rate applicable to the annual taxable income A
S            Ontario or British Columbia provincial tax reduction
S1           Annualizing factor
T            Estimated federal and provincial or territorial tax deductions for the pay period
T1           Annual federal tax deduction
T2           Annual provincial or territorial tax deduction
T3           Annual basic federal tax
T4           Annual basic provincial or territorial tax
TB           Tax deductions on a bonus, retroactive pay increase, etc., payable now
TC           “Total claim amount” reported on federal Form TD1
TCP          “Total claim amount” reported on the provincial or territorial TD1 form
U1           Union dues for the pay period
V            Provincial or territorial tax rate for the year
V1           Surtax calculated on the basic provincial or territorial tax
V2           Additional tax calculated on taxable income (applies to Ontario Health Premium only)
Y            Additional provincial or territorial tax reduction based on applicable amounts reported
             on the provincial or territorial Form TD1
YTD          Year-to-date


Formula to calculate annual taxable income (A)
A     =    Annual taxable income
      =    [P × (I – F – F2 – U1 )] – HD – F1
           If the result is negative, T = L.
           Where:
           T = Estimated federal and provincial or territorial tax deductions for the pay period.
           L = Additional tax deductions for the pay period requested by the employee or
                  pensioner as indicated on Form TD1.

For employees remunerated by commission only:
A    = I1 – F* – F2* – HD – F1 – E
       If the result is negative, T = L.
          ** Estimated deduction amounts for the year. In the case of registered retirement savings
             plan (RRSP) contributions included in F, the employer will need to find out from the
             employee remunerated by commission the estimated or expected annual deduction.
             It is recommended that employers caution employees not to exceed their RRSP
             contribution limit for the year.

P     =    The number of pay periods in the year:
           Weekly                P = 52 ( or 53 where applicable)
           Bi-weekly             P = 26 ( or 27 where applicable)
           Semi-monthly         P = 24
           Monthly              P = 12

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         Other                    P   =   10, 13, 22, or any other number of pay periods of the
                                          employer or payer for the year
I    =   Gross remuneration for the pay period. This includes overtime earned and paid in the
         same pay period, pension income, qualified pension income, and taxable benefits, but
         does not include bonuses, retroactive pay increases, or other non-periodic payments.
         See the formula called “Tax calculation formula for bonuses, retroactive pay increases,
         or other non-periodic payments” on page 32 for the tax deductions calculation on
         bonuses, retroactive pay increases, or other non-periodic payments.
I1   =   Total remuneration for the year reported on Form TD1X. Total remuneration includes
         commission payments, salary (where applicable), non-periodic payments, and taxable
         benefits.
F    =   Payroll deductions for the pay period for employee contributions to a registered pension
         plan (RPP) for current and past services, a registered retirement savings plan (RRSP),
         or a retirement compensation arrangement (RCA).
         For tax deductions purposes, employers can deduct amounts contributed to an RPP,
         RRSP, or RCA by or on behalf of an employee to determine the employee’s taxable
         income.
         Since January 1, 2001, you no longer need a letter of authority to reduce the amount of
         income tax deductions from any remuneration when you withhold a contribution that is
         paid directly to the recipient’s RRSP from any payments including retiring allowances
         (both eligible and non-eligible portions), and lump-sum payments in excess of $10,000.
         For more information, see the employers’ guide called Payroll Deductions and
         Remittances.
F2   =   Alimony or maintenance payments required by a legal document dated before
         May 1, 1997, to be deducted from the employee’s salary for the pay period. The legal
         document could be a garnishment or a similar order of a court or competent tribunal.
         If an employee asks that the alimony or maintenance payments not be used to
         determine his or her annual taxable income, no authorization from a tax services office
         or tax centre is needed.
         In situations where a garnishment or a similar order of a court or competent tribunal
         indicates that the alimony or maintenance payment cannot be more than a certain
         percentage of the employee’s net salary (net salary as defined in the garnishment or
         order), additional calculations may be required, as follows:
         1. Calculate the tax deduction amount and the net salary amount using the alimony or
            maintenance amount shown in the garnishment or order.
         2. Determine the alimony or maintenance payment to be withheld (F2). This will be
            either the maximum allowable as a percentage of the employee’s net salary
            calculated in (1), or the amount shown in the garnishment or order, whichever is
            less.
         3. Determine the actual tax deduction for the pay period using the F2 amount in (2).
U1   =   Union dues for the pay period paid to a trade union, an association of public servants, or
         dues required under the law of a province to a parity or advisory committee or similar body.
HD =     Annual deduction for living in a prescribed zone as indicated on Form TD1.
         To determine whether or not an individual resided in a prescribed zone, the employee or
         pensioner should contact the local tax services office or tax centre.
F1   =   Annual deductions (such as child-care expenses, and alimony and maintenance
         payments not deducted from the employee’s salary), requested by an employee or
         pensioner and authorized by a tax services office or tax centre. The employer or payer
         will be informed by a tax services office or tax centre of the amount to be used with F1,
         when it is applicable.
         If the F1 amount is implemented after the employer’s or payer’s first pay period in the
         year, F1 must be adjusted by using the following formula:
                  (P × F1) / PR

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                  Where:
                  P = The number of pay periods in the year.
                  F1 = Annual deduction authorized by a tax services office or tax centre.
                  PR = The number of pay periods remaining in the year excluding current pay
                         period.
E    =   Total commission expenses deductions reported on Form TD1X.

Formula to calculate basic federal tax (T3)
T3   =   Annual basic federal tax
     =   (R × A) – K – K1 – K2 – K3 – K4
         If the result is negative, T3 = $0.
         For employees in Quebec only:
         (R × A) – K – K1 – K2Q – K3 – K4
         If the result is negative, T3 = $0.
R    =   Federal tax rate applicable to annual taxable income A.

                         2010 federal tax rates and income thresholds

                 Annual taxable income A                Rate           Constant
                 More than – Not more than               R                K

                     $        0 – $ 40,970                 0.15         $     0
                         40,970 –    81,941                0.22          2,868
                         81,941 – 127,021                  0.26          6,146
                      127,021 – and over                   0.29          9,956

A    =   Annual taxable income.
K    =   Federal constant to adjust the application of the federal tax rate to the annual taxable
         income A. The constant is the tax overcharged when applying the 22%, 26%, and 29%
         rates to the total annual taxable income A. See the “2010 federal tax rates and income
         thresholds” table above.
K1   =   Federal non-refundable personal tax credit.
     =   0.15 × TC
            Note
            The appropriate percentage for the tax year is 15%. The appropriate percentage is
            the lowest percentage referred to in the “2010 federal tax rates and income
            thresholds” table above.
         Where:
         TC = The total claim amount reported on Form TD1. If Form TD1 is not filed by
                the employee or pensioner, TC is $10,382, and for non-resident individuals,
                TC is $0. If the claim code is E, T = $0. If you have the federal tax credits
                amounts for the employee or pensioner for 2009, see the section called
                “Indexing of personal amounts” on page 15.
            Note
            If the province is Ontario, even if the claim code is E, the Ontario Health Premium is
            payable on annual income over $20,000.
K2   =   Canada Pension Plan contributions and Employment Insurance premiums federal tax
         credits for the year.
     =   [(0.15 × (P x C, max. $2,163.15)) + (0.15 x (P × EI, max. $747.36))]*
         For employees in Quebec only:
         K2Q = Quebec Pension Plan contributions, Employment Insurance premiums, and
               Quebec parental insurance plan premiums federal tax credits for the year.


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                 = [(0.15 × (P × C, max. $2,163.15)) + (0.15 × (P × EI, max. $587.52)) +
                   (0.15 × (P × IE × 0.00506, max. $316.25))]*
       Where:
       P = The number of pay periods in the year.
       C     =     Canada (or Quebec) Pension Plan contribution for the pay period. See the
                   section called “Part B – Canada Pension Plan (CPP)” on page 83.
       EI    =     Employment Insurance premium for the pay period. See the section called
                   “Part C – Employment Insurance (EI)” on page 87.
       IE    =     Insurable earnings for the pay period including insurable taxable benefits,
                   bonuses, and retroactive pay increases.

       Note
       * Where an employee has already contributed the maximum CPP, EI, or QPIP for the
       year with the employer, use the maximum CPP, EI, or QPIP deduction to determine the
       credit for the remainder of the year. Where, during the pay period in which the employee
       reaches the maximum, the CPP, EI, or QPIP, when annualized, is less than the annual
       maximum, then use the maximum annual deduction(s) in that pay period.
       In either case, for the remaining pay periods in the year, (P × C) or (P × EI) or
       (P × IE × 0.00506), as applicable, is replaced by the maximum annual deduction(s).
       This modification ensures that the employee will receive the maximum CPP, EI,
       and QPIP tax credit for the remaining pay periods in the year.
       If you want to use a year-to-date method to calculate CPP, EI, and QPIP federal tax
       credits, (P × C) and (P × EI) can be modified as follows:
       (P × C) is changed to the lesser of:
       (i) $2,163.15; and
       (ii) Year-to-date C + (PR × C).
       (P × EI) is changed to the lesser of:
       (i) $747.36; and
       (ii) Year-to-date EI + (PR × EI).
        For employees in Quebec only:
       (P × EI) is changed to the lesser of:
       (i) $587.52; and
       (ii) Year-to-date EI + (PR × EI).
       (P × IE × 0.00506) is changed to the lesser of:
       (i) $316.25; and
       (ii) Year-to-date QPIP+ (PR × IE × 0.00506).
       Where:
       PR = The number of pay periods remaining in the year excluding current pay period.

For employees remunerated by commission only:
K2 =   [(0.15 × (0.0495 × (I1 – $3,500)*, max. $2,163.15)) +
       (0.15 × (0.0173 × I1, max. $747.36))]
       ** If the resulting amount is negative, substitute $0.
       For employees in Quebec only:
        K2Q = [(0.15 × (0.0495 × (I1 – $3,500)*, max $2,163.15)) +
             (0.15 × (0.0136 × I1, max. $587.52)) + (0.15 × (0.00506 × I1, max $316.25))]
             ** If the resulting amount is negative, substitute $0.
            Note
            The preceding is subject to rules in Part B and Part C of this document and the
            instructions contained in the employers’ guide called Payroll Deductions and
            Remittances.




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I1   =   Total remuneration for the year reported on Form TD1X. Total remuneration includes
         commission payments, salary (where applicable), non-periodic payments, and taxable
         benefits.
K3   =   Other federal tax credits, such as medical expenses and charitable donations requested
         by an employee or pensioner and authorized by a tax services office or tax centre. The
         employer or payer will be informed by a tax services office or tax centre of the amount
         to be used as K3, when applicable.
         If the K3 amount is implemented after the employer’s or payer’s first pay period in the
         year, K3 must be adjusted by using the following formula:
             (P × K3) / PR
             Where:
             P = The number of pay periods in the year.
             K3 = Annual federal tax credit authorized by a tax services office or tax centre.
             PR = The number of pay periods remaining in the year excluding current pay
                    period.
K4   =   Canada Employment Credit
     =   The lesser of:
         (i) 0.15 × A; and
         (ii) 0.15 × $1,051.
         Note
         For purposes of the Canada Employment Credit, A is the annual gross income from
         office or employment before deductions. This is the same amount you normally report in
         box 14 of the T4 slip(s). As administrative relief, you are authorized to use the regular
         factor A (annual taxable income) for this calculation, except when the total income is
         superannuation or pension benefits.

Formula to calculate the annual federal tax payable (T1)
T1   =   Annual federal tax deduction, except for employees in Quebec, outside Canada, and in
         Canada beyond the limits of any province
     =   (T3 – LCF)*
         * If the result is negative, substitute $0.
         For employees in Quebec only:
         T1 = [(T3 – LCF)* – (0.165 × T3)]*
                * If the result is negative, substitute $0.
         For employees outside Canada and in Canada beyond the limits of any province
         only:
         T1 = [T3 + (0.48 × T3) – LCF]*
                * If result is negative, substitute $0.
T3   =   Annual basic federal tax.
LCF =    Labour-sponsored funds federal tax credit for the year.
    =    The lesser of:
         (i) $750; and
         (ii) 15% of the amount deducted or withheld during the year for the acquisition, by the
              employee, of approved shares of the capital stock of a prescribed labour-sponsored
              venture capital corporation.
             Note
             If the shares are invested in a registered retirement savings plan, then the amount
             invested can be used to determine the annual taxable income amount.




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Tax calculation formula for bonuses, retroactive pay increases, or
other non-periodic payments
Introduction
Generally, the tax on a bonus (or retroactive pay increase) is calculated by finding the tax on the
total of regular annual income plus any previous bonuses plus the current bonus and
subtracting the tax on the total of regular annual income plus any previous bonuses.
The difference will be the tax on the current bonus.
In the optional year-to-date method outlined below, instead of annualizing the current income,
you use year-to-date income values and year-to-date deductions as the annual income with and
without the bonus. In either case the tax on the bonus is as follows:
TB   = Tax on a bonus, a retroactive pay increase, or other non-periodic payments payable
       now is calculated as follows:
         The difference between:
         (i) the annual tax amount (T1 + T2) based on the instructions contained in Step 1
              below; and
         (ii) the annual tax amount (T1 + T2) based on the instructions contained in Step 2
              below.
(1) Regular bonus calculation
Step 1
Determine the annual tax (T1 + T2) based on the annual taxable income (factor A) with the
non-periodic payment payable now. The formula to calculate this A is as follows:
A    =   ([P × (I – F – F2 – U1)] – HD – F1)* + (B – F3)** + (B1 – F4)**
         * If the result is negative, substitute $0.
         ** Result cannot be negative and result cannot be negative after deducting CPP and EI.
         Note
         If the result above is $5,000 or less, deduct 15% tax (10% in Quebec) from the bonus or
         retroactive pay increase.

Step 2
Determine the annual tax (T1 + T2) based on the annual taxable income (factor A) without the
non-periodic payment payable now. The formula to calculate this A is as follows:
A    =   ([P × (I – F – F2 – U1)] – HD – F1)* + (B1 – F4)**
         * If the result is negative, substitute $0.
         ** Result cannot be negative and result cannot be negative after deducting CPP and EI.
Where:
P   = Number of pay periods
I   = Gross remuneration for the pay period, excluding bonuses, retroactive pay increases,
       or other non-periodic payments.
F   = Employee registered pension plan or registered retirement savings plan contributions
       for the pay period.
F2 = Alimony or maintenance payments deducted at source for the pay period.
U1 = Union dues for the pay period.
B   = Gross bonus, retroactive pay increase, or other non-periodic payment payable now.
F3 = Employee registered pension plan or registered retirement savings plan contributions
       deducted from the current non-periodic payment. You can also use this field or design
       another to apply other tax deductible amounts to the non-periodic payment, such as
       union dues.
B1 = Gross bonus, retroactive pay increase, or other non-periodic payments year-to-date
       (prior to this pay period).
F4 = Employee registered pension plan or registered retirement savings plan contributions
       deducted from the year-to-date non-periodic payments. You can also use this field or
       design another to apply other tax deductible amounts to the non-periodic payment,
       such as union dues.

32                                       www.cra.gc.ca
If there is no current I, use the most recent I.
(2) Year-to-date bonus calculation (optional)
Step 1
Determine the annual tax (T1 + T2) based on the annual taxable income (factor A) with the
non-periodic payment payable now. The annual taxable income (factor A) is based on a
year-to-date concept plus the estimated income for the remaining pay periods in the year. YTD
means year- to-date (prior to this pay period). The formula to calculate this A is as follows:
A   =   [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B – F3)** +
        (B1 – F4)**
        * If the result is negative, substitute $0.
        ** Result cannot be negative and result cannot be negative after deducting CPP and EI.
        Note
        If the result above is $5,000 or less, deduct 15% tax (10% in Quebec) from the bonus or
        retroactive pay increase.

Step 2
A = [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B1 – F4)**
       * If the result is negative, substitute $0.
       ** Result cannot be negative and result cannot be negative after deducting CPP and EI.
Where:
IYTD   =       Gross remuneration year-to-date and excluding non-periodic payments.
FYTD   =       Employee registered pension plan or registered retirement savings plan
               contributions year-to-date.
F2YTD = Alimony or maintenance payments deducted at source year-to-date.
U1YTD = Union dues year-to-date.
PR        = Number of pay periods remaining in the year
Factors I, F, F2, U1, F1, HD, B, F3, B1, and F4 have the meanings given above under
“(1) Regular bonus calculation.”
Example for year-to-date bonus calculation method
In this example, an employee received a retroactive pay increase from $1,000 to $1,100
per week that applies to 25 weeks. Therefore, a retroactive pay increase payment of $2,500 is
payable now. $1,000 will be directed to the employee’s RRSP. Thirty pay periods have passed
and 22 pay periods remain in the year. Year-to-date income is $30,000, year-to-date RPP is
$1,350, and year-to-date union dues are $150. The current income is $1,100 with RPP withheld
of $45 and union dues of $5. The employee received a previous bonus of $1,000 with only CPP,
EI, and tax withheld from it.
Step 1
A = Annual taxable income with the non-periodic payment payable now
    = [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B – F3)** +
       (B1 – F4)**
    = [($30,000 – $1,350 – $0 – $150) + (22 × ($1,100 – $45 – $0 – $5)) – $0 – $0] +
       ($2,500 – $1,000] + ($1,000 – $0)
    = $28,500 + (22 × $1,050) + $1,500 + $1,000
    = $54,100
Step 2
A = Annual taxable income without the non-periodic payment payable now
    = [(IYTD – FYTD – F2YTD – U1YTD) + (PR × (I – F – F2 – U1)) – F1 – HD]* + (B1 – F4)**
    = [($30,000 – $1,350 – $0 – $150) + (22 × ($1,100 – $45 – $0 – $5)) – $0 – $0] +
       ($1,000 – $0)
    = $28,500 + (22 × $1,050) + $1,000
    = $52,600
Once you have calculated the annual taxable income, A, in Steps 1 and 2, calculate the factors
T1 and T2 in the same manner as for regular remuneration.
  Note
  The formula above can be used to calculate the tax deductions on non-periodic payments such
                                            www.cra.gc.ca                                    33
     as accumulated overtime not paid in the same pay period earned, paid vacation not taken by
     the employee, and bonuses.

Formula to calculate annual basic provincial or territorial tax (T4)
T4     =   Annual basic provincial or territorial tax
       =   (V × A) – KP – K1P – K2P – K3P – K4P
           If the result is negative, T4 = $0.
V      =   Provincial or territorial tax rate for the year (not applicable to Quebec, outside Canada,
           and in Canada beyond the limits of any province).
A      =   Annual taxable income.
KP     =   Provincial or territorial constant.
K1P =      Provincial or territorial non-refundable personal tax credit.
K2P =      Canada Pension Plan contributions and Employment Insurance premiums provincial or
           territorial tax credits for the year.
K3P =      Other provincial or territorial tax credits, such as medical expenses and charitable
           donations authorized by a tax services office or tax centre.
K4P =      Provincial or territorial Canada Employment Credit (applies to Yukon only).

Formulas to calculate annual provincial or territorial tax
deduction (T2)
T2     =   Annual provincial or territorial tax deduction
       =   T4 + V1 + V2 – S – LCP
           If the result is negative, T2 = $0.
           For employees in Quebec only:
           T2 = $0
           For employees outside Canada and in Canada beyond the limits of any province
           only:
           T2 = $0
T4     =   Annual basic provincial or territorial tax.
V1     =   Provincial or territorial surtax calculated on the basic provincial or territorial tax
           (applicable to NS, PE, ON, and YT only).
V2     =   Additional tax calculated on taxable income (applies to Ontario Health Premium only).
S      =   Provincial tax reduction (applicable to ON and BC only).
LCP =      Provincial or territorial labour-sponsored funds tax credit (applicable to NL, NS, NB, ON,
           MB, SK, BC, NT and YT only).
A1     =   Annual net income used to calculate S (applies to BC only).
       =   A + HD

For employees remunerated by commission only:
A1 = I1 – F* – F2* – F1 – E
       If the result is negative, A1 = $0.
           * Estimated deductions amount for the year. In the case of registered retirement savings
            plan (RRSP) contributions included in F, the employer will need to find out from the
            employee remunerated by commission the estimated or expected annual deduction.
            It is recommended that employers caution employees not to exceed their RRSP
            contribution limits for the year.
             Note
             When an employee has not filed Form TD1X, tax deductions will be calculated in the
             same manner as for regular salary.


34                                               www.cra.gc.ca
For Alberta only:
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
        Where:
        T4 = (V × A) – KP – K1P – K2P – K3P
        Where:
        V  = 0.10
        KP = $0
K1P = 0.10 × TCP
        Where:
        TCP = The total of personal non-refundable tax credits amounts reported on
               Form TD1AB. If Form TD1AB is not filed, TCP is $16,825.
K2P = [(0.10 × (P × C, max. $2,163.15)) + (0.10 × (P × EI, max. $747.36))]*
        * Where an employee reaches the maximum CPP or EI for the year with an employer,
          the instructions in the note for the K2 factor on page 30 also apply to the K2P factor. For
          employees remunerated by commission, use the federal K2 formula for commissions
          and replace the lowest federal rate in the K2 formula with the tax rate for the province.
K3P = Other annual provincial non-refundable tax credits, such as medical expenses or
      charitable donations authorized by a tax services office or tax centre. The tax office will
      inform the employer or payer of the amount of K3P when it applies and of how to
      implement the amount after the first pay period of the year.
V1, S, and LCP = $0

For British Columbia only:
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
        Where:
        T4   = (V × A) – KP – K1P – K2P – K3P
               Where V and KP are based on the value of A in the 2010 British Columbia tax
               rates and income thresholds table.

