Commissions paid to an employee constitute salary or wages and are generally added to the employee's basic salary or wages and similar payments made to the employee for calculating source deductions and employer contributions.

Source deductions of income tax

You have to withhold income tax from commissions you pay an employee.

If the commissions are paid regularly, add them to the employee's salary or wages to calculate the source deduction of income tax.

If the commissions are not paid regularly, you can use the method applicable to gratuities to calculate the source deduction of income tax.

Employee who does not have to pay expenses or who did not complete form TP-1015.R.13.1-V

An employee whose remuneration consists, in whole or in part, of commissions and who is required to pay certain employment expenses can elect to have only a percentage of their commissions included in their remuneration used to calculate source deductions of income tax.

To make the 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
• the 30th day after the date on which they begin 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 their remuneration subject to source deductions of income tax

An employee can revoke the election at any time by notifying you in writing. The revocation takes effect on the date shown in the notice.

To calculate the employee's source deductions of income tax, add the result of the following calculation to the employee's salary or wages:

• the amount of the gross commissions paid to the employee for the pay period
• multiplied by the percentage of commissions shown in form TP-1015.R.13.1-V

Québec Pension Plan contributions

You have to withhold and pay Québec Pension Plan (QPP) contributions on commissions you pay an employee.

If you pay an employee commissions during a pay period and you pay the amount with the employee's salary or wages for the period, add the amount to the salary or wages to calculate the employee's QPP contribution for the period.

If you pay the commissions separately from the employee's salary or wages, use the method applicable to gratuities to calculate the contribution to withhold.

Québec parental insurance plan premiums and other employer contributions

You have to withhold and pay Québec parental insurance plan (QPIP) premiums on commissions you pay an employee and pay the contribution to the health services fund, the contribution related to labour standards and, if applicable, the contribution to the Workforce Skills Development and Recognition Fund (WSDRF). You must also include the commissions in your total payroll used to calculate your health services fund contribution rate and your participation in workforce skills development.