Commissions you pay to an employee constitute salary or wages and are added to the employee's basic salary or wages or similar payments made to the employee.
Election by an employee whose remuneration consists of commissions
Employees whose remuneration consists, in whole or in part, of commissions and who are required to pay certain employment expenses may elect to have only a percentage of their commissions included in the calculation of their remuneration subject to source deductions of income tax.
To make such an election, the employee must complete the Statement of Commissions and Expenses for Source Deduction Purposes (form TP-1015.R.13.1-V), and submit it to you no later than:
- January 31 of the year concerned;
- the 30th day after the date on which the employee begins to be remunerated on a commission basis;
- the 30th day after the date of an event that may change the percentage of commissions to be included in the calculation of the employee's remuneration subject to source deductions of income tax.
The employee may revoke the election at any time by notifying you in writing. The revocation takes effect on the date indicated in the notice.
An employee whose estimated commission income changes during the year must complete and submit to you another TP-1015.R.13.1-V form.
Source deductions of income tax
Commissions paid to employees who do not incur work-related expenses or did not complete form TP-1015.R.13.1-V
If the commissions are paid on a regular basis to the employee, add them to the employee's basic salary or wages to calculate the remuneration subject to source deductions of income tax. Then determine the source deduction of income tax using the usual method.
If the commissions are not paid on a regular basis, you may use the method applicable to gratuities to calculate the remuneration subject to source deduction of income tax.
Commissions paid to employees who incur work-related expenses and who completed form TP-1015.R.13.1-V by the prescribed deadline
Calculate the employee's remuneration subject to source deductions of income tax by adding to his or her basic salary or wages the result of the following calculation: the amount of the gross commissions paid to the employee for the pay period, multiplied by the percentage of commissions determined using form TP-1015.R.13.1-V.
Then determine the source deduction of income tax using the usual method.