                   2010 British Columbia tax rates and income thresholds
                  Annual taxable income A                 Rate           Constant
                  More than – Not more than                V               KP
                      $       0 – $ 35,859               0.0506          $     0
                          35,859 –   71,719              0.0770              947
                          71,719 –   82,342              0.1050           2,955
                          82,342 –   99,987              0.1229           4,429
                          99,987 – and over              0.1470           6,838

K1P = 0.0506 × TCP
        Where:
        TCP = The total of personal non-refundable tax credits amounts reported on
               Form TD1BC. If Form TD1BC is not filed, TCP is $11,000.
K2P = [(0.0506 × (P × C, max. $2,163.15)) + (0.0506 × (P × EI, max. $747.36))]*
        * Where an employee reaches the maximum CPP or EI for the year with an employer,
          the instructions in the note for the K2 factor on page 30 also apply to the K2P factor. For
          employees remunerated by commission, use the federal K2 formula for commissions
          and replace the lowest federal rate in the K2 formula with the lowest tax rate for the

                                             www.cra.gc.ca                                          35
        province.
K3P = Other annual provincial non-refundable tax credits, such as medical expenses or
      charitable donations authorized by a tax services office or tax centre. The tax office will
      inform the employer or payer of the amount of K3P when it applies and how to implement
      the amount after the first pay period of the year.
V1   = $0
S    = Where A1 ≤ $17,354, S is equal to the lesser of:
       (i) T4, and
       (ii) $390;
     = Where A1 > $17,354 ≤ $29,541.50, S is equal to the lesser of:
       (i) T4, and
       (ii) $390 – [(A1 – $17,354) × 3.2%];
     = Where A1 > $29,541.50,
         S = $0
LCP = The lesser of:
      (i) $2,000; and
      (ii) 15% of the amount deducted or withheld during the year for the acquisition by the
           employee of approved shares of the capital stock of a prescribed labour-sponsored
           venture capital corporation.

For Manitoba only:
T2   =   T4 + V1 – S – LCP
         If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the 2010 Manitoba tax rates
                and income thresholds table.

                          2010 Manitoba tax rates and income thresholds
                  Annual taxable income A                  Rate          Constant
                  More than – Not more than                 V              KP
                      $       0 – $ 31,000                 0.1080         $     0
                          31,000 –   67,000                0.1275             605
                          67,000 – and over                0.1740          3,720

K1P =    0.108 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1MB. If Form TD1MB is not filed, TCP is $8,134.
K2P =    [(0.108 × (P × C, max. $2,163.15)) + (0.108 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest tax
           rate for the province.
K3P =    Other annual provincial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office will
         inform the employer or payer of the amount of K3P when it applies and of how to
         implement the amount after the first pay period of the year.
V1 and S = $0
LCP =    The lesser of:
         (i) $1,800; and

36                                             www.cra.gc.ca
         (ii)   15% of the amount deducted or withheld during the year for the acquisition by the
                employee of approved shares of the capital stock of a prescribed labour-sponsored
                venture capital corporation.

For New Brunswick only:
T2   =   T4 + V1 – S – LCP
         If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the 2010 New Brunswick tax
                rates and income thresholds table.

                      2010 New Brunswick tax rates and income thresholds
                   Annual taxable income A                 Rate          Constant
                   More than – Not more than                V              KP
                       $       0 – $ 36,421                0.093         $     0
                           36,421 –   72,843               0.125          1,165
                           72,843 – 118,427                0.133          1,748
                       118,427 – and over                  0.143          2,932

K1P =    0.093 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1NB. If Form TD1NB is not filed, TCP is $8,777.
K2P =    [(0.093 × (P × C, max. $2,163.15)) + (0.093 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest
           tax rate for the province.
K3P =    Other annual provincial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office
         will inform the employer or payer of the amount of K3P when it applies and how to
         implement the amount after the first pay period of the year.
V1 and S = $0
LCP =    The lesser of:
         (i) $2,000; and
         (ii) 20% of the amount deducted or withheld during the year for the acquisition
              by the employee of approved shares of the capital stock of a prescribed
              labour-sponsored venture capital corporation.

For Newfoundland and Labrador only:
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the
                2010 Newfoundland and Labrador tax rates and income thresholds table.




                                               www.cra.gc.ca                                         37
                                2010 Newfoundland and Labrador
                                 tax rates and income thresholds
                  Annual taxable income A                  Rate          Constant
                  More than – Not more than                 V              KP
                      $       0 – $ 31,278                 0.077         $     0
                          31,278 –   62,556                0.128           1,595
                          62,556 – and over                0.155           3,284

K1P =    0.077 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                 Form TD1NL. If Form TD1NL is not filed, TCP is $7,833.
K2P =    [(0.077 × (P × C, max. $2,163.15)) + (0.077 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest tax
           rate for the province.
K3P =    Other annual provincial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office will
         inform the employer or payer of the amount of K3P when it applies and how to
         implement the amount after the first pay period of the year.
V1   =   $0
S    =   $0
LCP =    The lesser of:
         (i) $2,000; and
         (ii) 20% of the amount deducted or withheld during the year for the acquisition by the
              employee of approved shares of the capital stock of a prescribed labour-sponsored
              venture capital corporation.

For the Northwest Territories only:
T2   =   T4 + V1 – S – LCP
         If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the 2010 Northwest Territories
                tax rates and income thresholds table.

                 2010 Northwest Territories tax rates and income thresholds
                  Annual taxable income A                  Rate          Constant
                  More than – Not more than                 V              KP
                      $       0 – $ 37,106                 0.0590        $     0
                          37,106 –   74,214                0.0860          1,002
                          74,214 – 120,656                 0.1220          3,674
                      120,656 – and over                   0.1405          5,906

K1P =    0.059 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1NT. If Form TD1NT is not filed, TCP is $12,740.

38                                             www.cra.gc.ca
K2P =    [(0.059 × (P × C, max. $2,163.15)) + (0.059 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest tax
           rate for the territory.
K3P =    Other annual territorial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office will
         inform the employer or payer of the amount of K3P when it applies and how to
         implement the amount after the first pay period of the year.
V1 and S = $0
LCP =    The lesser of:
         (i) $29,250; and
         (ii) 15% of the first $5,000 and 30% of the remainder of amounts deducted or withheld
              during the year for the acquisition by the employee of approved shares of the
              capital stock of a prescribed labour-sponsored venture capital corporation.

For Nova Scotia only:
T2   =   T4 + V1 – S – LCP
         If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the 2010 Nova Scotia tax rates
                and income thresholds table.

                      2010 Nova Scotia tax rates and income thresholds
                  Annual taxable income A                 Rate           Constant
                  More than – Not more than                V               KP
                     $       0 – $ 29,590                0.0879          $     0
                         29,590 –    59,180              0.1495            1,823
                         59,180 –    93,000              0.1667            2,841
                         93,000 – and over               0.1750            3,613

K1P =    0.0879 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1NS. If Form TD1NS is not filed, TCP is $8,231.
K2P =    [(0.0879 × (P × C, max. $2,163.15)) + (0.0879 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest tax
           rate for the province.
K3P =    Other annual provincial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office will
         inform the employer or payer of the amount of K3P when it applies and how to implement
         the amount after the first pay period of the year.
V1   =   Where T4 ≤ $10,000,
         V1 = $0
         Where T4 > $10,000,
         V1 = 0.10 × (T4 – $10,000)

                                           www.cra.gc.ca                                           39
S    =   $0
LCP =    The lesser of:
         (i) $2,000; and
         (ii) 20% of the amount deducted or withheld during the year for the acquisition by the
              employee of approved shares of the capital stock of a prescribed labour-sponsored
              venture capital corporation.

For Nunavut only:
T2   =   T4 + V1 – S – LCP
         If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the 2010 Nunavut tax rates and
                income thresholds table.

                          2010 Nunavut tax rates and income thresholds
                  Annual taxable income A                  Rate          Constant
                  More than – Not more than                 V              KP
                      $       0 – $ 39,065                 0.040         $     0
                          39,065 –   78,130                0.070           1,172
                          78,130 – 127,021                 0.090           2,735
                      127,021 – and over                   0.115           5,910

K1P =    0.040 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1NU. If Form TD1NU is not filed, TCP is $11,714.
K2P =    [(0.040 × (P × C, max. $2,163.15)) + (0.040 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest tax
           rate for the territory.
K3P =    Other annual territorial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office will
         inform the employer or payer of the amount of K3P when it applies and of how to
         implement the amount after the first pay period of the year.
V1, S, and LCP = $0

For Ontario only:
T2   =   T4 + V1 + V2 – S – LCP
         If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the 2010 Ontario tax rates and
                income thresholds table.




40                                             www.cra.gc.ca
                           2010 Ontario tax rates and income thresholds
                  Annual taxable income A                 Rate           Constant
                  More than – Not more than                V               KP
                      $       0 – $ 37,106                0.0505         $     0
                          37,106 –   74,214               0.0915          1,521
                          74,214 – and over               0.1116          3,013

K1P =    0.0505 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1ON. If Form TD1ON is not filed, TCP is $8,943.
K2P =    [(0.0505 × (P × C, max. $2,163.15)) + (0.0505 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest
           tax rate for the province.
K3P =    Other annual provincial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office
         will inform the employer or payer of the amount of K3P when it applies and of how
         to implement the amount after the first pay period of the year.
V1   =   Where T4 ≤ $3,978,
         V1 = $0
         Where T4 > $3,978 ≤ $5,091,
         V1 = 0.20 × (T4 – $3,978)
         Where T4 > $5,091,
         V1 = 0.20 × (T4 – $3,978) + 0.36 × (T4 – $5,091)
V2   =   Where A ≤ $20,000, V2 = $0
         Where A > $20,000 ≤ $36,000, V2 = the lesser of:
         (i) $300; and
         (ii) 0.06 × (A – $20,000)
         Where A > $36,000 ≤ $48,000, V2 = the lesser of:
         (i) $450; and
         (ii) $300 + (0.06 × (A – $36,000))
         Where A > $48,000 ≤ $72,000, V2 = the lesser of:
         (i) $600; and
         (ii) $450 + (0.25 × (A – $48,000))
         Where A > $72,000 ≤ $200,000, V2 = the lesser of:
         (i) $750; and
         (ii) $600 + (0.25 × (A – $72,000))
         Where A > $200,000, V2 = the lesser of:
         (i) $900; and
         (ii) $750 + (0.25 × (A – $200,000))
S    =   The lesser of:
         (i) T4 + V1; and
         (ii) [2 × ($206 + Y)] – [T4 + V1].
         If the result is negative, S = $0.
         Where:
         Y = The total of the following amounts:
                $382 multiplied by the number of disabled dependants as indicated on
                 Form TD1ON; and
                $382 multiplied by the number of dependants under age 19 for which the
                 employee or pensioner has made a written request.
                                              www.cra.gc.ca                                          41
                Note
                If Y is not used, any over deduction of tax will be considered when the individual
                files an income tax return. When possible, the Y factor should be implemented.
LCP =    The lesser of:
         (i) $750; and
         (ii) 10% of the amount deducted or withheld during the year for the acquisition
              by the employee of approved shares of the capital stock of a prescribed
              labour-sponsored venture capital corporation.

For Prince Edward Island only:
T2 =    T4 + V1 – S – LCP
        If the result is negative, T2 = $0.
        Where:
        T4 = (V × A) – KP – K1P – K2P – K3P
               Where V and KP are based on the value of A in the 2010 Prince Edward Island
               tax rates and income thresholds table.

                 2010 Prince Edward Island tax rates and income thresholds
                  Annual taxable income A                 Rate          Constant
                  More than – Not more than                V              KP
                      $       0 – $ 31,984                0.098         $     0
                          31,984 –   63,969               0.138           1,279
                          63,969 – and over               0.167           3,134

K1P = 0.098 × TCP
      Where:
      TCP = The total of personal non-refundable tax credits amounts reported on
              Form TD1PE. If Form TD1PE is not filed, TCP is $7,708.
K2P = [(0.098 × (P × C, max. $2,163.15)) + (0.098 × (P × EI, max. $747.36))]*
        * Where an employee reaches the maximum CPP or EI for the year with an employer,
          the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
          For employees remunerated by commission, use the federal K2 formula
          for commissions and replace the lowest federal rate in the K2 formula with the
          lowest tax rate for the province.
K3P = Other annual provincial non-refundable tax credits, such as medical expenses or
      charitable donations authorized by a tax services office or tax centre. The tax office
      will inform the employer or payer of the amount of K3P when it applies and how
      to implement the amount after the first pay period of the year.
V1   = Where T4 ≤ $12,500,
       V1 = $0
       Where T4 > $12,500,
       V1 = 0.10 × (T4 – $12,500)
S and LCP = $0

For Quebec only:
Quebec employers whose employees receive income from tips and gratuities should review
the section called “Example for employees in the hotel and restaurant business in Quebec”
on page 58.
Since Quebec collects its own provincial income tax and Quebec Pension Plan contributions,
contact the ministère du Revenu du Québec for information on these subjects. The address and
telephone numbers are listed on page 5 of this publication.


42                                            www.cra.gc.ca
For Saskatchewan only:
T2   =   T4 + V1 – S – LCP
         If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P
                Where V and KP are based on the value of A in the 2010 Saskatchewan tax
                rates and income thresholds table.

                      2010 Saskatchewan tax rates and income thresholds
                  Annual taxable income A                  Rate          Constant
                  More than – Not more than                 V              KP
                      $       0 – $ 40,354                     0.11       $     0
                          40,354 – 115,297                     0.13           807
                       115,297 – and over                      0.15        3,113

K1P =    0.11 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1SK. If Form TD1SK is not filed, TCP is $13,348.
K2P =    [(0.11 × (P × C, max. $2,163.15)) + (0.11 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest
           tax rate for the province.
K3P =    Other annual provincial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office will
         inform the employer or payer of the amount of K3P when it applies and of how to
         implement the amount after the first pay period of the year.
V1 and S = $0
LCP =    The lesser of:
         (i) $1,000; and
         (ii) 20% of the amount deducted or withheld during the year for the acquisition
              by the employee of approved shares of the capital stock of a prescribed
              labour-sponsored venture capital corporation.

For Yukon only:
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
         Where:
         T4 = (V × A) – KP – K1P – K2P – K3P – K4P
                Where V and KP are based on the value of A in the 2010 Yukon tax rates and
                income thresholds table.




                                               www.cra.gc.ca                                       43
                          2010 Yukon tax rates and income thresholds
                 Annual taxable income A                  Rate           Constant
                 More than – Not more than                 V               KP
                     $       0 – $ 40,970                0.0704          $     0
                         40,970 –    81,941              0.0968           1,082
                         81,941 – 127,021                0.1144           2,524
                      127,021 – and over                 0.1276           4,200

K1P =    0.0704 × TCP
         Where:
         TCP = The total of personal non-refundable tax credits amounts reported on
                Form TD1YT. If Form TD1YT is not filed, TCP is $10,382.
K2P =    [(0.0704 × (P × C, max. $2,163.15)) + (0.0704 × (P × EI, max. $747.36))]*
         * Where an employee reaches the maximum CPP or EI for the year with an employer,
           the instructions in the note for the K2 factor on page 30 also apply to the K2P factor.
           For employees remunerated by commission, use the federal K2 formula for
           commissions and replace the lowest federal rate in the K2 formula with the lowest tax
           rate for the territory.
K3P =    Other annual territorial non-refundable tax credits, such as medical expenses or
         charitable donations authorized by a tax services office or tax centre. The tax office
         will inform the employer or payer of the amount of K3P when it applies and how
         to implement the amount after the first pay period of the year.
K4P =    The lesser of:
         (i) 0.0704 × A and
         (ii) 0.0704 × $1,051
              Note
              For purposes of the Canada Employment Credit, A is the annual gross income from
              office or employment before deductions. This is the same amount you normally
              report in box 14 of the T4 slip(s). As administrative relief, you are authorized to use
              the regular factor A (annual taxable income) for this calculation, except when the
              total income is superannuation or pension benefits.
V1   =   Where T4 ≤ $6,000
         V1 = $0
         Where T4 > $6,000
         V1 = 0.05 × (T4 – $6,000)
S    =   $0
LCP =    The lesser of:
         (i) $1,250; and
         (ii) 25% of the amount deducted or withheld during the year for the acquisition by the
              employee of approved shares of the capital stock of a prescribed labour-sponsored
              venture capital corporation.

For outside Canada and in Canada beyond the limits of any province only:
V, V1, V2, S, and LCP = $0

Formula to calculate the tax deductions (T) for the pay period
T    =   Estimated federal and provincial or territorial tax deductions for the pay period
     =   [(T1 + T2) / P] + L
         You can round the resulting amount to the nearest multiple of $0.05 or $0.01.


44                                        www.cra.gc.ca
           For employees in Quebec, outside Canada, and in Canada beyond the limits of
           any province only:
           T = Estimated federal tax deductions for the pay period*
               = (T1 / P) + L
                  You can round the resulting amount to the nearest multiple of $0.05 or $0.01.
                     * Note
                      Quebec employers whose employees receive income from tips and gratuities
                      should review the section called “Example for employees in the hotel and
                      restaurant business in Quebec” on page 58.
           For employees remunerated by commission where Form TD1X is completed:
           T = The tax to be deducted on the current commission payment (factor G)
               = [(T1 + T2) / (I1 / G)] + L
                  You can round the resulting amount to the nearest multiple of $0.05 or $0.01.
T1     =   Annual federal tax deduction.
T2     =   Annual provincial or territorial tax deduction.
P      =   The number of pay periods in the year.
L      =   Additional tax deductions for the pay period requested by the employee or pensioner as
           indicated on Form TD1.
              Note
              To cancel the election to have additional tax deducted, the employee or pensioner
              must file a new Form TD1 entering $0 at the item “Additional tax to be deducted.”
G      =   Gross commission amount including gross salary at the time of payment, plus any
           taxable benefits for commission-remunerated employees who have completed
           Form TD1X. When an employee has not filed Form TD1X, tax is calculated in the same
           manner as regular salary.

Option 1 – Tax calculation examples for periodic payments
Steps to follow – for salary, wages, pensions, or other periodic payments
The following step-by-step method should provide an understandable approach to Option 1
based on the following examples.
     Notes
     The following examples have been standardized to reflect the same income and deduction
     amounts for each province and territory. We trust this measure will simplify the process of
     reviewing and testing calculations.
     In addition, the federal calculation has been shown only once, with the portion for each
     province and territory shown after. This method will avoid duplication and reduce the number
     of pages in this publication.
     For employees remunerated by commission only, see the example on page 56.
Changes in this section are not shaded.
Example – Assumptions and federal calculation
This example is for a married employee who has a dependent spouse and three dependent
children (under 18). The total personal non-refundable tax credits amount on Form TD1 is
$27,067 ($10,382 + $10,382 + $6,303). For each province and territory we have assumed
the maximum claims for these dependants, as shown on the provincial or territorial TD1 forms.
The employee’s salary is $57,200 annually, or $1,100 on a weekly payroll (52 pay periods).
Registered pension plan contributions are $50 for the pay period, and $20 is deducted for union
dues. The employee bought, by payroll deductions, $2,000 of approved shares of the capital
stock of a prescribed labour-sponsored venture capital corporation.
Step 1
Determine A using the following formula:
A      = [P × (I – F – F2 – U1)] – HD – F1

                                             www.cra.gc.ca                                        45
     =   [52 × ($1,100 – $50 – $0 – $20)] – $0 – $0
     =   [52 × $1,030] – $0 – $0
     =   $53,560 – $0 – $0
     =   $53,560
Determine C using the following formula:
C    = The lesser of:
       (i) $2,163.15 – D; and
            = $2,163.15
       (ii) 0.0495 × [PI – ($3,500 / 52)]
            = 0.0495 × ($1,100 – $67.30)
            = 0.0495 × $1,032.70
            = $51.12
Determine EI using the following formula:
EI   = The lesser of:
       (i) $747.36 – D1; and
            = $747.36
       (ii) 0.0173 × IE
            = 0.0173 × $1,100
            = $19.03
For employees in Quebec only:
EI = The lesser of:
      (i) $587.52 – D1; and
           = $587.52
      (ii) 0.0136 × IE
           = 0.0136 × $1,100
           = $14.96
Step 2
Determine K1, K2, K2Q K3, and K4 using the following formula:
K1 = 0.15 × TC
    = 0.15 × $27,067
    = $4,060.05
K2   =   [(0.15 × (P × C, max. $2,163.15)) + (0.15 × (P × EI, max. $747.36))]
     =   [(0.15 × (52 × $51.12, max. $2,163.15)) + (0.15 × (52 × $19.03, max. $747.36))]
     =   [(0.15 × ($2,658.24, max. $2,163.15)) + (0.15 × ($989.56, max. $747.36))]
     =   (0.15 × $2,163.15) + (0.15 × $747.36)
     =   $324.47 + $112.10
     =   $436.57
K2Q = [(0.15 × (P × C, max. $2,163.15)) + (0.15 × (P × EI, max. $587.52)) +
      (0.15 × (P × IE × 0.00506, max. $316.25))]
    = [(0.15 × (52 × $51.12, max. $2,163.15)) + (0.15 × (52 × $14.96, max. $587.52)) +
      (0.15 × (52 × $1,100 × 0.00506, max. $316.25))]
    = [(0.15 × ($2,658.24, max. $2,163.15)) + (0.15 × ($777.92, max. $587.52)) +
      (0.15 × (289.43, max. $316.25))]
    = (0.15 × $2,163.15) + (0.15 × $587.52) + (0.15 × $289.43)
    = $324.47 + $88.13 + $43.41
    = $456.01
K3   = $0
K4   = The lesser of:
       (i) 0.15 × A; and
       (ii) 0.15 × $1,051
     = $157.65

Step 3
Determine the annual basic federal tax, (R × A) – K – K1 – K2 – K3 – K4. Locate the
corresponding values of R and K based on A from the “2010 federal tax rates and income
thresholds” table on page 29 and calculate the basic federal tax:

46                                          www.cra.gc.ca
A = .........................................................................................................................   $   53,560.00
Federal R ...............................................................................................................       ×        0.22
                                                                                                                                $   11,783.20
Less federal constant K ........................................................................................                –    2,868.00
Federal tax.............................................................................................................        $    8,915.20
Less federal tax credits, K1 + K2 + K3 + K4 ...........................................................                         –    4,654.27
Basic federal tax T3 ...............................................................................................            $    4,260.93

Step 4
Determine the federal labour-sponsored funds tax credit:
LCF = The lesser of:
      (i) $750; and
      (ii) 15% of the purchase of approved shares.
           0.15 × $2,000 ......................................................................................                 –     300.00
Annual federal tax deduction, except for employees in Quebec, outside Canada,
and in Canada beyond the limits of any province (T1) ..........................................                                 $    3,960.93

Example 1 – For Alberta
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.10 × $53,560 .......................................................................................                $    5,356.00
KP = $0..............................................................................................................                    0.00
K1P = 0.10 × TCP
    = 0.10 × $33,650..........................................................................................                  –    3,365.00
K2P = [(0.10 × (P × C, max. $2,163.15)) + (0.10 × (P × EI, max. $747.36))]
    = [(0.10 × $2,163.15) + (0.10 × $747.36)]
    = $216.32 + $74.74......................................................................................                    –     291.06
K3P = $0..............................................................................................................                   0.00
Basic provincial tax for the year (T4) .....................................................................                    $    1,699.94
Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
V1, S, and LCP = $0...............................................................................................                       0.00
Net provincial tax deduction for the year (T2) ........................................................                         $    1,699.94

