Compensation Tax

A financial institution that is not a corporation must remit the compensation tax at the same time as it remits source deductions and employer contributions if it is:

• an individual
• a partnership
• a trust
• an estate
• an organization or an association that is not an insurance corporation within the meaning of section 1159.1 of the Taxation Act

However, a financial institution that is a corporation must remit the compensation tax using the form COZ-1027.R, Acomptes provisionnels d'une société.

As a rule, it is employment income that is subject to compensation tax.

The rate of the compensation tax applicable to remuneration paid by a financial institution that is not a corporation is 1.5% for remuneration paid through March 31, 2014.

If you do not operate a financial institution throughout the year, you are required to pay compensation tax at the rate of 1.5% on the remuneration you pay during the portion of the year in which you operate a financial institution.

You must remit compensation tax periodically, according to your payment frequency, using a payment method that is convenient for you.

For more information, see the Guide for Employers: Source Deductions and Contributions (TP-1015.G-V).