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                               $    5,660.87
T = Tax prorated for the pay period.......................................................................                      $     108.86

Example 2 – For British Columbia
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P



                                                                 www.cra.gc.ca                                                            47
(V × A) = 0.077 × $53,560 .....................................................................................              $   4,124.12
KP = $947..........................................................................................................          –    947.00
K1P = 0.0506 × TCP
    = 0.0506 × $20,653 .....................................................................................                 –   1,045.04
K2P = [(0.0506 × (P × C, max. $2,163.15)) + (0.0506 × (P × EI, max. $747.36))]
    = [(0.0506 × $2,163.15) + (0.0506 × $747.36)]
    = $109.46 + $37.82 .....................................................................................                 –    147.28
K3P = $0..............................................................................................................               0.00
Basic provincial tax for the year (T4) .....................................................................                 $   1,984.80
Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
V1     = $0...............................................................................................................           0.00
S      = Where A1 > $29,541.50
     = $0...............................................................................................................             0.00
Net provincial tax deduction for the year before LCP.............................................                            $   1,984.80
LCP = The lesser of:
      (i) $2,000; and
      (ii) 15% of the purchase of approved shares.
           0.15 × $2,000......................................................................................               –    300.00
Net provincial tax deduction for the year (T2).........................................................                      $   1,684.80

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                            $   5,645.73
T = Tax prorated for the pay period.......................................................................                   $    108.57

Example 3 – For Manitoba
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.1275 × $53,560 ...................................................................................               $   6,828.90
KP = $605..........................................................................................................          –    605.00
K1P = 0.108 × TCP
    = 0.108 × $16,268........................................................................................                –   1,756.94
K2P = [(0.108 × (P × C, max. $2,163.15)) + (0.108 × (P × EI, max. $747.36))]
    = [(0.108 × $2,163.15) + (0.108 × $747.36)]
    = $233.62 + $80.71......................................................................................                 –    314.33
K3P = $0..............................................................................................................               0.00
Basic provincial tax for the year (T4) .....................................................................                 $   4,152.63
Determine the annual provincial tax deduction using the following formula:
T2     = T4 + V1 – S – LCP
V1 and S = $0 ........................................................................................................               0.00
Net provincial tax deduction for the year before LCP............................................                             $   4,152.63
LCP = The lesser of:
      (i) $1,800; and

48                                                            www.cra.gc.ca
            (ii) 15% of the purchase of approved shares.
                 0.15 × $2,000.....................................................................................       –    300.00
Net provincial tax deduction for the year (T2) ........................................................                   $   3,852.63

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2                                                                        $   7,813.56
T = Tax prorated for the pay period.......................................................................                $    150.26

Example 4 – For New Brunswick
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.125 × $53,560 .....................................................................................           $   6,695.00
KP = $1,165.......................................................................................................        –   1,165.00
K1P = 0.093 × TCP
    = 0.093 × $16,230........................................................................................             –   1,509.39
K2P = [(0.093 × (P × C, max. $2,163.15)) + (0.093 × (P × EI, max. $747.36))]
    = [(0.093 × $2,163.15) + (0.093 × $747.36)]
    = $201.17 + $69.50......................................................................................              –    270.67
K3P = $0 ..............................................................................................................           0.00
Basic provincial tax for the year (T4) .....................................................................              $   3,749.94
Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
V1 and S = $0 ........................................................................................................            0.00
Net provincial tax deduction for the year before LCP............................................                          $   3,749.94
LCP = The lesser of:
      (i) $2,000; and
      (ii) 20% of the purchase of approved shares.
           0.20 × $2,000.....................................................................................             –    400.00
Net provincial tax deduction for the year (T2) ........................................................                   $   3,349.94

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                         $   7,310.87
T = Tax prorated for the pay period.......................................................................                $    140.59

Example 5 – For Newfoundland and Labrador
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.
Step 5
Determine the basic provincial tax (T4) using the following formula:

(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.128 × $53,560 .....................................................................................           $   6,855.68
KP     = $1,595 ......................................................................................................    –   1,595.00
K1P = 0.077 × TCP

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       = 0.077 × $14,233 .......................................................................................         –   1,095.94
K2P = [(0.077 × (P × C, max. $2,163.15)) + (0.077 × (P × EI, max. $747.36))]
    = [(0.077 × $2,163.15) + (0.077 × $747.36)]
    = $166.56 + $57.55 .....................................................................................             –    224.11
K3P = $0 .............................................................................................................           0.00
Basic provincial tax for the year (T4) .....................................................................             $   3,940.63
Determine the annual provincial tax deduction using the following formula:
T2     = T4 + V1 – S – LCP
V1 and S = $0 ........................................................................................................           0.00
LCP = The lesser of:
      (i) $2,000; and
      (ii) 20% of the purchase of approved shares.
           0.2 × $2,000........................................................................................          –    400.00
Net provincial tax deduction for the year (T2).........................................................                  $   3,540.63
Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                        $   7,501.56
T = Tax prorated for the pay period.......................................................................               $    144.26

Example 6 – For Northwest Territories
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic territorial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.086 × $53,560 .....................................................................................          $   4,606.16
KP = $1,002.......................................................................................................       –   1,002.00
K1P = 0.059 × TCP
    = 0.059 × $25,480........................................................................................            –   1,503.32
K2P = [(0.059 × (P × C, max. $2,163.15)) + (0.059 × (P × EI, max. $747.36))]
    = [(0.059 × $2,163.15) + (0.059 × $747.36)]
    = $127.63 + $44.09......................................................................................             –    171.72
K3P = $0..............................................................................................................           0.00
Basic territorial tax for the year (T4).......................................................................           $   1,929.12

Determine the annual territorial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
V1 and S = $0 ........................................................................................................           0.00
Net provincial tax deduction for the year before LCP............................................                         $   1,929.12
LCP = The lesser of:
      (i) $29,250; and
      (ii) 15% of the first $5,000 and 30% of the remainder of amounts
           deducted or withheld for the purchase of approved shares.
           0.15 × $2,000....................................................................................             –    300.00
Net provincial tax deduction for the year (T2) ........................................................                  $   1,629.12

Step 6
Total federal and territorial tax deductions for the year:

50                                                           www.cra.gc.ca
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                             $   5,590.05
T = Tax prorated for the pay period.......................................................................                    $    107.50

Example 7 – For Nova Scotia
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.1495 × $53,560 ...................................................................................                $   8,007.22
KP = $1,823.......................................................................................................            –   1,823.00
K1P = 0.0879 × TCP
    = 0.0879 × $15,220......................................................................................                  –   1,337.84
K2P = [(0.0879 × (P × C, max. $2,163.15)) + (0.0879 × (P × EI, max. $747.36))]
    = [(0.0879 × $2,163.15) + (0.0879 × $747.36)]
    = $190.14 + $65.69......................................................................................                  –    255.83
K3P = $0..............................................................................................................                0.00
Basic provincial tax for the year (T4) .....................................................................                  $   4,590.55

Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
            Where T4 ≤ $10,000,
            V1 =     $0..............................................................................................                 0.00
            S      =       $0..............................................................................................           0.00
Net provincial tax deduction for the year before LCP.............................................                             $   4,590.55
LCP = The lesser of:
      (i) $2,000; and
      (ii) 20% of the purchase of approved shares.
           0.20 × $2,000......................................................................................                –    400.00
Net provincial tax deduction for the year (T2).........................................................                       $   4,190.55

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                             $   8,151.48
T = Tax prorated for the pay period.......................................................................                    $    156.76

Example 8 – For Nunavut
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic territorial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.07 × $53,560 .......................................................................................              $   3,749.20
KP = $1,172.......................................................................................................            –   1,172.00
K1P = 0.04 × TCP
    = 0.04 × $23,428..........................................................................................                –    937.12
K2P = [(0.04 × (P × C, max. $2,163.15)) + (0.04 × (P × EI, max. $747.36))]
    = [(0.04 × $2,163.15) + (0.04 × $747.36)]

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       = $86.53 + $29.89........................................................................................              –    116.42
K3P = $0..............................................................................................................                0.00
Basic territorial tax for the year (T4).......................................................................                $   1,523.66

Determine the annual territorial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
V1, S, and LCP = $0...............................................................................................                    0.00
Net territorial tax deduction for the year (T2) .........................................................                     $   1,523.66

Step 6
Total federal and territorial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                             $   5,484.59
T = Tax prorated for the pay period.......................................................................                    $    105.47

Example 9 – For Ontario
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.0915 × $53,560 ...................................................................................                $   4,900.74
KP = $1,521.......................................................................................................            –   1,521.00
K1P = 0.0505 × TCP
    = 0.0505 × $16,537......................................................................................                  –    835.12
K2P = [(0.0505 × (P × C, max. $2,163.15)) + (0.0505 × (P × EI, max. $747.36))]
    = [(0.0505 × $2,163.15) + (0.0505 × $747.36)]
    = $109.24 + $37.74......................................................................................                  –    146.98
K3P = $0..............................................................................................................                0.00
Basic provincial tax for the year (T4) .....................................................................                  $   2,397.64

Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 + V2 – S – LCP
            Where T4 ≤ $3,978
            V1 =     $0 ..............................................................................................               0.00
Sub-total .................................................................................................................   $   2,397.64
V2     = Where A > $48,000 ≤ $72,000, V2 = the lesser of:
       = (i) $600; and                                                                                                             600.00
         (ii) $450 + (0.25 × (A – $48,000))
              = $450 + (0.25 × ($53,560 – $48,000))
              = $450 + (0.25 × $5,560)
              = $1,840

S      = The lesser of:
         (i) T4 + V1;
              = $2,397.64; and
         (ii) [2 × ($206 + Y)] – [T4 + V1]
              = [2 × ($206 + $1,146)] – [$2,397.64 + $0]
              = [2 × $1,352] – $2,397.64
              = $2,704 – $2,397.64
              = $306.36


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                 If the result is negative, S = $0............................................................                306.36
Net provincial tax deduction for the year before LCP.............................................                        $   2,691.28
LCP = The lesser of:
      (i) $750; and
      (ii) 10% of the purchase of approved shares.
           0.10 × $2,000......................................................................................           –    200.00
Net provincial tax deduction for the year (T2).........................................................                  $   2,491.28

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ...............................................                       $   6,452.21
T = Tax prorated for the pay period........................................................................              $    124.08

Example 10 – For Prince Edward Island
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.138 × $53,560 .....................................................................................          $   7,391.28
KP     = $1,279 ......................................................................................................   –   1,279.00
K1P = 0.098 × TCP
    = 0.098 × $14,254 .......................................................................................            –   1,396.89
K2P = [(0.098 × (P × C, max. $2,163.15)) + (0.098 × (P × EI, max. $747.36))]
    = [(0.098 × $2,163.15) + (0.098 × $747.36)]
    = $211.99 + $73.24 .....................................................................................             –    285.23
K3P = $0 .............................................................................................................           0.00
Basic provincial tax for the year (T4) .....................................................................             $   4,430.16

Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
            Where T4 ≤ $12,500,
            V1 =     $0 .............................................................................................           0.00
S and LCP = $0 .....................................................................................................             0.00
Net provincial tax deduction for the year (T2) ........................................................                  $   4,430.16

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                        $   8,391.09
T = Tax prorated for the pay period.......................................................................               $    161.37

Example 11 – For Quebec
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Total federal tax deduction for the year using K2Q values (before the Quebec
  tax abatement) ...................................................................................................     $   3,941.49
Less Quebec tax abatement of 16.5% (0.165 × T3) ..............................................                           –    699.85


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Net federal tax deduction for the year (T1) ............................................................                  $   3,241.64
T      = Tax prorated for the pay period ................................................................                 $     62.34

Example 12 – For Saskatchewan
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.
Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.13 × $53,560 .......................................................................................          $   6,962.80
KP = $807 ..........................................................................................................      –    807.00
K1P = 0.11 × TCP
    = 0.11 × $41,528..........................................................................................            –   4,568.08
K2P = [(0.11 × (P × C, max. $2,163.15)) + (0.11 × (P × EI, max. $747.36))]
    = [(0.11 × $2,163.15) + (0.11 × $747.36)]
    = $237.95 + $82.21......................................................................................              –    320.16
K3P = $0 ..............................................................................................................           0.00
Basic provincial tax for the year (T4) .....................................................................              $   1,267.56

Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
V1 and S = $0 ........................................................................................................            0.00
Net provincial tax deduction for the year before LCP............................................                          $   1,267.56
LCP = The lesser of:
      (1) $1,000; and
      (2) 20% of the purchase of approved shares
          0.20 × $2,000.....................................................................................              –    400.00
Net provincial tax deduction for the year (T2) ........................................................                   $    867.56

Step 6
Total federal and provincial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                         $   4,828.49
T = Tax prorated for the pay period.......................................................................                $     92.86

Example 13 – For Yukon
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Determine the basic territorial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P – K4P
(V × A) = 0.0968 × $53,560 ...................................................................................            $   5,184.61
KP = $1,082.......................................................................................................        –   1,082.00
K1P = 0.0704 × TCP
    = 0.0704 × $27,067......................................................................................              –   1,905.52
K2P = [(0.0704 × (P × C, max. $2,163.15)) + (0.0704 × (P × EI, max. $747.36))]
    = [(0.0704 × $2,163.15) + (0.0704 × $747.36)]
    = $152.29 + $52.61......................................................................................              –    204.90
K3P = $0..............................................................................................................    –       0.00
K4P = The lesser of:

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           (i) 0.0704 × A; and
           (ii) 0.0704 × $1,051
                0.0704 × $1,051.................................................................................             –     73.99
Basic territorial tax for the year (T4).......................................................................               $   1,918.20
Determine the annual territorial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
           Where T4 ≤ $6,000,
           V1 =     $0..............................................................................................                0.00
           S     =        $0..............................................................................................          0.00
Net territorial tax deduction for the year before LCP .............................................                          $   1,918.20
LCP = The lesser of:
      (i) $1,250; and
      (ii) 25% of the purchase of approved shares.
           0.25 × $2,000......................................................................................               –    500.00
Net territorial tax deduction for the year (T2) ..........................................................                   $   1,418.20

Step 6
Total federal and territorial tax deductions for the year:
T1 (see federal portion of example) $3,960.93 + T2 ..............................................                            $   5,379.13
T = Tax prorated for the pay period.......................................................................                   $    103.44

Example 14 – For outside Canada and in Canada beyond the limits
of any province
See the section called “Example – Assumptions and federal calculation” on page 45 for more
details.

Step 5
Total federal tax deduction for the year before surtax for outside Canada or in
Canada beyond the limits of any province (see federal portion of example) ........                                           $   3,960.93
Additional federal tax of 48% for employees working outside Canada or in
Canada beyond the limits of any province (0.48 × T3) ..........................................                                  2,045.25
Total federal tax deduction for the year (T1)..........................................................                      $   6,006.18
T = Tax prorated for the pay period.......................................................................                   $     115.50

Testing Results – Example
The following example provided below is for those of you that simply want to test your results
against ours.
Julie is a single employee with no deductions and only claims the basic personal amounts. Here
are Julie’s results for three different scenarios:


                                                        Annual Income
                                      P = 12                                 P = 26                                 P = 52
                                   I = $1,800                             I = $2,300                              I = $2,500
                                       T=                                     T=                                     T=
         AB                          $140.43                                $467.03                                $704.21
         BC                          $129.39                                $426.54                                $714.62
         MB                          $220.99                                $537.04                                $832.68
         NB                          $200.76                                $513.83                                $772.37

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      NL                 $191.41                   $514.18                  $800.60
      NT                 $148.54                   $436.69                  $712.08
      NS                 $199.85                   $549.41                  $857.03
      NU                 $139.94                   $406.36                  $654.76
      ON                 $167.14                   $464.94                  $782.93
      PE                 $214.30                   $541.12                  $839.06
      QC                  $92.56*                 $260.62*                  $410.58*
      SK                 $175.23                   $512.12                  $772.90
      YT                 $163.42                   $455.13                  $716.14
      OC                 $164.60                   $463.15                  $728.40

* Note: Quebec calculates provincial tax separately therefore only federal portion calculated.

Example for employees remunerated by commission only
This example is for an employee remunerated by commission and working in the province
of Saskatchewan. The total of personal tax credits amounts on Form TD1 is $10,382 and
on Form TD1SK $13,348. On Form TD1X, the employee has indicated total remuneration (I1)
of $60,000 and total expenses (E) of $4,000. Registered pension plan contributions are $2,000
for the year. The employee has purchased, by payroll deductions, $2,000 of approved shares
of the capital stock of prescribed labour-sponsored venture capital corporations. The employer
has received authorization from a tax services office to reduce the amount subject to income tax
withholdings by a $7,800 annual deduction. The current commission payment (G) is $1,500.

Step 1
Determine A using the following formula:
A    = I1 – F – F2 – HD – F1 – E
     = $60,000 – $2,000 – $0 – $0 – $7,800 – $4,000
     = $46,200.00

Step 2
Determine K1, K2, K3 and K4 using the following formulas:
K1   = 0.15 × TC
     = 0.15 × $10,382
     = $1,557.30
K2   = [(0.15 × (0.0495 × (I1 – $3,500)*, max. $2,163.15)) +
       (0.15 × ((0.0173 × I1), max. $747.36))]
       * If the result is negative, substitute $0.
     = [(0.15 × (0.0495 × ($60,000 – $3,500)*, max. $2,163.15)) +
       (0.15 × (0.0173 × $60,000, max. $747.36))]
     = [(0.15 × (0.0495 × $56,500, max. $2,163.15)) + (0.15 × ($1,038, max. $747.36))]
     = [(0.15 × ($2,796.75, max. $2,163.15)) + (0.15 × $747.36)]
     = [(0.15 × $2,163.15) + $112.10]
     = $324.47 + $112.10
     = $436.57
K3   = $0
K4   = The lesser of:
       (i) 0.15 × A; and
       (ii) 0.15 × $1,051
     = 0.15 × $1,051
     = $157.65




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Step 3
Determine the annual basic federal tax, (R × A) – K – K1 – K2 – K3 – K4. Locate
the corresponding values of R and K based on A, from the “2010 federal tax rates and income
thresholds” table on page 29 and calculate the basic federal tax:
A = .........................................................................................................................   $   46,200.00
Federal R ...............................................................................................................       ×        0.22
                                                                                                                                $   10,164.00
Less federal constant K .........................................................................................               –    2,868.00
Federal tax.............................................................................................................        $    7,296.00
Less federal tax credits, K1 + K2 + K3 + K4 ...........................................................                         –    2,151.52
Basic federal tax (T3) .............................................................................................            $    5,144.48

Step 4
Determine the federal labour-sponsored funds tax credit:
LCF = the lesser of:
      (i) $750; and
      (ii) 15% of the purchase of approved shares.
           0.15 × $2,000 .....................................................................................                  –     300.00
Annual federal tax deduction, except for employees in Quebec, outside Canada,
and in Canada beyond the limits of any province (T1) ..........................................                                 $    4,844.48

Step 5
Determine the basic provincial tax (T4) using the following formula:
(V × A) – KP – K1P – K2P – K3P
(V × A) = 0.13 × $46,200 .......................................................................................                $    6,006.00
KP = $807..........................................................................................................             –     807.00
K1P = 0.11 × TCP
    = 0.11 × $13,348..........................................................................................                  –    1,468.28
K2P = [(0.11 × (0.0495 × (I1 – $3,500)*, max. $2,163.15)) +
      (0.11 × ((0.0173 × I1), max. $747.36))]
      * If the result is negative, substitute $0.
    = [(0.11 × (0.0495 × ($60,000 – $3,500)*, max. $2,163.15)) +
      (0.11 × (0.0173 × $60,000, max. $747.36))]
    = [(0.11 × (0.0495 × $56,500, max. $2,163.15)) +
      (0.11 × ($1,038, max. $747.36))]
    = [(0.11 × ($2,796.75, max. $2,163.15)) + (0.11 × $747.36)]
    = [(0.11 × $2,163.15) + $82.21]
    = $237.95 + $82.21
    = $320.16.....................................................................................................              –     320.16
K3P = $0..............................................................................................................                   0.00
Basic provincial tax for the year (T4) .....................................................................                    $    3,410.56
Determine the annual provincial tax deduction using the following formula:
T2 = T4 + V1 – S – LCP
V1 and S = $0 ........................................................................................................                   0.00
Net provincial tax deduction for the year before LCP............................................                                $    3,410.56

Step 6
Determine the provincial labour-sponsored funds tax credit:
LCP = The lesser of:
      (1) $1,000; and
      (2) 20% of the purchase of approved shares of the capital stock
          of a prescribed labour-sponsored venture capital corporation
                 0.20 × $1,000 ............................................................................                     –     200.00

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Net provincial tax deduction for the year (T2) ........................................................   $   3,210.56

Step 7
Calculate the tax to be deducted on the commission payment of $1,500, factor G:
T     =    [(T1 + T2) / (I1 / G)] + L
      =    [($4,844.48 + $3,210.56 / ($60,000 / $1,500)] + $0
      =    $8,055.04 / 40 + $0
      =    $201.38

Step 8
For all later payments (such as commission, salary, and bonus) change the G value amount
of $1,500 in Step 7 to calculate the appropriate amount of tax deduction at source.

Example for employees in the hotel and restaurant business in Quebec
As a result of legislation introduced in the province of Quebec, employees in the hotel and
restaurant business who receive income from tips and gratuities have to declare this income to
their employers. Since January 1, 1998, you have to include tips declared by these employees
when you calculate insurable earnings for purposes of Employment Insurance (EI). You have to
include these tips when you determine federal income tax deductions. Report the tips and
deductions on the T4 slip.
When you include the declared tips and gratuities in income, the deductions may be greater than
the cash salary or wages paid. Payroll deductions cannot be more than the amount of salary and
wages paid. To make sure that the deductions are not more than the salary or wages, you will
have to reduce the deductions until the net pay is no longer negative.
When you reduce the payroll deductions, you have to reduce them in a particular order,
as specified in the Quebec legislation. First reduce Quebec provincial tax, and then reduce in
the following order, union dues, Quebec parental insurance premiums, and Quebec Pension Plan
contributions. If the net pay is still negative, reduce the federal tax withholding. Any shortfall
of federal or provincial tax will be determined when the individuals file their personal tax returns.
In some cases, when QPP and QPIP are reduced, you may have to increase federal tax to reflect
the change in the federal tax credit for QPP and QPIP contributions (factor K2). The following will
explain how to recalculate the federal tax to allow a credit more closely approximating the actual
QPP and QPIP deduction for the pay period.
After you have calculated the QPP, EI, and federal tax deductions based on the total income
(tips plus salary) for the pay period, check whether there is enough net pay available to cover
the full QPP contribution. Find:
N      =   Net pay available for QPP deduction. If negative, N = $0.
       =   This will be the cash net pay after all deductions including EI premiums and federal tax,
           but before QPP and QPIP contributions and Quebec provincial tax. If N is negative or
           $0, or if it is greater than the QPP contribution required, you will not need to adjust
           the K2 tax credit, since recalculation will not change the federal tax deduction.
Next, find:
CQ =        The maximum QPP deduction based on available net pay.
   =        The lesser of:
            (i) C, the QPP contribution for the pay period; and
            (ii) N, the net pay available for the QPP deduction.
Next, recalculate the employee’s federal tax by replacing C in the K2 tax credit calculation
with factor CQ. For this calculation routine, you will need to recalculate K2, T3, and T1 based
on the QPP deduction for the pay period, instead of the QPP contribution normally calculated.
Use factors called K2Q, T3Q, and T1Q for these calculations. The formulas for these factors
are shown in the example below.
Once you find T1Q, determine the federal tax deduction, as follows:
T      = The greater of:
         (i) (T1 / P) + L, and

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         (ii) (T1Q / P) + L.
Example
This is an example of an employee in the hotel and restaurant business in Quebec. The employer
uses 26 (bi-weekly) pay periods. The employee is paid $70 in wages and declares $700 in tips
and gratuities. Other factors, such as F, F1, and U1 are $0. The employee claims the basic
personal amount on Form TD1. This example uses the formulas in effect on January 1, 2010.

Step 1 – Regular payroll deductions calculations
For simplicity of presentation, only the results of the regular calculations are shown in this step.
A    = $20,020.00              EI   = $10.47                  K2    = $178.69
C    = $31.45                  K1   = $1,557.30               T1    = $926.32
K4   = $157.65
Step 2 – Additional calculations for employees in the hotel and restaurant business in
Quebec
N    = Net pay available for QPP deduction. If negative, N = $0.
     = Cash income for the pay period minus EI premiums for the pay period minus federal tax
        for the pay period.
     = $70 – $10.47 – ($926.32 / 26). If negative, N = $0.
     = $70 – $10.47 – $35.63
     = $23.90
CQ = The maximum QPP deduction based on available net pay.
   = The lesser of:
     (i) $31.45, the QPP contribution for the pay period; and
     (ii) $23.90, the net pay available for the QPP deduction.
   = $23.90
K2Q =    Federal tax credit for the year based on the QPP deduction (CQ).
    =    [(0.15 × (P × CQ, max. $2,163.15)) + (0.15 × (P × EI, max. $587.52))
    =    [(0.15 × (26 × $23.90, max. $2,163.15)) + (0.15 × (26 × $10.47, max. $587.52))
    =    (0.15 × $621.40) + (0.15 × $272.22)
    =    $93.21 + $40.83
    =    $134.04
T3Q =    Basic federal tax based on K2Q.
    =    (R × A) – K – K1 – K2Q – K3 – K4, if the result is negative, T3Q = $0.
    =    (0.15 × $20,020) – $0 – $1,557.30 – $134.04 – $0 – $157.65
    =    $3,003.00 – $1,557.30 – $134.04 – $157.65
    =    $1,154.01
T1Q = Annual federal tax for Quebec based on T3Q.
    = (T3Q – LCF)* – (T3Q × 0.165)
      * If the result is negative, substitute $0.
    = ($1,154.01 – $0) – ($1,154.01 × 0.165)
    = $1,154.01 – $190.41
    = $963.60

Step 3 – Adjusted federal tax deduction for the pay period
T    = The greater of:
        (i) (T1 / P) + L,
             = ($926.32 / 26) + $0
             = $35.63, and
        (ii) (T1Q / P) + L
             = ($963.60 / 26) + $0
             = $37.06
     = $37.06

Step 4 – Adjusted QPP deduction for the pay period
For purposes of the employee’s pay statement, determine the actual QPP deduction based on
the new available net pay. The new available net pay = $70 – $10.47 (EI) – $37.06 (revised tax)

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= $22.47 (available net pay). Therefore, the employee’s QPP deduction is $22.47.
Although this QPP deduction is less than the $23.90 QPP amount used in the revised tax
calculation, a second or subsequent recalculation of federal tax is not required.
Include the $22.47 QPP deduction in your remittance to the ministère du Revenu du Québec.
Include the $10.47 EI deduction and the $37.06 federal tax deduction in your remittance to the
Canada Revenue Agency.


Option 2 – Tax formula based on cumulative averaging
Option 2 formulas are intended for employees whose remuneration fluctuates considerably from
one pay period to the next. In the Option 2 formulas, the amount of tax to be deducted is based
on the projected annual taxable income (including bonuses) compared to the amount of tax
previously deducted in the year. Option 2 works well for employees who are employed for a full
calendar year. If the employee’s income is relatively stable for each pay period, there will not be
a significant difference in the tax deductions with Option 2 compared to Option 1.
The following sections will explain in detail how Option 2 works. The acronym YTD used in this
option means year-to-date, and will include payments or deductions for the current year, but will
exclude the payment payable now and the deductions for the current pay period.

Calculation of income
In Option 2, the actual year-to-date income plus the current income is projected over the
remaining pay periods in the year. For example, an employee received $20,000 total in 20
previous pay periods and $500 in the current pay period, and there are 5 pay periods remaining.
The projected income for the year using Option 2 will be $25,380.95 [($20,000 + $500) × 26 / 21].
When you determine year-to-date income, you have to use the year-to-date taxable income.
Therefore, you will have to store and use the year-to-date values for each pay period factor, such
as RPP (factor F) and union dues (U1).

Calculation of tax for the pay period
When you calculate tax in Option 2, you calculate the tax on the projected income for the year,
then find the tax amount that is proportional to the number of pay periods that have actually
occurred (including the current pay period). Compare the result to the tax actually deducted in the
year-to-date. The difference is the tax payable on the current income.
Continuing the above example, if the total federal and provincial or territorial tax on $25,380.95
is $3,560.17, the proportional year-to-date tax is $2,875.52 ($3,560.17 / 26 × 21.) If the total tax
deducted year-to-date is $2,736.40, the tax on the current income of $500 is $139.12
($2,875.52 – $2,736.40.) The tax values used in this example are fictitious.

Special situations
When the employer changes tax options during the year, it is recommended that the employer
reset the S1 factor to the first pay period. For example, if an employer’s pay period is weekly and
the tax option is changed for the first pay period after July 1, then S1 should be reset to 52/1
instead of 52/27. In this way, the tax deductions that have been made under the previous option
are not considered when calculating the deductions under the new option. This modification could
also apply when an employee commences employment with you during the year.
When there are tax changes during the year, the first pay period after the change will show
a significant adjustment to balance the new annual tax with the tax deducted at the old rates. It is
recommended that you reduce this impact by resetting the S1 factor or by averaging the tax
increase or decrease over the remaining pay periods.
     Note
     If an employee or a pensioner has income from another source from which no tax has been
     deducted (for example, investment income or rental income), a possible tax liability could exist
     when filing an individual income tax return for the year. The employee or pensioner may ask
     for additional tax deductions, factor L, using Form TD1.



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Formula to calculate annual taxable income (A)
A    =   Projected annual taxable income
     =   [S1 × (I – F – F2 – U1)] + B1 – HD – F1
         If the result is negative, A = $0.
S1   =   Annualizing factor
     =   This is a set of two numbers: the number of the employer’s or payer’s total pay periods
         (or, optionally, the employee’s pay periods where the periods worked are less than the
         employer’s or payer’s total pay periods), divided by the applicable number of the current
         pay period. See the chart below for examples. See also the additional information under
         “Special situations” on page 60.

          Examples                                 52pp    26pp       24pp      12pp
          1st pay period, S1 =                     52/1     26/1      24/1       12/1
          2nd pay period, S1 =                     52/2     26/2      24/2       12/2
          3rd pay period, S1 =                     52/3     26/3      24/3       12/3
          Etc., last pay period, S1 =              52/52   26/26      24/24     12/12

I    =   Gross remuneration for the pay period. This includes overtime earned and paid in the
         same pay period, pension income, qualified pension income, and taxable benefits,
         plus IYTD, but does not include amounts in factor B.
F    =   Payroll deductions for the pay period for employee contributions to a registered pension
         plan (RPP) for current and past services, a registered retirement savings plan (RRSP),
         or a retirement compensation arrangement (RCA) plus FYTD.
           Note
           We have not repeated the entire explanation for this factor. Refer to the description
           under Option 1 for full details.
F2   =   Alimony or maintenance payments required by a legal document dated before
         May 1, 1997, to be deducted at source from the employee’s salary for the pay period
         plus F2YTD. The legal document could be a garnishment or a similar order of a court or
         competent tribunal.
           Note
           We have not repeated the entire explanation for this factor. Refer to the description
           under Option 1 for full details.
U1   =   Union dues for the pay period plus U1YTD.
B1   =   Year-to-date (prior to this pay period) non-periodic payments such as a bonuses,
         retroactive pay increases, vacation pay when vacation is not taken, and accumulated
         overtime. Since tax on a current non-periodic payment is calculated separately, do not
         include the current non-periodic payment in this calculation of A. Refer to “Option 2 –
         Step-by-step example when calculating tax deductions separately on periodic and
         non-periodic payments” on page 65 for an illustration.
           Note
           For overtime earned and paid in the same pay period, the payment is included
           with the I factor. Also, when the employee receives vacation pay and takes vacation,
           the income is included in the I factor. If you wish to make deductions such as RRSP
           contributions from the bonus payment then refer to the instructions in Option 1,
           page 32, regarding the use of the additional factors F3 and F4.




                                         www.cra.gc.ca                                             61
HD =     Annual deduction for living in a prescribed zone as indicated on Form TD1.
         To determine whether or not he or she resided in a prescribed zone, an employee or
         pensioner should contact the local tax services office or tax centre.
F1   =   Annual deductions (such as child care expenses, and alimony and maintenance
         payments not deducted at source from the employee’s salary) requested by an
         employee or pensioner and authorized by a tax services office or tax centre.
         The employer or payer will be informed by a tax services office or tax centre of the
         amount to be used with F1, when it is applicable.

Formula to calculate basic federal tax (T3)
T3   =   Annual basic federal tax.
     =   (R × A) – K – K1 – K2 – K3 – K4
         If the result is negative, T3 = $0.
         For employees in Quebec only:
T3   =   Annual basic federal tax.
     =   (R × A) – K – K1 – K2Q – K3 – K4
         If the result is negative, T3 = $0.
R    =   Federal tax rate applicable to the annual taxable income A. See the “2010 federal tax
         rates and income thresholds” table below.

                         2010 federal tax rates and income thresholds
                 Annual taxable income A                  Rate           Constant
                 More than – Not more than                 R                K
                     $       0 – $ 40,970                  0.15           $     0
                      40,970 –      81,941                 0.22            2,868
                      81,941 – 127,021                     0.26            6,146
                     127,021 – and over                    0.29            9,956

A    =   Projected annual taxable income.
K    =   Federal constant to adjust application of the federal rate to the total annual taxable
         income A. See the “2010 federal tax rates and income thresholds” table above.
K1   =   Non-refundable personal tax credit.
     =   0.15 × TC
           Note
           0.15 = The appropriate percentage for the year. The appropriate percentage is the
           lowest percentage referred to in the “2010 federal tax rates and income thresholds”
           table above.
         Where:
         TC = The total personal tax credits amounts reported on Form TD1. If Form TD1 is
                  not filed by the employee or pensioner, TC is $10,382, and for non-resident
                  individuals, TC is $0. If the claim code is E, T = $0. If you have the federal tax
                  credit amount for the employee or pensioner for 2009, see the section called
                  “Indexing of personal amounts” on page 15.
           Note
           If the province is Ontario, even if the claim code is E, the Ontario Health Premium
           is payable on annual income over $20,000.
K2   =   Canada (or Quebec) Pension Plan contribution and Employment Insurance premium
         federal tax credits for the year.
         [(0.15 × (0.0495 × ((S1 × PI) + B1 – $3,500)*, max. $2,163.15)) +
     =
         (0.15 × (0.0173 × ((S1 × IE) + B1), max. $747.36))]



62                                         www.cra.gc.ca
         For employees in Quebec only:
         K2Q = Quebec Pension Plan contributions, Employment Insurance premiums, and
                provincial parental insurance plan premiums federal tax credits for the year.
                [(0.15 × (0.0495 × ((S1 × PI) + B1 – $3,500)*, max. $2,163.15)) +
              =
                (0.15 × (0.0136 × ((S1 × IE) + B1), max. $587.52)) +
                (0.15 × (0.00506 × S1 × IE) + B1), max $316.25))]
           Note
           * If the result is negative, substitute $0.
         Where:
         PI = Pensionable income for the pay period, or the gross income plus any taxable
                   benefits for the pay period, plus PIYTD.
         IE = Insurable earnings for the pay period including insurable taxable benefits
                   for the pay period, plus IEYTD.
         The above is subject to the rules contained in Part B and Part C of this publication and
         instructions contained in the employers’ guide called Payroll Deductions and
         Remittances.
K3   =   Other federal tax credits, such as medical expenses and charitable donations
         requested by an employee or pensioner and authorized by the tax services office or tax
         centre. The tax services office or tax centre will inform the employer or payer of
         the amount to be used with K3. If no amount has been authorized, K3 = $0.
K4   =   Canada Employment Credit
     =   The lesser of:
         (i) 0.15 × A; and
         (ii) 0.15 × $1,051
                Note
                For purposes of the Canada Employment Credit, A is the annual gross income
                from office or employment before deductions. This is the same amount you
                normally report in box 14 of the T4 slip(s). As administrative relief, you are
                authorized to use the regular factor A (annual taxable income) for this calculation,
                except when the total income is superannuation or pension benefits.

Formula to calculate the federal tax payable (T1)
T1   =   Annual federal tax deduction except for Quebec, outside Canada, and in Canada
         beyond the limits of any province.
     =   (T3 – LCF)*
         * If the result is negative, substitute $0.
         For Quebec only:
         T1 =    (T3 – LCF)* – (0.165 × T3)
                 * If the result is negative, substitute $0.
         For outside Canada or in Canada beyond the limits of any province only:
         T1 =    [T3 + (0.48 × T3) – LCF]*
                 * If the result is negative, substitute $0.
T3   =   Annual basic tax.
LCF =    Labour-sponsored funds federal tax credit.
    =    The lesser of:
         (i) $750; and
         (ii) 15% of the amount deducted or withheld during the year for the acquisition by
              the employee of approved shares of the capital stock of a prescribed labour-
              sponsored venture capital corporation.
             Note
             If the shares are invested in an RRSP, then the amount invested can be used
             to determine the annual taxable income amount.


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Formula to calculate provincial and territorial tax payable (T2)
We have not repeated the entire explanation for the provincial and territorial variables.
Effective January 1, 2010, the variables for Option 2 are the same as Option 1, except for factor
K2P, which is as follows:
K2P =    [(Lowest provincial or territorial tax rate × (0.0495 × ((S1 × PI) + B1 – $3,500)*,
         max. $2,163.15)) + (lowest provincial or territorial tax rate × (0.0173 × ((S1 × IE) + B1),
         max. $747.36))]
         * If the result is negative, substitute $0.
         Replace the lowest provincial or territorial tax rate with the appropriate rate for the
         province or territory that is applicable to the employee or pensioner.
         For Quebec only:
         T2 =    $0
         For outside Canada or in Canada beyond the limits of any province only:
         T2 =    $0

Formula to calculate tax deductions (T) for the pay period
T    =   Estimated federal and provincial or territorial tax deduction for the pay period.
     =   [((T1 + T2 – M1) / S1) – M]* + L
         * If the result is negative, T = L.
         The resulting amount can be rounded to the nearest multiple of $0.05 or $0.01.
         For employees in Quebec, outside Canada, and in Canada beyond the limits of
         any province only:
         T   =   Estimated federal tax deduction for the pay period.**
             =   [((T1 – M1) / S1) – M]* + L
                 * If the result is negative, T = L.
                 The resulting amount can be rounded to the nearest multiple of $0.05 or $0.01.
                 ** Note
                    Quebec employers whose employees receive income from tips and gratuities
                    should review the section called “Example for employees in the hotel and
                    restaurant business in Quebec” on page 58.
T1   =   Annual federal tax deduction.
T2   =   Annual provincial or territorial tax deduction.
S1   =   Annualizing factor.
M    =   Accumulated federal and provincial (or territorial) tax deductions on periodic payments
         such as salary, wages, and taxable benefits, if any, to the last pay period. Exclude
         any year-to-date additional tax deductions requested by the employee, factor L.
         Tax previously deducted on non-periodic payments such as bonuses, is included in
         factor M1.
M1   =   Accumulated federal and provincial (or territorial) tax deductions on non-periodic
         payments such as bonuses, if any, to the last pay period. Exclude any year-to-date
         additional tax deductions for the year requested by the employee, factor L, and any tax
         included in factor M. The T factor (tax deduction for the pay period) will not include
         the tax on the non-periodic payment. The tax to be deducted on a current non-periodic
         payment is kept in another field (TB).
TB   =   Estimated federal and provincial or territorial tax deduction on a non-periodic payment
         for the pay period.
     =   Step 1 minus Step 2 below (if negative, TB = $0).
         Step 1
         Projected annual taxable income including B1 and B payable now
         = [S1 × (I – F – F2 – U1)] + B1 + B – HD – F1

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          Step 2
          Projected annual taxable income including B1 and excluding B payable now
          = [S1 × (I – F – F2 – U1)] + B1 – HD – F1
L    =    Additional tax deductions for the pay period as reported on Form TD1.
            Note
            To cancel the election to have additional tax deducted, the employee or pensioner
            must file a new Form TD1 entering $0 at the item “Additional tax to be deducted.”


Option 2 – Step-by-step example when calculating tax deductions
separately on periodic and non-periodic payments
This example is based on pay period 14 from the chart for the province of Nova Scotia
on page 70. In pay period 14, the employee receives current salary or wages of $740 and
a bonus (B) of $500. The year-to-date income (I) from pay period 13 is $8,715 and the employee
received two previous non-periodic payments (bonuses) amounting to $150 (B1). The F, F2, U1,
HD, F1, and K3 are $0.
The year-to-date tax deducted (M) from pay period 14 is $736.19 and the year-to-date tax
on previous bonuses (M1) is $33.30. In this example, the TD1 forms filed by the employee are
for January 2010. They show total federal personal tax credits of $10,382 (TC) and provincial
personal tax credits of $8,231 (TCP). All of the employee’s income is subject to CPP and
EI deductions.
This example illustrates the following steps:
Step 1 – Calculation of annual tax on year to date income including current periodic payment and
         previous and current bonuses.
Step 2 – Calculation of annual tax on year to date income including current periodic payment and
         previous bonuses only.
Step 3 – Calculation of tax deduction (T) on current periodic payment.
Step 4 – Calculation of tax deduction (TB) on current bonus payment.
Changes in this section are not shaded.

Step 1 – Calculation of annual tax on year to date income including B1 and B
Determine the projected annual taxable income A:
A    =   [S1 × (I – F – F2 – U1)] + B1 + B – HD – F1
     =   [26/14 × ($9,455 – $0 – $0 – $0)] + $150 + $500 – $0 – $0
     =   $17,559.29 + $150 + $500
     =   $18,209.29

Determine the K1, K2, K3, and K4 credits:
K1   = 0.15 × TC
     = 0.15 × $10,382
     = $1,557.30
K2   = [(0.15 × (0.0495 × ((S1 × PI) + B1 + B – $3,500)*, max. $2,163.15)) +
       (0.15 × (0.0173 × ((S1 × IE) + B1 + B), max. $747.36))]
       * If the result is negative, substitute $0.
     = [(0.15 × (0.0495 × (($18,209.29 – $3,500)*, max. $2,163.15)) +
       (0.15 × (0.0173 × $18,209.29, max. $747.36))]
     = [(0.15 × $728.11) + (0.15 × $315.02)]
     = $109.22 + $47.25
     = $156.47
K3   = $0
K4   = The lesser of:
       (i) 0.15 × A; and
       (ii) 0.15 × $1,051
     = 0.15 × $1,051

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     = $157.65
Determine T3, annual basic federal tax:
T3   =   (R × A) – K – K1 – K2 – K3 – K4
     =   (0.15 × $18,209.29) – $0 – $1,557.30 – $156.47 – $0 – $157.65
     =   $2,731.39 – $0 – $1,557.30 – $156.47 – $0 – $157.65
     =   $859.97
Determine the total federal tax deduction for the year:
T1   = (T3 – LCF)*
       * If the result is negative, substitute $0.
     = $859.97 – $0
     = $859.97
Determine the total provincial tax deduction for the year:
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
         Where:
         T4      = (V × A) – KP – K1P – K2P – K3P
         Where V and KP are determined based on the value of A in the “2010 Nova Scotia tax
         rates and income thresholds” table.
         (V × A) = 0.0879 × $18,209.29
                 = $1,600.60
KP = $0
K1P = 0.0879 × TCP
    = 0.0879 × $8,231
    = $723.50
K2P = [(0.0879 × (0.0495 × ((S1 × PI) + B1 + B – $3,500)*, max. $2,163.15)) +
      (0.0879 × (0.0173 × ((S1 × IE) + B1 + B), max. $747.36))]
      * If the result is negative, substitute $0.
    = [(0.0879 × (0.0495 × $18,209.29 – $3,500)*, max. $2,163.15)) +
      (0.0879 × (0.0173 × $18,209.29, max. $747.36))]
    = [(0.0879 × $728.11) + (0.0879 × $315.02)]
    = $64.00 + $27.69
    = $91.69
K3P = $0
T4   = (V × A) – KP – K1P – K2P – K3P
     = $1,600.60 – $0 – $723.50 – $91.69 – $0
     = $785.41
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
     = $785.41 + $0 – $0 – $0
     = $785.41

Step 2 – Calculation of annual tax on year to date income including B1 only
A    = [S1 × (I – F – F2 – U1)] + B1 – HD – F1
     = $17,709.29
K1   = 0.15 × TC
     = $1,557.30
K2   = [(0.15 × (0.0495 × ((S1 × PI) + B1 – $3,500)*, max. $2,163.15)) +
       (0.15 × (0.0173 × ((S1 × IE) + B1), max. $747.36))]
       * If the result is negative, substitute $0.
     = [(0.15 × $703.36) + (0.15 × $306.37)]
     = $151.46


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K3   = $0
K4   = 0.15 × $1,051
     = $157.65
T3   = (R × A) – K – K1 – K2 – K3 – K4
     = (0.15 × $17,709.29) – $0 – $1,557.30– $151.46 – $0 – $157.65
     = $789.98
T1   = T3 – LCF
     = $789.98 – $0
       $789.98
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
        Where:
        T4      = (V × A) – KP – K1P – K2P – K3P
                  Where V and KP are determined based on the value of A in the “2010 Nova
                  Scotia tax rates and income thresholds” table.
        (V × A) = 0.0879 × $17,709.29
                = $1,556.65
KP = $0
K1P = 0.0879 × TCP
    = $723.50
K2P = [(0.0879 × (0.0495 × ((S1 × PI) + B1 – $3,500)*, max. $2,163.15)) +
      (0.0879 × (0.0173 × ((S1 × IE) + B1), max. $747.36))]
      * If the result is negative, substitute $0.
    = [(0.0879 × $703.36) + (0.0879 × $306.37)]
    = $88.76
K3P = $0
T4   = (V × A) – KP – K1P – K2P – K3P
     = $1,556.65 – $0 – $723.50 – $88.76 – $0
     = $744.39
T2   = T4 + V1 – S – LCP
       If the result is negative, T2 = $0.
     = $744.39

Step 3 – Calculation of tax deduction on current periodic payment (T)
T    = [((T1 + T2 – M1) / S1) – M] + L
       If the result is negative, T = $0.
     = [(($789.98 + 744.39 – $33.30) × 14 / 26) – $736.19] + $0
     = [($1,534.37 × 14 / 26) – $736.19] + $0
     = [$808.27 – $736.19] + $0
     = $72.08

Step 4 – Calculation of tax deduction on current bonus payment (TB)
TB      =   (T1 + T2 in Step 1) – (T1 + T2 in Step 2)
        =   ($859.97 + $785.41) – ($789.98 + $744.39)
        =   $1,645.38 – $1,534.37
        =   $111.01


Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately
On the following pages you will find examples for all provinces and territories of the results
expected when using Option 2 when calculating separately the tax on regular salary and on


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non-periodic payments. A bi-weekly (26) pay period and the optional non-periodic payment
formula are used in these examples.




68                                      www.cra.gc.ca
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Alberta

                         I                                             K1 + K2                        K1P +                                    (T1+T2-

PP      Salary        YTD            B        B1            A            + K4             T1           K2P             T2           M1        M1) / S1            M             T       TB

            $            $           $         $            $               $              $              $             $             $            $              $             $        $
 1        740            740                         19,240.00          1,881.75 1,004.25 1,793.70                    130.30                      43.64                        43.64

 2        740         1,480                          19,240.00          1,881.75 1,004.25 1,793.70                    130.30                      87.27        -43.64          43.63

 3        740           2,220                        19,240.00          1,881.75 1,004.25 1,793.70                    130.30                     130.91        -87.27          43.64

 4        740           2,960                        19,240.00          1,881.75 1,004.25 1,793.70                    130.30                     174.55       -130.91          43.64

4B                     2,960       100        100 1 9 , 3 4 0 . 0 0     1,882.75 1,018.25 1,794.37                    139.63                     see*         -174.55                  23.33

 5        680           3,640                 100 1 9 , 0 2 8 . 0 0     1,879.63         974.57 1,792.28              110.52 -23.33              204.18       -174.55          29.63

 6        510            4,150                100 1 8 , 0 8 3 . 3 3     1,870.16         842.34 1,785.97               22.36      -23.33         194.16       -204.18          0.00

 7        680           4,830                 100 1 8 , 0 4 0 . 0 0     1,869.72         836.28 1,785.68               18.32      -23.33         223.80       -204.18          19.62

7B                     4,830        50       150 1 8 , 0 9 0 . 0 0      1,870.22         843.28 1,786.02               22.98 -23.33              see*         -223.80                  11.66

 8        680           5,510                 150 1 8 , 0 5 7 . 5 0     1,869.90         838.73 1,785.80               19.95 -34.99              253.44       -223.80          29.64

 9        680           6,190                 150 1 8 , 0 3 2 . 2 2     1,869.64         835.19 1,785.63               17.59 -34.99              283.08       -253.44          29.64

 10       680           6,870                 150 1 8 , 0 1 2 . 0 0     1,869.44         832.36 1,785.49               15.71 -34.99              312.72       -283.08          29.64

 11       680           7,550                 150 1 7 , 9 9 5 . 4 5     1,869.28         830.04 1,785.38               14.17 -34.99              342.36       -312.72          29.64

 12       485           8,035                 150 1 7 , 5 5 9 . 1 7     1,864.91         768.97 1,782.47                    -     -34.99         338.76       -342.36          0.00

 13       680           8,715                 150 1 7 , 5 8 0 . 0 0     1,865.11         771.89 1,782.61                    -     -34.99         368.45       -342.36          26.09

 14       740           9,455                 150 1 7 , 7 0 9 . 2 9     1,866.41         789.98 1,783.48                    -     -34.99         406.53       -368.45          38.08

14B                   9,455        500       650 1 8 , 2 0 9 . 2 9      1,871.42         859.97 1,786.81               34.12 -34.99              see*         -406.53                  104.11

 15       680          10,135                 650 1 8 , 2 1 7 . 3 3     1,871.50         861.10 1,786.87               34.86 -139.10             436.65       -406.53          30.12

 16       680          10,815                 650 1 8 , 2 2 4 . 3 8     1,871.57         862.09 1,786.92               35.52 -139.10             466.78       -436.65          30.13

 17       680          11,495                 650 1 8 , 2 3 0 . 5 9     1,871.63         862.96 1,786.96               36.10 -139.10             496.90       -466.78          30.12

 18       680          12,175                 650 1 8 , 2 3 6 . 1 1     1,871.69         863.73 1,786.99               36.62 -139.10             527.02       -496.90          30.12

 19       680          12,855                 650 1 8 , 2 4 1 . 0 5     1,871.74         864.42 1,787.03               37.08 -139.10             557.14       -527.02          30.12

 20       680          13,535                 650 1 8 , 2 4 5 . 5 0     1,871.79         865.04 1,787.06               37.49 -139.10             587.25       -557.14          30.11

 21       680          14,215                 650 1 8 , 2 4 9 . 5 2     1,871.83         865.60 1,787.08               37.87 -139.10             617.38       -587.25          30.13

 22       680          14,895                 650 1 8 , 2 5 3 . 1 8     1,871.86         866.12 1,787.11               38.21 -139.10             647.50       -617.38          30.12

 23       680          15,575                 650 1 8 , 2 5 6 . 5 2     1,871.90         866.58 1,787.13               38.52 -139.10             677.62       -647.50          30.12

 24       680          16,255                 650 1 8 , 2 5 9 . 5 8     1,871.92         867.02 1,787.15               38.81 -139.10             707.75       -677.62          30.13

 25       680          16,935                 650 1 8 , 2 6 2 . 4 0     1,871.95         867.41 1,787.16               39.08 -139.10             737.88       -707.75          30.13

 26       680          17,615                 650 1 8 , 2 6 5 . 0 0     1,871.98         867.77 1,787.19               39.31 -139.10             767.98       -737.88          30.10

Total tax deducted for the year on regular salary...........................................................................................................................    $ 767.98

Total tax deducted for the year on non-periodic payments ............................................................................................................               139.10

Total tax deducted for the year on salary and non-periodic payments ..........................................................................................                  $ 907.08


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments, the
        same principle will apply. The non-periodic payment tax calculation for pay period 14 has
        been used to determine the steps to follow. For more details, see the example that begins on
        page 65.

YTD = year-to-date



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Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
British Columbia

                       I                                             K1 + K2                         K1P +                                   (T1+T2-

PP     Salary        YTD           B         B1           A             + K4             T1           K2P            T2            M1        M1) / S1            M               T      TB

          $            $           $          $            $              $               $             $             $             $             $              $               $       $
 1       740               740                      19,240.00         1,881.75 1,004.25              612.86           31.03                       39.82                     39.82

 2       740           1,480                        19,240.00         1,881.75 1,004.25              612.86           31.03                       79.64       -39.82        39.82

 3       740           2,220                        19,240.00         1,881.75 1,004.25              612.86           31.03                     119.46        -79.64        39.82

 4       740           2,960                        19,240.00         1,881.75 1,004.25              612.86           31.03                     159.27       -119.46        39.81

4B                   2,960        100       100 1 9 , 3 4 0 . 0 0     1,882.75 1,018.25              613.20           38.95                     see*         -159.27                   21.92

 5       680           3,640                100 1 9 , 0 2 8 . 0 0     1,879.63          974.57       612.15           14.24 -21.92              185.94       -159.27        26.67

 6       510           4,150                100 1 8 , 0 8 3 . 3 3     1,870.16          842.34       608.96                -     -21.92         189.33       -185.94         3.39

 7       680           4,830                100 1 8 , 0 4 0 . 0 0     1,869.72          836.28       608.81            -         -21.92         219.25       -189.33        29.92

7B                   4,830        50        150 1 8 , 0 9 0 . 0 0     1,870.22          843.28       608.98            -         -21.92         see*         -219.25                    7.00

 8       680           5,510                150 1 8 , 0 5 7 . 5 0     1,869.90          838.73       608.87            -         -28.92         249.17       -219.25        29.92

 9       680           6,190                150 1 8 , 0 3 2 . 2 2     1,869.64          835.19       608.79            -         -28.92         279.09       -249.17        29.92

10       680           6,870                150 1 8 , 0 1 2 . 0 0     1,869.44          832.36       608.72            -         -28.92         309.02       -279.09        29.93

11       680           7,550                150 1 7 , 9 9 5 . 4 5     1,869.28          830.04       608.66            -         -28.92         338.94       -309.02        29.92

12       485           8,035                150 1 7 , 5 5 9 . 1 7     1,864.91          768.97       607.18            -         -28.92         341.56       -338.94         2.62

13       680           8,715                150 1 7 , 5 8 0 . 0 0     1,865.11          771.89       607.26            -         -28.92         371.49       -341.56        29.93

14       740           9,455                150 1 7 , 7 0 9 . 2 9     1,866.41          789.98       607.69            -         -28.92         409.80       -371.49        38.31

14B                  9,455        500       650 1 8 , 2 0 9 . 2 9     1,871.42          859.97       609.38            -         -28.92         see*         -409.80                   69.99

15       680          10,135                650 1 8 , 2 1 7 . 3 3     1,871.50          861.10       609.41            -         -98.91         439.73       -409.80        29.93

16       680          10,815                650 1 8 , 2 2 4 . 3 8     1,871.57          862.09       609.43            -         -98.91         469.65       -439.73        29.92

17       680          11,495                650 1 8 , 2 3 0 . 5 9     1,871.63          862.96       609.46            -         -98.91         499.57       -469.65        29.92

18       680          12,175                650 1 8 , 2 3 6 . 1 1     1,871.69          863.73       609.47            -         -98.91         529.49       -499.57        29.92

19       680          12,855                650 1 8 , 2 4 1 . 0 5     1,871.74          864.42       609.49            -         -98.91         559.41       -529.49        29.92

20       680          13,535                650 1 8 , 2 4 5 . 5 0     1,871.79          865.04       609.50            -         -98.91         589.33       -559.41        29.92

21       680          14,215                650 1 8 , 2 4 9 . 5 2     1,871.83          865.60       609.52            -         -98.91         619.25       -589.33        29.92

22       680          14,895                650 1 8 , 2 5 3 . 1 8     1,871.86          866.12       609.53            -         -98.91         649.18       -619.25        29.93

23       680          15,575                650 1 8 , 2 5 6 . 5 2     1,871.90          866.58       609.54            -         -98.91         679.09       -649.18        29.91

24       680          16,255                650 1 8 , 2 5 9 . 5 8     1,871.92          867.02       609.55            -         -98.91         709.02       -679.09        29.93

25       680          16,935                650 1 8 , 2 6 2 . 4 0     1,871.95          867.41       609.57            -         -98.91         738.94       -709.02        29.92

26       680          17,615                650 1 8 , 2 6 5 . 0 0     1,871.98          867.77       609.57            -         -98.91         768.86       -738.94        29.92

 Total tax deducted for the year on regular salary ...........................................................................................................................       $768.86

 Total tax deducted for the year on non-periodic payments.............................................................................................................                 98.91

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 867.77


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments, the
        same principle will apply. The non-periodic payment tax calculation for pay period 14 has
        been used to determine the steps to follow. For more details, see the example that begins on
        page 65.

YTD = year-to-date


70                                                                              www.cra.gc.ca
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Manitoba

                      I                                             K1+ K2                        K1P+                                  (T1+T2-

PP     Salary       YTD           B        B1            A            + K4            T1           K2P            T2           M1       M1) / S1           M             T         TB

          $           $           $          $           $              $              $             $            $             $            $              $            $          $
 1       740              740                     19,240.00         1,881.75 1,004.25 998.57                 1,079.35                        80.14                    80.14

 2       740           1,480                      19,240.00         1,881.75 1,004.25 998.57                 1,079.35                      160.28       -80.14        80.14

 3       740          2,220                       19,240.00         1,881.75 1,004.25 998.57                 1,079.35                      240.42      -160.28        80.14

 4       740          2,960                       19,240.00         1,881.75 1,004.25 998.57                 1,079.35                      320.55      -240.42        80.13

4B                   2,960      100        100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25 999.28                 1,089.44                      see*        -320.55                   24.09

 5       680          3,640                100 1 9 , 0 2 8 . 0 0    1,879.63         974.57 997.03           1,057.99       -24.09         386.24      -320.55        65.69

 6       510           4,150               100 1 8 , 0 8 3 . 3 3    1,870.16         842.34 990.22             962.78       -24.09         411.01      -386.24        24.77

 7       680          4,830                100 1 8 , 0 4 0 . 0 0    1,869.72         836.28 989.91             958.41       -24.09         476.70      -411.01        65.69

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22         843.28 990.27             963.45       -24.09         see*        -476.70                   12.04

 8       680           5,510               150 1 8 , 0 5 7 . 5 0    1,869.90         838.73 990.03             960.18       -36.13         542.39      -476.70        65.69

 9       680           6,190               150 1 8 , 0 3 2 . 2 2    1,869.64         835.19 989.85             957.63       -36.13         608.09      -542.39        65.70

10       680          6,870                150 1 8 , 0 1 2 . 0 0    1,869.44         832.36 989.70             955.60       -36.13         673.78      -608.09        65.69

11       680          7,550                150 1 7 , 9 9 5 . 4 5    1,869.28         830.04 989.58             953.93       -36.13         739.47      -673.78        65.69

12       485          8,035                150 1 7 , 5 5 9 . 1 7    1,864.91         768.97 986.44             909.95       -36.13         758.21      -739.47        18.74

13       680           8,715               150 1 7 , 5 8 0 . 0 0    1,865.11         771.89 986.59             912.05       -36.13         823.91      -758.21        65.70

14       740          9,455                150 1 7 , 7 0 9 . 2 9    1,866.41         789.98 987.52             925.08       -36.13         904.04      -823.91        80.13

14B                  9,455      500        650 1 8 , 2 0 9 . 2 9    1,871.42         859.97 991.13             975.47       -36.13         see*        -904.04                  120.38

15       680         10,135                650 1 8 , 2 1 7 . 3 3    1,871.50         861.10 991.19             976.28       -156.51        969.73      -904.04        65.69

16       680         10,815                650 1 8 , 2 2 4 . 3 8    1,871.57         862.09 991.24             976.99       -156.51 1,035.43           -969.73        65.70

17       680         11,495                650 1 8 , 2 3 0 . 5 9    1,871.63         862.96 991.28             977.62       -156.51 1,101.12 -1,035.43 65.69

18       680         12,175                650 1 8 , 2 3 6 . 1 1    1,871.69         863.73 991.32             978.18       -156.51 1,166.82 -1,101.12 65.70

19       680         12,855                650 1 8 , 2 4 1 . 0 5    1,871.74         864.42 991.36             978.67       -156.51 1,232.50 -1,166.82 65.68

20       680         13,535                650 1 8 , 2 4 5 . 5 0    1,871.79         865.04 991.39             979.12       -156.51 1,298.19 -1,232.50 65.69

21       680         14,215                650 1 8 , 2 4 9 . 5 2    1,871.83         865.60 991.42             979.53       -156.51 1,363.89 -1,298.19 65.70

22       680         14,895                650 1 8 , 2 5 3 . 1 8    1,871.86         866.12 991.44             979.90       -156.51 1,429.59 -1,363.89 65.70

23       680         15,575                650 1 8 , 2 5 6 . 5 2    1,871.90         866.58 991.47             980.23       -156.51 1,495.27 -1,429.59 65.68

24       680         16,255                650 1 8 , 2 5 9 . 5 8    1,871.92         867.02 991.49             980.54       -156.51 1,560.97 -1,495.27 65.70

25       680         16,935                650 1 8 , 2 6 2 . 4 0    1,871.95         867.41 991.51             980.83       -156.51 1,626.66 -1,560.97 65.69

26       680         17,615                650 1 8 , 2 6 5 . 0 0    1,871.98         867.77 991.53             981.09       -156.51 1,692.35 -1,626.66 65.69

 Total tax deducted for the year on regular salary ........................................................................................................................... $1,692.35

 Total tax deducted for the year on non–periodic payments............................................................................................................         156.51

 Total tax deducted for the year on salary and non–periodic payments .......................................................................................... $ 1,848.86


     * Note
       Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
       amounts determined at line 4. For other similar payments, such as lump-sum payments, the
       same principle will apply. The non-periodic payment tax calculation for pay period 14 has
       been used to determine the steps to follow. For more details, see the example that begins on
       page 65.

YTD = year-to-date



                                                                             www.cra.gc.ca                                                                                          71
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
New Brunswick

                       I                                           K1 + K2                        K1P +                                  (T1+T2-

PP     Salary       YTD           B         B1           A            + K4            T1           K2P            T2           M1        M1) / S1           M            T         TB

          $           $           $          $           $              $              $             $             $            $             $             $            $           $
 1       740               740                    19,240.00         1,881.75 1,004.25             919.68         869.64                      72.07                    72.07

 2       740           1,480                      19,240.00         1,881.75 1,004.25             919.68         869.64                    144.15        -72.07       72.08

 3       740          2,220                       19,240.00         1,881.75 1,004.25             919.68         869.64                    216.22 -144.15             72.07

 4       740          2,960                       19,240.00         1,881.75 1,004.25             919.68         869.64                    288.29 -216.22             72.07

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25             920.30         878.32                     see*        -288.29                   22.68

 5       680          3,640                100 1 9 , 0 2 8 . 0 0    1,879.63         974.57       918.35         851.25 -22.68             346.76 -288.29             58.47

 6       510           4,150               100 1 8 , 0 8 3 . 3 3    1,870.16         842.34       912.48         769.27 -22.68             366.68 -346.76             19.92

 7       680          4,830                100 1 8 , 0 4 0 . 0 0    1,869.72         836.28       912.21         765.51 -22.68             425.15 -366.68             58.47

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22         843.28       912.54         769.83 -22.68              see*        -425.15                   11.32

 8       680           5,510               150 1 8 , 0 5 7 . 5 0    1,869.90         838.73       912.33         767.02 -34.00             483.62 -425.15             58.47

 9       680           6,190               150 1 8 , 0 3 2 . 2 2    1,869.64         835.19       912.17         764.83 -34.00             542.08 -483.62             58.46

10       680          6,870                150 1 8 , 0 1 2 . 0 0    1,869.44         832.36       912.05         763.07 -34.00             600.55 -542.08             58.47

11       680          7,550                150 1 7 , 9 9 5 . 4 5    1,869.28         830.04       911.94         761.64 -34.00             659.02 -600.55             58.47

12       485          8,035                150 1 7 , 5 5 9 . 1 7    1,864.91         768.97       909.23         723.77 -34.00             673.26 -659.02             14.24

13       680           8,715               150 1 7 , 5 8 0 . 0 0    1,865.11         771.89       909.36         725.58 -34.00             731.74 -673.26             58.48

14       740          9,455                150 1 7 , 7 0 9 . 2 9    1,866.41         789.98       910.16         736.80 -34.00             803.80 -731.74             72.06

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9    1,871.42         859.97       913.27         780.19 -34.00              see*        -803.80                  113.38

15       680          10,135               650 1 8 , 2 1 7 . 3 3    1,871.50         861.10       913.32         780.89 -147.38            862.28 -803.80             58.48

16       680          10,815               650 1 8 , 2 2 4 . 3 8    1,871.57         862.09       913.36         781.51 -147.38            920.75 -862.28             58.47

17       680          11,495               650 1 8 , 2 3 0 . 5 9    1,871.63         862.96       913.40         782.04 -147.38            979.21 -920.75             58.46

18       680          12,175               650 1 8 , 2 3 6 . 1 1    1,871.69         863.73       913.44         782.52 -147.38 1,037.68 -979.21                      58.47

19       680         12,855                650 1 8 , 2 4 1 . 0 5    1,871.74         864.42       913.47         782.95 -147.38 1,096.15 -1,037.68 58.47

20       680         13,535                650 1 8 , 2 4 5 . 5 0    1,871.79         865.04       913.50         783.33 -147.38 1,154.61 -1,096.15 58.46

21       680          14,215               650 1 8 , 2 4 9 . 5 2    1,871.83         865.60       913.52         783.69 -147.38 1,213.08 -1,154.61 58.47

22       680         14,895                650 1 8 , 2 5 3 . 1 8    1,871.86         866.12       913.55         784.00 -147.38 1,271.55 -1,213.08 58.47

23       680         15,575                650 1 8 , 2 5 6 . 5 2    1,871.90         866.58       913.56         784.30 -147.38 1,330.02 -1,271.55 58.47

24       680         16,255                650 1 8 , 2 5 9 . 5 8    1,871.92         867.02       913.59         784.55 -147.38 1,388.48 -1,330.02 58.46

25       680         16,935                650 1 8 , 2 6 2 . 4 0    1,871.95         867.41       913.60         784.80 -147.38 1,446.95 -1,388.48 58.47

26       680          17,615               650 1 8 , 2 6 5 . 0 0    1,871.98         867.77       913.62         785.03 -147.38 1,505.42 -1,446.95 58.47

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,505.42

 Total tax deducted for the year on non-periodic payments.............................................................................................................         147.38

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,652.80


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments, the
        same principle will apply. The non-periodic payment tax calculation for pay period 14 has
        been used to determine the steps to follow. For more details, see the example that begins on
        page 65.

YTD = year-to-date



72                                                                            www.cra.gc.ca
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Newfoundland and Labrador

                       I                                            K1+ K2                         K1P                                   (T1+T2-

PP     Salary       YTD           B         B1           A            + K4            T1       + K2P              T2           M1        M1) / S1           M            T         TB

          $           $           $          $           $              $              $             $             $            $             $             $            $           $
 1       740               740                    19,240.00         1,881.75 1,004.25             688.76         792.72                      69.11                    69.11

 2       740           1,480                      19,240.00         1,881.75 1,004.25             688.76         792.72                    138.23        -69.11       69.12

 3       740          2,220                       19,240.00         1,881.75 1,004.25             688.76         792.72                    207.34       -138.23       69.11

 4       740          2,960                       19,240.00         1,881.75 1,004.25             688.76         792.72                    276.46       -207.34       69.12

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25             689.27         799.91                     see*        -276.46                   21.19

 5       680          3,640                100 1 9 , 0 2 8 . 0 0    1,879.63         974.57       687.68         777.48 -21.19             332.86       -276.46       56.40

 6       510           4,150               100 1 8 , 0 8 3 . 3 3    1,870.16         842.34       682.81         709.61 -21.19             353.25       -332.86       20.39

 7       680          4,830                100 1 8 , 0 4 0 . 0 0    1,869.72         836.28       682.59         706.49 -21.19             409.66       -353.25       56.41

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22         843.28       682.85         710.08 -21.19              see*        -409.66                   10.59

 8       680           5,510               150 1 8 , 0 5 7 . 5 0    1,869.90         838.73       682.68         707.75 -31.78             466.06       -409.66       56.40

 9       680           6,190               150 1 8 , 0 3 2 . 2 2    1,869.64         835.19       682.55         705.93 -31.78             522.46       -466.06       56.40

10       680          6,870                150 1 8 , 0 1 2 . 0 0    1,869.44         832.36       682.44         704.48 -31.78             578.87       -522.46       56.41

11       680          7,550                150 1 7 , 9 9 5 . 4 5    1,869.28         830.04       682.36         703.29 -31.78             635.27       -578.87       56.40

12       485          8,035                150 1 7 , 5 5 9 . 1 7    1,864.91         768.97       680.12         671.94 -31.78             650.37       -635.27       15.10

13       680           8,715               150 1 7 , 5 8 0 . 0 0    1,865.11         771.89       680.23         673.43 -31.78             706.77       -650.37       56.40

14       740          9,455                150 1 7 , 7 0 9 . 2 9    1,866.41         789.98       680.89         682.73 -31.78             775.89       -706.77       69.12

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9    1,871.42         859.97       683.46         718.66 -31.78              see*        -775.89                  105.92

15       680          10,135               650 1 8 , 2 1 7 . 3 3    1,871.50         861.10       683.51         719.22 -137.70            832.28       -775.89       56.39

16       680          10,815               650 1 8 , 2 2 4 . 3 8    1,871.57         862.09       683.54         719.74 -137.70            888.70       -832.28       56.42

17       680          11,495               650 1 8 , 2 3 0 . 5 9    1,871.63         862.96       683.58         720.18 -137.70            945.10       -888.70       56.40

18       680          12,175               650 1 8 , 2 3 6 . 1 1    1,871.69         863.73       683.60         720.58 -137.70 1,001.50 -945.10                      56.40

19       680         12,855                650 1 8 , 2 4 1 . 0 5    1,871.74         864.42       683.63         720.93 -137.70 1,057.90 -1,001.50 56.40

20       680         13,535                650 1 8 , 2 4 5 . 5 0    1,871.79         865.04       683.65         721.25 -137.70 1,114.30 -1,057.90 56.40

21       680          14,215               650 1 8 , 2 4 9 . 5 2    1,871.83         865.60       683.67         721.54 -137.70 1,170.70 -1,114.30 56.40

22       680         14,895                650 1 8 , 2 5 3 . 1 8    1,871.86         866.12       683.69         721.80 -137.70 1,227.11 -1,170.70 56.41

23       680         15,575                650 1 8 , 2 5 6 . 5 2    1,871.90         866.58       683.70         722.05 -137.70 1,283.52 -1,227.11 56.41

24       680         16,255                650 1 8 , 2 5 9 . 5 8    1,871.92         867.02       683.72         722.27 -137.70 1,339.93 -1,283.52 56.41

25       680         16,935                650 1 8 , 2 6 2 . 4 0    1,871.95         867.41       683.74         722.46 -137.70 1,396.32 -1,339.93 56.39

26       680          17,615               650 1 8 , 2 6 5 . 0 0    1,871.98         867.77       683.75         722.66 -137.70 1,452.73 -1,396.32 56.41

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,452.73

 Total tax deducted for the year on non-periodic payments.............................................................................................................         137.70

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,590.43


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments, the
        same principle will apply. The non-periodic payment tax calculation for pay period 14 has
        been used to determine the steps to follow. For more details, see the example that begins on
        page 65.

YTD = year-to-date



                                                                              www.cra.gc.ca                                                                                          73
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Northwest Territories

                       I                                           K1 + K2                        K1P +                                  (T1+T2-

PP     Salary       YTD           B         B1           A            + K4            T1           K2P            T2           M1        M1) / S1           M            T         TB

          $           $           $          $           $              $              $             $             $            $             $             $            $           $
 1       740               740                    19,240.00         1,881.75 1,004.25             817.27         317.89                      50.85                    50.85

 2       740           1,480                      19,240.00         1,881.75 1,004.25             817.27         317.89                    101.70        -50.85       50.85

 3       740          2,220                       19,240.00         1,881.75 1,004.25             817.27         317.89                    152.55 -101.70             50.85

 4       740          2,960                       19,240.00         1,881.75 1,004.25             817.27         317.89                    203.41 -152.55             50.86

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25             817.66         323.40                     see*        -203.41                   19.51

 5       680          3,640                100 1 9 , 0 2 8 . 0 0    1,879.63         974.57       816.43         306.22 -19.51             242.55 -203.41             39.14

 6       510           4,150               100 1 8 , 0 8 3 . 3 3    1,870.16         842.34       812.71         254.21 -19.51             248.55 -242.55              6.00

 7       680          4,830                100 1 8 , 0 4 0 . 0 0    1,869.72         836.28       812.53         251.83 -19.51             287.70 -248.55             39.15

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22         843.28        812.73        254.58 -19.51              see*        -287.70                    9.75

 8       680           5,510               150 1 8 , 0 5 7 . 5 0    1,869.90         838.73       812.61         252.78 -29.26             326.85 -287.70             39.15

 9       680           6,190               150 1 8 , 0 3 2 . 2 2    1,869.64         835.19       812.51         251.39 -29.26             366.00 -326.85             39.15

10       680          6,870                150 1 8 , 0 1 2 . 0 0    1,869.44         832.36       812.42         250.29 -29.26             405.15 -366.00             39.15

11       680          7,550                150 1 7 , 9 9 5 . 4 5    1,869.28         830.04       812.36         249.37 -29.26             444.29 -405.15             39.14

12       485          8,035                150 1 7 , 5 5 9 . 1 7    1,864.91         768.97       810.64         225.35 -29.26             445.41 -444.29              1.12

13       680           8,715               150 1 7 , 5 8 0 . 0 0    1,865.11         771.89       810.72         226.50 -29.26             484.57 -445.41             39.16

14       740          9,455                150 1 7 , 7 0 9 . 2 9    1,866.41         789.98       811.24         233.61 -29.26             535.41 -484.57             50.84

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9    1,871.42         859.97       813.21         261.14 -29.26              see*        -535.41                   97.52

15       680          10,135               650 1 8 , 2 1 7 . 3 3    1,871.50         861.10       813.23         261.59 -126.78            574.56 -535.41             39.15

16       680          10,815               650 1 8 , 2 2 4 . 3 8    1,871.57         862.09       813.26         261.98 -126.78            613.72 -574.56             39.16

17       680          11,495               650 1 8 , 2 3 0 . 5 9    1,871.63         862.96       813.29         262.31 -126.78            652.86 -613.72             39.14

18       680          12,175               650 1 8 , 2 3 6 . 1 1    1,871.69         863.73       813.31         262.62 -126.78            692.01 -652.86             39.15

19       680         12,855                650 1 8 , 2 4 1 . 0 5    1,871.74         864.42       813.33         262.89 -126.78            731.16 -692.01             39.15

20       680         13,535                650 1 8 , 2 4 5 . 5 0    1,871.79         865.04       813.34         263.14 -126.78            770.31 -731.16             39.15

21       680          14,215               650 1 8 , 2 4 9 . 5 2    1,871.83         865.60       813.37         263.35 -126.78            809.45 -770.31             39.14

22       680         14,895                650 1 8 , 2 5 3 . 1 8    1,871.86         866.12       813.38         263.56 -126.78            848.61 -809.45             39.16

23       680         15,575                650 1 8 , 2 5 6 . 5 2    1,871.90         866.58       813.39         263.74 -126.78            887.75 -848.61             39.14

24       680         16,255                650 1 8 , 2 5 9 . 5 8    1,871.92         867.02       813.41         263.91 -126.78            926.91 -887.75             39.16

25       680         16,935                650 1 8 , 2 6 2 . 4 0    1,871.95         867.41       813.41         264.07 -126.78            966.06 -926.91             39.15

26       680          17,615               650 1 8 , 2 6 5 . 0 0    1,871.98         867.77       813.42         264.22 -126.78 1,005.21 -966.06                      39.15

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,005.21

 Total tax deducted for the year on non-periodic payments.............................................................................................................         126.78

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,131.99


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments, the
        same principle will apply. The non-periodic payment tax calculation for pay period 14 has
        been used to determine the steps to follow. For more details, see the example that begins on
        page 65.

YTD = year-to-date



74                                                                            www.cra.gc.ca
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Nova Scotia

                      I                                            K1 + K2                       K1P +                                  (T1+T2-

PP     Salary       YTD           B        B1            A            + K4            T1           K2P            T2           M1       M1) / S1           M             T         TB

          $           $           $          $           $              $              $             $            $             $            $             $             $          $
 1       740              740                     19,240.00         1,881.75 1,004.25             821.25        869.95                       72.08                    72.08

 2       740           1,480                      19,240.00         1,881.75 1,004.25             821.25        869.95                     144.17       -72.08        72.09

 3       740          2,220                       19,240.00         1,881.75 1,004.25             821.25        869.95                     216.25 -144.17             72.08

 4       740          2,960                       19,240.00         1,881.75 1,004.25             821.25        869.95                     288.34 -216.25             72.09

4B                   2,960      100        100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25             821.83        878.16                     see*        -288.34                   22.21

 5       680          3,640                100 1 9 , 0 2 8 . 0 0    1,879.63         974.57       819.99        852.57 -22.21              347.10 -288.34             58.76

 6       510           4,150               100 1 8 , 0 8 3 . 3 3    1,870.16         842.34       814.45        775.07 -22.21              368.12 -347.10             21.02

 7       680          4,830                100 1 8 , 0 4 0 . 0 0    1,869.72         836.28       814.19        771.53 -22.21              426.89 -368.12             58.77

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22         843.28       814.49        775.62 -22.21              see*        -426.89                   11.09

 8       680           5,510               150 1 8 , 0 5 7 . 5 0    1,869.90         838.73       814.30        772.95 -33.30              485.66 -426.89             58.77

 9       680           6,190               150 1 8 , 0 3 2 . 2 2    1,869.64         835.19       814.15        770.88 -33.30              544.42 -485.66             58.76

10       680          6,870                150 1 8 , 0 1 2 . 0 0    1,869.44         832.36       814.03        769.22 -33.30              603.18 -544.42             58.76

11       680          7,550                150 1 7 , 9 9 5 . 4 5    1,869.28         830.04       813.94        767.86 -33.30              661.95 -603.18             58.77

12       485          8,035                150 1 7 , 5 5 9 . 1 7    1,864.91         768.97       811.37        732.08 -33.30              677.42 -661.95             15.47

13       680           8,715               150 1 7 , 5 8 0 . 0 0    1,865.11         771.89       811.49        733.79 -33.30              736.19 -677.42             58.77

14       740          9,455                150 1 7 , 7 0 9 . 2 9    1,866.41         789.98       812.26        744.39 -33.30              808.27 -736.19             72.08

14B                  9,455      500        650 1 8 , 2 0 9 . 2 9    1,871.42         859.97       815.19        785.41 -33.30              see*        -808.27                  111.01

15       680         10,135                650 1 8 , 2 1 7 . 3 3    1,871.50         861.10       815.24        786.06 -144.31             867.03 -808.27             58.76

16       680         10,815                650 1 8 , 2 2 4 . 3 8    1,871.57         862.09       815.28        786.64 -144.31             925.80 -867.03             58.77

17       680         11,495                650 1 8 , 2 3 0 . 5 9    1,871.63         862.96       815.31        787.16 -144.31             984.57 -925.80             58.77

18       680         12,175                650 1 8 , 2 3 6 . 1 1    1,871.69         863.73       815.35        787.60 -144.31 1,043.32 -984.57                       58.75

19       680         12,855                650 1 8 , 2 4 1 . 0 5    1,871.74         864.42       815.38        788.01 -144.31 1,102.09 -1,043.32                     58.77

20       680         13,535                650 1 8 , 2 4 5 . 5 0    1,871.79         865.04       815.41        788.37 -144.31 1,160.85 -1,102.09                     58.76

21       680         14,215                650 1 8 , 2 4 9 . 5 2    1,871.83         865.60       815.43        788.70 -144.31 1,219.61 -1,160.85                     58.76

22       680         14,895                650 1 8 , 2 5 3 . 1 8    1,871.86         866.12       815.45        789.00 -144.31 1,278.38 -1,219.61                     58.77

23       680         15,575                650 1 8 , 2 5 6 . 5 2    1,871.90         866.58       815.47        789.28 -144.31 1,337.14 -1,278.38                     58.76

24       680         16,255                650 1 8 , 2 5 9 . 5 8    1,871.92         867.02       815.49        789.53 -144.31 1,395.91 -1,337.14                     58.77

25       680         16,935                650 1 8 , 2 6 2 . 4 0    1,871.95         867.41       815.50        789.76 -144.31 1,454.67 -1,395.91                     58.76

26       680         17,615                650 1 8 , 2 6 5 . 0 0    1,871.98         867.77       815.51        789.98 -144.31 1,513.44 -1,454.67                     58.77

 Total tax deducted for the year on regular salary ........................................................................................................................... $1,513.44

 Total tax deducted for the year on non-periodic payments.............................................................................................................        144.31

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,657.75


     * Note
       Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
       amounts determined at line 4. For other similar payments, such as lump-sum payments, the
       same principle will apply. The non-periodic payment tax calculation for pay period 14 has
       been used to determine the steps to follow. For more details, see the example that begins on
       page 65.

YTD = year-to-date



                                                                             www.cra.gc.ca                                                                                          75
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Nunavut

                      I                                            K1 + K2                       K1P +                                 (T1+T2-

PP     Salary       YTD           B        B1           A            + K4            T1           K2P            T2           M1       M1) / S1           M              T       TB

          $           $           $         $           $              $              $             $             $            $            $             $              $         $
 1      740               740                     19,240.00         1,881.75 1,004.25            513.04         256.56                      48.49                   48.49

 2      740           1,480                       19,240.00         1,881.75 1,004.25            513.04         256.56                      96.99      -48.49       48.50

 3      740           2,220                       19,240.00         1,881.75 1,004.25            513.04         256.56                    145.48       -96.99       48.49

 4      740           2,960                       19,240.00         1,881.75 1,004.25            513.04         256.56                    193.97 -145.48            48.49

4B                   2,960      100        100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25            513.30         260.30                    see*        -193.97                   17.74

 5      680           3,640                100 1 9 , 0 2 8 . 0 0    1,879.63        974.57       512.48         248.64 -17.74             231.82 -193.97            37.85

 6      510           4,150                100 1 8 , 0 8 3 . 3 3    1,870.16        842.34       509.94         213.39 -17.74             239.54 -231.82             7.72

 7      680           4,830                100 1 8 , 0 4 0 . 0 0    1,869.72        836.28       509.83         211.77 -17.74             277.39 -239.54            37.85

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22        843.28       509.97         213.63 -17.74             see*        -277.39                    8.86

 8      680           5,510                150 1 8 , 0 5 7 . 5 0    1,869.90        838.73       509.88         212.42 -26.60             315.25 -277.39            37.86

 9      680           6,190                150 1 8 , 0 3 2 . 2 2    1,869.64        835.19       509.81         211.48 -26.60             353.10 -315.25            37.85

10      680           6,870                150 1 8 , 0 1 2 . 0 0    1,869.44        832.36       509.75         210.73 -26.60             390.96 -353.10            37.86

11      680           7,550                150 1 7 , 9 9 5 . 4 5    1,869.28        830.04       509.71         210.11 -26.60             428.81 -390.96            37.85

12      485           8,035                150 1 7 , 5 5 9 . 1 7    1,864.91        768.97       508.55         193.82 -26.60             432.09 -428.81             3.28

13      680           8,715                150 1 7 , 5 8 0 . 0 0    1,865.11        771.89       508.61         194.59 -26.60             469.94 -432.09            37.85

14      740           9,455                150 1 7 , 7 0 9 . 2 9    1,866.41        789.98       508.94         199.43 -26.60             518.44 -469.94            48.50

14B                  9,455      500        650 1 8 , 2 0 9 . 2 9    1,871.42        859.97       510.28         218.09 -26.60             see*        -518.44                   88.65

15      680          10,135                650 1 8 , 2 1 7 . 3 3    1,871.50        861.10       510.31         218.38 -115.25            556.29 -518.44            37.85

16      680          10,815                650 1 8 , 2 2 4 . 3 8    1,871.57        862.09       510.32         218.66 -115.25            594.15 -556.29            37.86

17      680          11,495                650 1 8 , 2 3 0 . 5 9    1,871.63        862.96       510.35         218.87 -115.25            631.99 -594.15            37.84

18      680          12,175                650 1 8 , 2 3 6 . 1 1    1,871.69        863.73       510.36         219.08 -115.25            669.85 -631.99            37.86

19      680          12,855                650 1 8 , 2 4 1 . 0 5    1,871.74        864.42       510.37         219.27 -115.25            707.71 -669.85            37.86

20      680          13,535                650 1 8 , 2 4 5 . 5 0    1,871.79        865.04       510.39         219.43 -115.25            745.55 -707.71            37.84

21      680          14,215                650 1 8 , 2 4 9 . 5 2    1,871.83        865.60       510.39         219.59 -115.25            783.41 -745.55            37.86

22      680          14,895                650 1 8 , 2 5 3 . 1 8    1,871.86        866.12       510.40         219.73 -115.25            821.28 -783.41            37.87

23      680          15,575                650 1 8 , 2 5 6 . 5 2    1,871.90        866.58       510.41         219.85 -115.25            859.12 -821.28            37.84

24      680          16,255                650 1 8 , 2 5 9 . 5 8    1,871.92        867.02       510.42         219.96 -115.25            896.98 -859.12            37.86

25      680          16,935                650 1 8 , 2 6 2 . 4 0    1,871.95        867.41       510.43         220.07 -115.25            934.84 -896.98            37.86

26      680          17,615                650 1 8 , 2 6 5 . 0 0    1,871.98        867.77       510.43         220.17 -115.25            972.69 -934.84            37.85

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 972.69

 Total tax deducted for the year on non-periodic payments.............................................................................................................       115.25

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,087.94


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments, the
        same principle will apply. The non-periodic payment tax calculation for pay period 14 has
        been used to determine the steps to follow. For more details, see the example that begins on
        page 65.

YTD = year-to-date



76                                                                           www.cra.gc.ca
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Ontario

                       I                                           K1 + K2                        K1P +                                  (T1+T2-

PP     Salary       YTD           B         B1           A            + K4            T1           K2P            T2           M1        M1) / S1          M             T         TB

          $           $           $          $           $              $              $             $             $            $             $             $            $          $
 1       740               740                    19,240.00         1,881.75 1,004.25             507.78         463.84                      56.47                    56.47

 2       740           1,480                      19,240.00         1,881.75 1,004.25             507.78         463.84                    112.93       -56.47        56.46

 3       740          2,220                       19,240.00         1,881.75 1,004.25             507.78         463.84                    169.40 -112.93             56.47

 4       740          2,960                       19,240.00         1,881.75 1,004.25             507.78         463.84                    225.86       -169.40       56.46

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25             508.12         468.55                     see*        -225.86                  18.71

 5       680          3,640                100 1 9 , 0 2 8 . 0 0    1,879.63         974.57       507.06         453.85 -18.71             271.10 -225.86             45.24

 6       510           4,150               100 1 8 , 0 8 3 . 3 3    1,870.16         842.34       503.87         406.68 -18.71             283.92       -271.10       12.82

 7       680          4,830                100 1 8 , 0 4 0 . 0 0    1,869.72         836.28       503.73         402.58 -18.71             328.50 -283.92             44.58

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22         843.28       503.89         407.32 -18.71              see*        -328.50                  11.74

 8       680           5,510               150 1 8 , 0 5 7 . 5 0    1,869.90         838.73       503.79         404.22 -30.45             373.08 -328.50             44.58

 9       680           6,190               150 1 8 , 0 3 2 . 2 2    1,869.64         835.19       503.70         401.86 -30.45             417.67 -373.08             44.59

10       680          6,870                150 1 8 , 0 1 2 . 0 0    1,869.44         832.36       503.64         399.94 -30.45             462.25 -417.67             44.58

11       680          7,550                150 1 7 , 9 9 5 . 4 5    1,869.28         830.04       503.57         398.40 -30.45             506.84 -462.25             44.59

12       485          8,035                150 1 7 , 5 5 9 . 1 7    1,864.91         768.97       502.10         357.28 -30.45             505.75 -506.84              0.00

13       680           8,715               150 1 7 , 5 8 0 . 0 0    1,865.11         771.89       502.18         359.22 -30.45             550.33 -506.84             43.49

14       740          9,455                150 1 7 , 7 0 9 . 2 9    1,866.41         789.98       502.61         371.42 -30.45             608.97 -550.33             58.64

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9    1,871.42         859.97       504.30         415.27 -30.45              see*        -608.97                  113.84

15       680          10,135               650 1 8 , 2 1 7 . 3 3    1,871.50         861.10       504.33         415.65 -144.29            653.34 -608.97             44.37

16       680          10,815               650 1 8 , 2 2 4 . 3 8    1,871.57         862.09       504.35         415.98 -144.29            697.71 -653.34             44.37

17       680          11,495               650 1 8 , 2 3 0 . 5 9    1,871.63         862.96       504.37         416.27 -144.29            742.08 -697.71             44.37

18       680          12,175               650 1 8 , 2 3 6 . 1 1    1,871.69         863.73       504.39         416.53 -144.29            786.44 -742.08             44.36

19       680         12,855                650 1 8 , 2 4 1 . 0 5    1,871.74         864.42       504.41         416.76 -144.29            830.80 -786.44             44.36

20       680         13,535                650 1 8 , 2 4 5 . 5 0    1,871.79         865.04       504.42         416.98 -144.29            875.18 -830.80             44.38

21       680          14,215               650 1 8 , 2 4 9 . 5 2    1,871.83         865.60       504.43         417.17 -144.29            919.54 -875.18             44.36

22       680         14,895                650 1 8 , 2 5 3 . 1 8    1,871.86         866.12       504.45         417.34 -144.29            963.91 -919.54             44.37

23       680         15,575                650 1 8 , 2 5 6 . 5 2    1,871.90         866.58       504.46         417.49 -144.29 1,008.27 -963.91                      44.36

24       680         16,255                650 1 8 , 2 5 9 . 5 8    1,871.92         867.02       504.47         417.64 -144.29 1,052.65 -1,008.27 44.38

25       680         16,935                650 1 8 , 2 6 2 . 4 0    1,871.95         867.41       504.47         417.78 -144.29 1,097.02 -1,052.65 44.37

26       680          17,615               650 1 8 , 2 6 5 . 0 0    1,871.98         867.77       504.49         417.89 -144.29 1,141.37 -1,097.02 44.35

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,141.37

 Total tax deducted for the year on non-periodic payments.............................................................................................................         144.29

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,285.66


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments, the
        same principle will apply. The non-periodic payment tax calculation for pay period 14 has
        been used to determine the steps to follow. For more details, see the example that begins on
        page 65.

YTD = year-to-date



                                                                              www.cra.gc.ca                                                                                          77
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Prince Edward Island

                       I                                            K1 + K2                       K1P +                                   (T1+T2-

PP     Salary        YTD           B        B1            A            + K4            T1           K2P            T2           M1       M1) / S1           M             T         TB

           $           $           $         $            $              $              $             $             $            $            $              $            $          $
 1       740               740                     19,240.00         1,881.75 1,004.25             864.35 1,021.17                            77.90                    77.90

 2       740            1,480                      19,240.00         1,881.75 1,004.25             864.35 1,021.17                          155.80       -77.90        77.90

 3       740           2,220                       19,240.00         1,881.75 1,004.25             864.35 1,021.17                          233.70 -155.80             77.90

 4       740           2,960                       19,240.00         1,881.75 1,004.25             864.35 1,021.17                          311.60 -233.70             77.90

4B                    2,960      100        100 1 9 , 3 4 0 . 0 0    1,882.75 1,018.25             865.01 1,030.31                           see*       -311.60                   23.14

 5       680           3,640                100 1 9 , 0 2 8 . 0 0    1,879.63         974.57       862.97 1,001.77 -23.14                   375.62 -311.60             64.02

 6       510            4,150               100 1 8 , 0 8 3 . 3 3    1,870.16         842.34       856.78         915.39 -23.14             400.29 -375.62             24.67

 7       680           4,830                100 1 8 , 0 4 0 . 0 0    1,869.72         836.28       856.49         911.43 -23.14             464.31 -400.29             64.02

7B                    4,830       50        150 1 8 , 0 9 0 . 0 0    1,870.22         843.28       856.83         915.99 -23.14              see*       -464.31                   11.56

 8       680            5,510               150 1 8 , 0 5 7 . 5 0    1,869.90         838.73       856.61         913.03 -34.70             528.33 -464.31             64.02

 9       680            6,190               150 1 8 , 0 3 2 . 2 2    1,869.64         835.19       856.45         910.71 -34.70             592.34 -528.33             64.01

10       680           6,870                150 1 8 , 0 1 2 . 0 0    1,869.44         832.36       856.32         908.86 -34.70             656.35 -592.34             64.01

11       680           7,550                150 1 7 , 9 9 5 . 4 5    1,869.28         830.04       856.21         907.34 -34.70             720.36 -656.35             64.01

12       485           8,035                150 1 7 , 5 5 9 . 1 7    1,864.91         768.97       853.35         867.45 -34.70             739.26 -720.36             18.90

13       680            8,715               150 1 7 , 5 8 0 . 0 0    1,865.11         771.89       853.48         869.36 -34.70             803.28 -739.26             64.02

14       740           9,455                150 1 7 , 7 0 9 . 2 9    1,866.41         789.98       854.33         881.18 -34.70             881.17 -803.28             77.89

14B                   9,455      500        650 1 8 , 2 0 9 . 2 9    1,871.42         859.97       857.60         926.91 -34.70              see*       -881.17                  115.72

15       680          10,135                650 1 8 , 2 1 7 . 3 3    1,871.50         861.10       857.66         927.64 -150.42            945.18 -881.17             64.01

16       680          10,815                650 1 8 , 2 2 4 . 3 8    1,871.57         862.09       857.71         928.28 -150.42 1,009.20 -945.18                      64.02

17       680          11,495                650 1 8 , 2 3 0 . 5 9    1,871.63         862.96       857.75         928.85 -150.42 1,073.22 -1,009.20                    64.02

18       680          12,175                650 1 8 , 2 3 6 . 1 1    1,871.69         863.73       857.79         929.35 -150.42 1,137.23 -1,073.22                    64.01

19       680          12,855                650 1 8 , 2 4 1 . 0 5    1,871.74         864.42       857.82         929.80 -150.42 1,201.24 -1,137.23                    64.01

20       680          13,535                650 1 8 , 2 4 5 . 5 0    1,871.79         865.04       857.84         930.22 -150.42 1,265.26 -1,201.24                    64.02

21       680          14,215                650 1 8 , 2 4 9 . 5 2    1,871.83         865.60       857.87         930.58 -150.42 1,329.27 -1,265.26                    64.01

22       680          14,895                650 1 8 , 2 5 3 . 1 8    1,871.86         866.12       857.90         930.91 -150.42 1,393.29 -1,329.27                    64.02

23       680          15,575                650 1 8 , 2 5 6 . 5 2    1,871.90         866.58       857.91         931.23 -150.42 1,457.31 -1,393.29                    64.02

24       680          16,255                650 1 8 , 2 5 9 . 5 8    1,871.92         867.02       857.94         931.50 -150.42 1,521.32 -1,457.31                    64.01

25       680          16,935                650 1 8 , 2 6 2 . 4 0    1,871.95         867.41       857.95         931.77 -150.42 1,585.35 -1,521.32                    64.03

26       680          17,615                650 1 8 , 2 6 5 . 0 0    1,871.98         867.77       857.98         931.99 -150.42 1,649.34 -1,585.35                    63.99

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,649.34

 Total tax deducted for the year on non-periodic payments.............................................................................................................         150.42

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,799.76


     * Note
       Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
       amounts determined at line 4. For other similar payments, such as lump-sum payments, the
       same principle will apply. The non-periodic payment tax calculation for pay period 14 has
       been used to determine the steps to follow. For more details, see the example that begins on
       page 65.

YTD = year-to-date



78                                                                            www.cra.gc.ca
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Quebec

                       I                                           K1 +K2                       Abate-                                  (T1-M1)

PP     Salary       YTD           B        B1           A            + K4            T3           ment           T1           M1          / S1            M              T        TB

          $           $           $         $            $              $             $             $             $            $            $              $             $         $
 1       740               740                    19,240.00         1,885.67 1,000.33             165.05        835.28                      32.13                    32.13

 2       740           1,480                      19,240.00         1,885.67 1,000.33             165.05        835.28                      64.25      -32.13        32.12

 3       740          2,220                       19,240.00         1,885.67 1,000.33             165.05        835.28                      96.38      -64.25        32.13

 4       740          2,960                       19,240.00         1,885.67 1,000.33             165.05        835.28                    128.50       -96.38        32.12

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0    1,886.69 1,014.31             167.36        846.95                     see*       -128.50                   11.67

 5       680          3,640                100 1 9 , 0 2 8 . 0 0    1,883.51         970.69       160.16        810.53 -11.67             153.63 -128.50             25.13

 6       510           4,150               100 1 8 , 0 8 3 . 3 3    1,873.85         838.65       138.38        700.27 -11.67             158.91 -153.63              5.28

 7       680          4,830                100 1 8 , 0 4 0 . 0 0    1,873.40         832.60       137.38        695.22 -11.67             184.03 -158.91             25.12

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0    1,873.91         839.59       138.53        701.06 -11.67              see*       -184.03                    5.84

 8       680           5,510               150 1 8 , 0 5 7 . 5 0    1,873.59         835.04       137.78        697.26 -17.51             209.15 -184.03             25.12

 9       680           6,190               150 1 8 , 0 3 2 . 2 2    1,873.33         831.50       137.20        694.30 -17.51             234.27 -209.15             25.12

10       680          6,870                150 1 8 , 0 1 2 . 0 0    1,873.11         828.69       136.73        691.96 -17.51             259.40 -234.27             25.13

11       680          7,550                150 1 7 , 9 9 5 . 4 5    1,872.95         826.37       136.35        690.02 -17.51             284.52 -259.40             25.12

12       485          8,035                150 1 7 , 5 5 9 . 1 7    1,868.49         765.39       126.29        639.10 -17.51             286.89 -284.52              2.37

13       680           8,715               150 1 7 , 5 8 0 . 0 0    1,868.69         768.31       126.77        641.54 -17.51             312.02 -286.89             25.13

14       740          9,455                150 1 7 , 7 0 9 . 2 9    1,870.02         786.37       129.75        656.62 -17.51             344.14 -312.02             32.12

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9    1,875.14         856.25       141.28        714.97 -17.51              see*       -344.14                   58.35

15       680          10,135               650 1 8 , 2 1 7 . 3 3    1,875.22         857.38       141.47        715.91 -75.86             369.26 -344.14             25.12

16       680          10,815               650 1 8 , 2 2 4 . 3 8    1,875.29         858.37       141.63        716.74 -75.86             394.39 -369.26             25.13

17       680          11,495               650 1 8 , 2 3 0 . 5 9    1,875.35         859.24       141.77        717.47 -75.86             419.51 -394.39             25.12

18       680          12,175               650 1 8 , 2 3 6 . 1 1    1,875.41         860.01       141.90        718.11 -75.86             444.63 -419.51             25.12

19       680         12,855                650 1 8 , 2 4 1 . 0 5    1,875.46         860.70       142.02        718.68 -75.86             469.75 -444.63             25.12

20       680         13,535                650 1 8 , 2 4 5 . 5 0    1,875.51         861.32       142.12        719.20 -75.86             494.88 -469.75             25.13

21       680          14,215               650 1 8 , 2 4 9 . 5 2    1,875.55         861.88       142.21        719.67 -75.86             520.00 -494.88             25.12

22       680         14,895                650 1 8 , 2 5 3 . 1 8    1,875.58         862.40       142.30        720.10 -75.86             545.13 -520.00             25.13

23       680         15,575                650 1 8 , 2 5 6 . 5 2    1,875.62         862.86       142.37        720.49 -75.86             570.25      -545.13        25.12

24       680         16,255                650 1 8 , 2 5 9 . 5 8    1,875.65         863.29       142.44        720.85 -75.86             595.38 -570.25             25.13

25       680         16,935                650 1 8 , 2 6 2 . 4 0    1,875.68         863.68       142.51        721.17 -75.86             620.49 -595.38             25.11

26       680          17,615               650 1 8 , 2 6 5 . 0 0    1,875.70         864.05       142.57        721.48 -75.86             645.62 -620.49             25.13

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 645.62

 Total tax deducted for the year on non-periodic payments.............................................................................................................         75.86

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 721.48


     * Note
       Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
       amounts determined at line 4. For other similar payments, such as lump-sum payments, the
       same principle will apply. The non-periodic payment tax calculation for pay period 14 has
       been used to determine the steps to follow. For more details, see the example that begins on
       page 65.

YTD = year-to-date



                                                                             www.cra.gc.ca                                                                                         79
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Saskatchewan

                       I                                            K1 + K2                       K1P +                                  (T1+T2-

PP     Salary       YTD           B         B1           A            + K4            T1           K2P            T2           M1        M1) / S1           M            T          TB

           $          $           $          $           $               $             $             $             $             $            $             $            $           $
 1       740               740                     19,240.00         1,881.75 1,004.25 1,590.59                  525.81                      58.85                     58.85

 2       740           1,480                       19,240.00         1,881.75 1,004.25 1,590.59                  525.81                     117.70       -58.85        58.85

 3       740           2,220                       19,240.00         1,881.75 1,004.25 1,590.59                  525.81                     176.55 -117.70             58.85

 4       740           2,960                       19,240.00         1,881.75 1,004.25 1,590.59                  525.81                     235.39 -176.55             58.84

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0     1,882.75 1,018.25 1,591.33                  536.07                     see*        -235.39                   24.26

 5       680           3,640               100 1 9 , 0 2 8 . 0 0     1,879.63         974.57 1,589.04            504.04 -24.26              279.68 -235.39             44.29

 6       510           4,150               100 1 8 , 0 8 3 . 3 3     1,870.16         842.34 1,582.10            407.07 -24.26              282.73 -279.68             3.05

 7       680           4,830               100 1 8 , 0 4 0 . 0 0     1,869.72         836.28 1,581.78            402.62 -24.26              327.02 -282.73             44.29

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0     1,870.22         843.28 1,582.15            407.75 -24.26              see*        -327.02                   12.13

 8       680           5,510               150 1 8 , 0 5 7 . 5 0     1,869.90         838.73 1,581.91            404.42 -36.39              371.31 -327.02             44.29

 9       680           6,190               150 1 8 , 0 3 2 . 2 2     1,869.64         835.19 1,581.73            401.81 -36.39              415.60 -371.31             44.29

10       680           6,870               150 1 8 , 0 1 2 . 0 0     1,869.44         832.36 1,581.58            399.74 -36.39             459.89       -415.60        44.29

11       680           7,550               150 1 7 , 9 9 5 . 4 5     1,869.28         830.04 1,581.46            398.04 -36.39              504.18 -459.89             44.29

12       485           8,035               150 1 7 , 5 5 9 . 1 7     1,864.91         768.97 1,578.24            353.27 -36.39              501.16 -504.18             0.00

13       680           8,715               150 1 7 , 5 8 0 . 0 0     1,865.11         771.89 1,578.40            355.40 -36.39             545.45       -504.18        41.27

14       740           9,455               150 1 7 , 7 0 9 . 2 9     1,866.41         789.98 1,579.35            368.67 -36.39              604.29 -545.45             58.84

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9     1,871.42         859.97 1,583.02            420.00 -36.39              see*        -604.29                  121.32

15       680          10,135               650 1 8 , 2 1 7 . 3 3     1,871.50         861.10 1,583.09            420.82 -157.71             648.58 -604.29             44.29

16       680          10,815               650 1 8 , 2 2 4 . 3 8     1,871.57         862.09 1,583.13            421.55 -157.71             692.88 -648.58             44.30

17       680          11,495               650 1 8 , 2 3 0 . 5 9     1,871.63         862.96 1,583.18            422.18 -157.71             737.17 -692.88             44.29

18       680          12,175               650 1 8 , 2 3 6 . 1 1     1,871.69         863.73 1,583.22            422.75 -157.71             781.46 -737.17             44.29

19       680         12,855                650 1 8 , 2 4 1 . 0 5     1,871.74         864.42 1,583.25            423.27 -157.71            825.75       -781.46        44.29

20       680         13,535                650 1 8 , 2 4 5 . 5 0     1,871.79         865.04 1,583.29            423.72 -157.71             870.04 -825.75             44.29

21       680          14,215               650 1 8 , 2 4 9 . 5 2     1,871.83         865.60 1,583.32            424.13 -157.71             914.32 -870.04             44.28

22       680         14,895                650 1 8 , 2 5 3 . 1 8     1,871.86         866.12 1,583.35            424.50 -157.71             958.62 -914.32             44.30

23       680         15,575                650 1 8 , 2 5 6 . 5 2     1,871.90         866.58 1,583.37            424.85 -157.71 1,002.91 -958.62                       44.29

24       680         16,255                650 1 8 , 2 5 9 . 5 8     1,871.92         867.02 1,583.40            425.15 -157.71 1,047.19 -1,002.91                     44.28

25       680         16,935                650 1 8 , 2 6 2 . 4 0     1,871.95         867.41 1,583.41            425.45 -157.71 1,091.49 -1,047.19                     44.30

26       680          17,615               650 1 8 , 2 6 5 . 0 0     1,871.98         867.77 1,583.44            425.71 -157.71 1,135.77 -1,091.49                     44.28

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,135.77

 Total tax deducted for the year on non-periodic payments.............................................................................................................         157.71

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,293.48


     * Note
       Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
       amounts determined at line 4. For other similar payments, such as lump-sum payments, the
       same principle will apply. The non-periodic payment tax calculation for pay period 14 has
       been used to determine the steps to follow. For more details, see the example that begins on
       page 65.

YTD = year-to-date



80                                                                            www.cra.gc.ca
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Yukon

                                                                                                  K1P +
                       I                                            K1 + K2                                                              (T1+T2-
                                                                                                  K2P +

PP     Salary       YTD           B         B1           A            + K4            T1           K4P            T2           M1        M1) / S1           M            T          TB

          $           $           $          $           $              $              $             $             $            $             $             $            $           $
 1       740               740                     19,240.00         1,881.75 1,004.25             883.16        471.34                      56.75                    56.75

 2       740           1,480                       19,240.00         1,881.75 1,004.25             883.16        471.34                     113.51       -56.75       56.76

 3       740          2,220                        19,240.00         1,881.75 1,004.25             883.16        471.34                     170.26 -113.51            56.75

 4       740          2,960                        19,240.00         1,881.75 1,004.25             883.16        471.34                     227.01 -170.26            56.75

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0     1,882.75 1,018.25             883.63        477.91                     see*        -227.01                   20.57

 5       680          3,640                100 1 9 , 0 2 8 . 0 0     1,879.63        974.57        882.16        457.41 -20.57              271.43 -227.01             44.42

 6       510           4,150               100 1 8 , 0 8 3 . 3 3     1,870.16        842.34        877.72        395.35 -20.57              280.87 -271.43             9.44

 7       680          4,830                100 1 8 , 0 4 0 . 0 0     1,869.72        836.28        877.52        392.50 -20.57              325.29 -280.87             44.42

7B                   4,830       50        150 1 8 , 0 9 0 . 0 0     1,870.22        843.28        877.75        395.79 -20.57              see*        -325.29                   10.29

 8       680           5,510               150 1 8 , 0 5 7 . 5 0     1,869.90        838.73        877.60        393.65 -30.86              369.70 -325.29             44.41

 9       680           6,190               150 1 8 , 0 3 2 . 2 2     1,869.64        835.19        877.48        391.99 -30.86              414.11 -369.70             44.41

10       680          6,870                150 1 8 , 0 1 2 . 0 0     1,869.44        832.36        877.39        390.65 -30.86              458.52 -414.11             44.41

11       680          7,550                150 1 7 , 9 9 5 . 4 5     1,869.28        830.04        877.31        389.57 -30.86              502.93 -458.52            44.41

12       485          8,035                150 1 7 , 5 5 9 . 1 7     1,864.91        768.97        875.26        360.91 -30.86              507.24 -502.93             4.31

13       680           8,715               150 1 7 , 5 8 0 . 0 0     1,865.11        771.89        875.36        362.27 -30.86              551.65 -507.24             44.41

14       740          9,455                150 1 7 , 7 0 9 . 2 9     1,866.41        789.98        875.97        370.76 -30.86              608.40 -551.65             56.75

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9     1,871.42        859.97        878.32        403.61 -30.86              see*        -608.40                  102.84

15       680          10,135               650 1 8 , 2 1 7 . 3 3     1,871.50        861.10        878.36        404.14 -133.70             652.81 -608.40            44.41

16       680          10,815               650 1 8 , 2 2 4 . 3 8     1,871.57        862.09        878.39        404.61 -133.70             697.23 -652.81             44.42

17       680          11,495               650 1 8 , 2 3 0 . 5 9     1,871.63        862.96        878.41        405.02 -133.70             741.64 -697.23            44.41

18       680          12,175               650 1 8 , 2 3 6 . 1 1     1,871.69        863.73        878.44        405.38 -133.70             786.05 -741.64            44.41

19       680         12,855                650 1 8 , 2 4 1 . 0 5     1,871.74        864.42        878.47        405.70 -133.70             830.46 -786.05            44.41

20       680         13,535                650 1 8 , 2 4 5 . 5 0     1,871.79        865.04        878.48        406.00 -133.70             874.88 -830.46            44.42

21       680          14,215               650 1 8 , 2 4 9 . 5 2     1,871.83        865.60        878.51        406.26 -133.70             919.28 -874.88            44.40

22       680         14,895                650 1 8 , 2 5 3 . 1 8     1,871.86        866.12        878.52        406.50 -133.70             963.70 -919.28            44.42

23       680         15,575                650 1 8 , 2 5 6 . 5 2     1,871.90        866.58        878.54        406.72 -133.70 1,008.11 -963.70                      44.41

24       680         16,255                650 1 8 , 2 5 9 . 5 8     1,871.92        867.02        878.55        406.92 -133.70 1,052.53 -1,008.11                    44.42

25       680         16,935                650 1 8 , 2 6 2 . 4 0     1,871.95        867.41        878.56        407.11 -133.70 1,096.94 -1,052.53                    44.41

26       680          17,615               650 1 8 , 2 6 5 . 0 0     1,871.98        867.77        878.57        407.29 -133.70 1,141.36 -1,096.94                    44.42

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,141.36

 Total tax deducted for the year on non-periodic payments.............................................................................................................         133.70

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,275.06


      * Note
        Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
        amounts determined at line 4. For other similar payments, such as lump-sum payments,
        the same principle will apply. The non-periodic payment tax calculation for pay period 14
        has been used to determine the steps to follow. For more details, see the example that
        begins on page 65.

YTD = year-to-date


                                                                              www.cra.gc.ca                                                                                          81
Option 2 – Examples when calculating the tax deductions on salary
and non-periodic payments separately (continued)
Outside Canada or in Canada beyond the limits of any province

                       I                                            K1 + K2                       Add’l                                  (T1-M1)

PP     Salary       YTD           B         B1           A            + K4            T3           Tax            T1           M1           / S1            M            T          TB

          $                  $    $          $           $              $              $             $             $            $             $             $            $           $
 1       740               740                     19,240.00         1,881.75 1,004.25             482.04 1,486.29                           57.17                    57.17

 2       740           1,480                       19,240.00         1,881.75 1,004.25             482.04 1,486.29                          114.33       -57.17       57.16

 3       740           2,220                       19,240.00         1,881.75 1,004.25             482.04 1,486.29                          171.50 -114.33            57.17

 4       740           2,960                       19,240.00         1,881.75 1,004.25             482.04 1,486.29                          228.66 -171.50            57.16

4B                   2,960       100       100 1 9 , 3 4 0 . 0 0     1,882.75 1,018.25             488.76 1,507.01                          see*        -228.66                   20.72

 5       680           3,640               100 1 9 , 0 2 8 . 0 0     1,879.63        974.57        467.79 1,442.36 -20.72                   273.39 -228.66            44.73

 6       510           4,150               100 1 8 , 0 8 3 . 3 3     1,870.16        842.34        404.32 1,246.66 -20.72                   282.91 -273.39             9.52

 7       680           4,830               100 1 8 , 0 4 0 . 0 0     1,869.72        836.28        401.41 1,237.69 -20.72                   327.65 -282.91            44.74

7B                   4,830        50       150 1 8 , 0 9 0 . 0 0     1,870.22        843.28        404.77 1,248.05 -20.72                   see*        -327.65                   10.36

 8       680           5,510               150 1 8 , 0 5 7 . 5 0     1,869.90        838.73        402.59 1,241.32 -31.08                   372.38 -327.65            44.73

 9       680           6,190               150 1 8 , 0 3 2 . 2 2     1,869.64        835.19        400.89 1,236.08 -31.08                   417.12 -372.38            44.74

10       680           6,870               150 1 8 , 0 1 2 . 0 0     1,869.44        832.36        399.53 1,231.89 -31.08                   461.85 -417.12            44.73

11       680           7,550               150 1 7 , 9 9 5 . 4 5     1,869.28        830.04        398.42 1,228.46 -31.08                   506.58 -461.85            44.73

12       485           8,035               150 1 7 , 5 5 9 . 1 7     1,864.91        768.97        369.11 1,138.08 -31.08                   510.92 -506.58             4.34

13       680           8,715               150 1 7 , 5 8 0 . 0 0     1,865.11        771.89        370.51 1,142.40 -31.08                   555.66 -510.92            44.74

14       740           9,455               150 1 7 , 7 0 9 . 2 9     1,866.41        789.98        379.19 1,169.17 -31.08                   612.82 -555.66            57.16

14B                  9,455       500       650 1 8 , 2 0 9 . 2 9     1,871.42        859.97        412.79 1,272.76 -31.08                   see*        -612.82                  103.59

15       680          10,135               650 1 8 , 2 1 7 . 3 3     1,871.50        861.10        413.33 1,274.43 -134.67                  657.55 -612.82            44.73

16       680          10,815               650 1 8 , 2 2 4 . 3 8     1,871.57        862.09        413.80 1,275.89 -134.67                  702.29 -657.55            44.74

17       680          11,495               650 1 8 , 2 3 0 . 5 9     1,871.63        862.96        414.22 1,277.18 -134.67                  747.03 -702.29            44.74

18       680          12,175               650 1 8 , 2 3 6 . 1 1     1,871.69        863.73        414.59 1,278.32 -134.67                  791.76 -747.03            44.73

19       680         12,855                650 1 8 , 2 4 1 . 0 5     1,871.74        864.42        414.92 1,279.34 -134.67                 836.49       -791.76       44.73

20       680         13,535                650 1 8 , 2 4 5 . 5 0     1,871.79        865.04        415.22 1,280.26 -134.67                  881.22 -836.49            44.73

21       680          14,215               650 1 8 , 2 4 9 . 5 2     1,871.83        865.60        415.49 1,281.09 -134.67                  925.95 -881.22            44.73

22       680         14,895                650 1 8 , 2 5 3 . 1 8     1,871.86        866.12        415.74 1,281.86 -134.67                  970.70 -925.95            44.75

23       680         15,575                650 1 8 , 2 5 6 . 5 2     1,871.90        866.58        415.96 1,282.54 -134.67 1,015.42 -970.70                           44.72

24       680         16,255                650 1 8 , 2 5 9 . 5 8     1,871.92        867.02        416.17 1,283.19 -134.67 1,060.17 -1,015.42                         44.75

25       680         16,935                650 1 8 , 2 6 2 . 4 0     1,871.95        867.41        416.36 1,283.77 -134.67 1,104.90 -1,060.17                         44.73

26       680          17,615               650 1 8 , 2 6 5 . 0 0     1,871.98        867.77        416.53 1,284.30 -134.67 1,149.63 -1,104.90                         44.73

 Total tax deducted for the year on regular salary ........................................................................................................................... $ 1,149.63

 Total tax deducted for the year on non-periodic payments.............................................................................................................         134.67

 Total tax deducted for the year on salary and non-periodic payments........................................................................................... $ 1,284.30


     * Note
       Tax on the non-periodic payment is T1 + T2 amounts determined at line 4B, less T1 + T2
       amounts determined at line 4. For other similar payments, such as lump-sum payments, the
       same principle will apply. The non-periodic payment tax calculation for pay period 14 has
       been used to determine the steps to follow. For more details, see the example that begins on
       page 65.

YTD = year-to-date



82                                                                            www.cra.gc.ca
 Part B – Canada Pension Plan (CPP)
Employee and employer CPP contributions for 2010
For 2010, the Canada Pension Plan (CPP) maximum pensionable earnings are $47,200, and
the basic exemption for the year is $3,500. The contribution rate for employees is 4.95%.
An employee’s maximum contribution for the year is $2,163.15. The employer’s contribution is an
amount equal to the total of the employee’s contribution.
For insurance companies that need the year’s maximum pensionable earnings before rounding,
the amount for 2010 is $47,290.90.
Each employer needs to deduct CPP contributions based on the employee’s pensionable income,
without regard to any other earnings the employee may have had with another employer in
the same year. Accordingly, you must use the maximums above even if the employee works for
you less than 12 months. Similarly, you are not entitled to a refund of the employer’s share of
CPP if the employee works for you less than 12 months.
For payments where the employee receives a bonus, retroactive pay increase, accumulated
overtime pay, or a director’s fee, and the payment is not included with the remuneration for
the current pay period, you should introduce a code with the record. You do this to avoid allowing
the basic exemption for the pay period ($3,500 / P) in the formula described below. The basic
exemption has already been allowed with the regular pay.
You can determine how much to deduct for the required contribution “C” by referring to
the amount of contributions for the year-to-date and the maximum contribution required for
the year, based on the following formula:

Formula to determine CPP contributions for employees receiving
salary or wages
C      =    The lesser of:
            (i) $2,163.15 – D; and
            (ii) 0.0495 × [PI – ($3,500 / P)]
                 If the result is negative, C = $0.

Formula to determine CPP contributions for employees
remunerated by commission only
C      =    The lesser of:
            (i) $2,163.15 – D; and
            (ii) 0.0495 × [G – ($3,500 × N / 365, minimum $67.30)]
                 If the result is negative, C = $0.
     Note
     For both formulas, round the resulting amount to the nearest $0.01. The maximum amount
     for the year (amount (i) above) will vary subject to the rules in the section called “Special CPP
     Situations” on page 84.
Where:
C   = Canada Pension Plan contribution (deduction) for the pay period.
D      =    Year-to-date CPP contribution (deduction) with the employer. This amount cannot be
            greater than the annual maximum.
PI     =   Pensionable income for the pay period, or the gross income plus any taxable benefits
           for the pay period, including bonuses and retroactive pay increases where applicable.
           For more information about income subject to Canada Pension Plan contributions,
           see the employers’ guide called Payroll Deductions and Remittances.
P      =   The number of pay periods in the year.
G      =    Gross commission amount including gross salary at the time of payment, plus
            any taxable benefits for commission-remunerated employees. Commission payments
            are the commissions included in the estimated annual amount reported by
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           the employee on Form TD1X, under the heading “Statement of remuneration.”
N      =   The number of days since the last commission payment. The minimum basic exemption
           amount of $67.30 is included in the formula to conform with CPP legislation.

     Notes
     For pay periods other than weekly pay periods, the basic exemption amount ($3,500 / P) used
     to determine the employee’s contributions for the pay period has to remain the same
     throughout the year, regardless of whether or not an employee has worked in each week of
     your pay period.
     Also, the employer should determine the number of pay periods at the beginning of the year
     (e.g., for weekly, 52 or 53 pay periods may apply, and, for bi-weekly, 26 or 27 pay periods may
     apply.) This is to ensure that you have deducted the employees’ contributions properly.

Special CPP situations
You will have to either start deducting, or stop deducting, CPP contributions under the following
circumstances:
Your employee turns 18 – start deducting CPP contributions for the first pay dated in the month
after the employee turns 18.
Your employee turns 70 – deduct CPP contributions up to and including the last pay dated in
the month in which the employee turns 70.
Your employee has received a CPP retirement pension award letter from HRSDC – For
details, see the employers’ guide called Payroll Deductions and Remittances.
Your employee is considered to be disabled under the CPP – deduct CPP contributions up to
and including the last pay dated in the month in which the employee is considered to be disabled.
     Note
     If the employee is no longer considered disabled under the CPP, start deducting CPP
     contributions in the first pay dated in the month after the employee ceases to be considered
     disabled.
Your employee dies in the year – deduct CPP contributions up to and including the last pay
dated in the month in which the employee dies.
In some cases, the requirements are different for QPP. For information, see the publication
TP-1015.G-V, Guide for Employers: Source Deductions and Contributions, which you can get
from Revenu Québec.
     Note
     If any of these special situations apply to your employees, you may need to prorate their
     contributions for the year. For more information, go to www.cra-arc.gc.ca/payroll, and select
     “General information” under the Canada Pension Plan listing in the Payroll Alphabetical
     Index.




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Year-end calculation of deductions for employee’s Canada
Pension Plan (CPP) contributions
 The following year-end calculation will help you verify an employee’s CPP contributions before you
 complete and file the T4 slips. This optional calculation is the only one we authorize. It is not, however,
 applicable to employees who have earnings listed in section B below and who earned more than
 the annual maximum pensionable earnings. For these employees, prorate the maximum contribution
 for the year. We based the calculation on information contained in the employers’ guide called
 Payroll Deductions and Remittances and in Part B of this publication. You can get the information
 you need to complete this calculation from each employee’s payroll master file.
 Using this calculation will help you avoid the possibility of receiving a Pensionable and Insurable
 Earnings Review (PIER) statement. To verify the CPP deduction, follow these steps:
 A. Enter the salary and wages from the employee’s payroll master file that you will
    include in box 14 of the T4 slip, “Employment income” ............................................... $                         1
 B. Subtract from line 1, the following earnings of the employee:
            the amount the employee received before and including
             the month the employee reached age 18........................................... $
            the amount the employee received after the month
             the employee reached age 70............................................................ $
            the amount the employee received during and after the month
             the employee began to receive a CPP retirement pension ................ $
            the amount the employee received during the months the employee
             was considered to be disabled under the CPP or QPP...................... $
            the amount received after the month the employee died .................... $
            any excluded income, benefits or payments in Chapter 3 of the
            employers’ guide called Payroll Deductions and Remittances ........... $
      Total earnings not subject to CPP contributions........................................................                  $    2
 C. Pensionable earnings for the period of employment, line 1 minus line 2...................                                  $    3
            Note
            If you have entered an amount on line 2, enter the amount on line 3 in box 26,
            “Pensionable earnings,” on the T4 slip.

 D. Enter the basic exemption for the pay period (see the table on the next
    page) ......................................................................................................... $
      Multiply by the number of pay periods of pensionable earnings
      (related to the amount on line 3). Make sure not to include pay periods
      applicable to the earnings listed in section B above.................................. ×
      Pro-rated basic exemption that applies to the period of pensionable employment
      (The amount cannot be more than the maximum basic yearly exemption amount
      shown in the table on the next page)........................................................................... $             4
 E. CPP contributory earnings for the period of pensionable employment,
    line 3 minus line 4........................................................................................................ $   5
 F. Enter the CPP contribution rate for the year................................................................ ×                  6
 G. Employee’s required CPP contribution for the period of pensionable employment,
    (line 5 multiplied by the rate on line 6)......................................................................... $            7
 H. Enter the CPP contributions that you have deducted for the period of pensionable
    employment shown in the employee’s payroll master file............................................ $                            8
 I.   Line 7 minus line 8. The result should be zero ............................................................ $                 9

      If there is an amount on line 9 and it is positive, you have under-deducted. If this is the case, add
      lines 8 and 9 and include the total in box 16, “Employee’s CPP contributions,” on the T4 slip.
      If the amount at line 9 is negative, you have over-deducted. If this is the case, verify the employee’s
      master file to ensure that the amounts on lines 1 and 3 are correct. For information on refunding
      CPP overpayments, see chapter 2 of the employers’ guide called Payroll Deductions and
      Remittances.



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Employee’s CPP basic exemption for various pay periods for 2010
                         Pay period                   Basic exemption
         Annually (1)                                   $   3,500.00
         Semi-annually (2)                                  1,750.00
         Quarterly (4)                                       875.00
         Monthly (12)                                        291.66
         Semi-monthly (24)                                   145.83
         Bi-weekly (26)                                      134.61
         Bi-weekly (27)                                      129.62
         Weekly (52)                                          67.30
         Weekly (53)                                          66.03
         22 pay periods                                      159.09
         13 pay periods                                      269.23
         10 pay periods                                      350.00
         Daily (240)                                          14.58
         Hourly (2000)                                          1.75




86                                    www.cra.gc.ca
 Part C – Employment Insurance (EI)
Employee and employer EI premiums for 2010
For 2010, the maximum annual insurable earnings are $43,200 and the premium rate is 1.73%
for a maximum annual premium of $747.36 for the country except for Quebec and 1.36% for
a maximum annual premium of $587.52 for Quebec.
As an employer, your contribution is 1.4 times the amount of the employee’s premiums for
the pay period. However, if you have a wage-loss replacement plan, you can ask to have
your contribution rate reduced.
If you need more information about the employer’s reduced EI premiums, contact:
  Service Canada
  Premium Reduction Program
  120 Harbourview Boulevard
  P.O. Box 11000
  Bathurst NB E2A 4T5
  Telephone:.........................1-800-561-7923
  Fax:....................................1-506-548-7473
We no longer use the concept of minimum or maximum insurable earnings or hours for a pay
period. You withhold EI premiums from each dollar of insurable earnings up to the yearly
maximum. Once you have deducted the maximum for the year, do not deduct any more
premiums.
You need to deduct EI premiums based on the employee’s insurable earnings, without regard to
any other insurable earnings the employee may have had with another employer in the same
year. Similarly, employers are not entitled to a refund of premiums if the employee leaves the
employment during the year.
Employees who earn $2,000 or less in a year can claim a refund on their personal tax returns
for all the EI premiums they paid. However, the employer cannot reduce or refund premiums
on this basis, nor is the employer entitled to a refund for such employees.
For purposes of the Record of Employment, the employer will also need to determine the hours
of employment. If the income is not directly related to hours, the earnings are insurable and
subject to withholding, while the hours are not considered to be insurable hours
Consult Service Canada for help and instructions on completing a Record of Employment.
There is no age limit for contributing to Employment Insurance.
For more information on Employment Insurance withholding, see the employers’ guide called
Payroll Deductions and Remittances.

Formula to calculate the EI premiums for 2010
The formula below will allow computer users to determine, in their payroll calculations,
the premium payable by an insured person under the Employment Insurance Act. The formula is:
EI    =    the lesser of:
           (i) $747.36 – D1; and
           (ii) 0.0173 × IE
           For employees in Quebec only:
          EI =  the lesser of
                (i) $587.52 – D1; and
                (ii) 0.0136 × IE*
     * Round the resulting amount(s) in (ii) to the nearest $0.01.




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           Note
           When an employee changes province of employment with the same employer during the
           year, the maximum premium for the year is based on the province where the first $43,200
           of insurable earnings are paid.
      Example:
      An employee makes $30,000 of insurable earnings in Ontario and changes his province of
      employment to Quebec and makes an additional $40,000 with the same employer.
      The employee’s maximum premium is calculated as follows:
       In Ontario:                $30,000                  ×         1.73%          =         $519.00
       In Quebec:                 $13,200                  ×         1.36%          =         $179.52
       Totals:                    $43,200                                           =         $698.52

      Canada Revenue Agency and Revenu Québec will reconcile adjustments to EI and QPIP
      premiums for trans-border employees. It is anticipated that adjustments between the EI and
      QPIP deductions will be resolved through the filing of the income tax return and an annual
      year-end adjustment process.
Where:
EI  =        Employee’s Employment Insurance premium deduction for the pay period.
D1     =     Employee’s year-to-date Employment Insurance premium with the employer (D1 cannot
             be more than the maximum annual premium).
IE     =     Insurable earnings for the pay period including insurable taxable benefits, bonuses, and
             retroactive pay increases.

Year-end calculation of deductions for employee’s Employment
Insurance premiums
 The following year-end calculation will help you verify an employee’s Employment Insurance (EI)
 premiums before you complete and file the T4 slips. This optional calculation is the only one
 we authorize. We have based the calculation on information contained in the employers’ guide
 called Payroll Deductions and Remittances and in Part C of this publication. You can get
 the information you need to complete this calculation from each employee’s payroll master file.
 The purpose of this calculation is to help you avoid the possibility of receiving a Pensionable and
 Insurable Earnings Review (PIER) statement. To verify the EI deduction, follow these steps:
 A. Enter the insurable earnings for the year as indicated in each employee’s
    payroll master file for the period of insurable employment. If the insurable
    earnings are less than the maximum and different from the gross income
    (box 14) reported on the T4 slip, report the amount on the T4 slip in box 24,
    “EI insurable earnings.” The amount should not be more than
    the annual maximum insurable earnings for the year ......................................... $                               1
 B. Enter the employee’s EI premium rate for the year............................................. ×                             2
 C. Multiply line 1 by line 2 to calculate the employee’s EI premiums payable for
    the year. The amount should not be more than the maximum EI premium for
    the year ............................................................................................................... $   3
 D. Enter the employee’s EI premium deduction for the period of insurable
    employment as indicated in the employee’s payroll master file ..........................                                     4
 E. Subtract line 4 from line 3. The result should be zero......................................... $                            5
      If the amount on line 5 results in a difference, and it is positive, you have to make
      an adjustment. Add lines 4 and 5, and include the total in box 18, “Employee’s EI premiums,”
      on the T4 slip.
      If the amount on line 5 is negative, you have over deducted. If this is the case, verify
      the employee’s master file to ensure that the amount on line 1 is correct. Refer to
      the employers’ guide called Payroll Deductions and Remittances, for information on
      refunding EI overpayments.



88                                                             www.cra.gc.ca
 Part D – Summary Sheet
We have created this page as a simple information sheet that you can tear out of this publication
and use as a quick summary for inputting the new figures into your programs.
There is nothing new presented here so if you have any questions concerning the amounts below
then please consult the appropriate sections in this guide for detailed explanations.
                Tax Bracket Rates                       Basic     Spouse    Child    Index
        1st       2nd        3rd       4th      5th     Amt        Amt      Amt       Rate    CEC

FED    0.15      0.22      0.26      0.29               10,382     10,382    2,101   0.6%     1,051
AB     0.1                                              16,825     16,825            0.3%
BC     0.0506    0.077     0.105     0.1229    0.147    11,000      9,653            0.4%
MB     0.108     0.1275    0.174                         8,134      8,134              -
NB     0.093     0.125     0.133     0.143               8,777      7,453            2.0%
NL     0.077     0.128     0.155                         7,833      6,400            0.7%
NT     0.059     0.086     0.122     0.1405             12,740     12,740            0.6%
NS     0.0879    0.1495    0.1667    0.175               8,231      6,989              -
NU     0.04      0.07      0.09      0.115              11,714     11,714            0.6%
ON     0.0505    0.0915    0.1116                        8,943      7,594            0.7%
PE     0.098     0.138     0.167                         7,708      6,546              -
*QC                                     Quebec Abatement is 16.5%
SK     0.11      0.13      0.15                     13,348     13,348        4,944   0.6%
YT     0.0704    0.0968    0.1144    0.1276             10,382     10,382    2,101   0.6%     1,051
OC                                   Outside Canada surtax rate is 48%


        Tax Bracket Income Thresholds                    V1        V1       LCP       LCP
       1st      2nd       3rd         4th       5th     Rate      Amt       Rate      Amt      S
FED     0      40,970     81,941    127,021                                 0.15      750
AB      -
BC      0      35,859     71,719     82,342    99,987                       0.15     2,000    390
MB      0      31,000     67,000                                            0.15     1,800
NB      0      36,421     72,843    118,427                                  0.2     2,000
NL      0      31,278     62,556                                             0.2     2,000
                                                                            0.15 &   750 &
NT      0      37,106     74,214    120,656
                                                                             0.30    28,500
NS      0      29,590     59,180     93,000             0.1      10,000     0.20     2,000
NU      0      39,065     78,130    127,021
                                                        0.2&     3,978&
ON      0      37,106     74,214                                             0.1      750     206
                                                        0.36     5,091
PE      0      31,984     63,969                        0.1      12,500
*QC                                     Quebec Abatement is 16.5%
SK      0      40,354    115,297                                            0.20     1,000
YT      0      40,970     81,941    127,021             0.05     6,000      0.25     1,250
OC                                   Outside Canada surtax rate is 48%

* Note: Quebec calculates its own provincial amounts therefore they are not included here




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