Reducing the Remuneration Subject to Source Deductions of Income Tax
In some cases, you must subtract certain contributions and deductions from the remuneration subject to source deductions of income tax.
For each pay period, reduce an employee's gross remuneration by subtracting:
- registered pension plan (RPP) contributions;
- contributions to a registered retirement savings plan (RRSP), a voluntary retirement savings plan (VRSP) or a pooled registered pension plan (PRPP) that you withhold and remit directly to the plan administrator;
- contributions to a retirement compensation arrangement that you withhold and pay to the retirement compensation arrangement;
- the deduction for the purchase of shares in a labour-sponsored fund;
- the Cooperative Investment Plan (CIP) deduction;
- the travel deduction for residents of designated remote areas;
Learn moreIf an employee's remuneration for a pay period includes the value of a taxable benefit related to trips made by a resident of a designated remote area, you have to subtract from the employee's gross remuneration, for that pay period, the amount of the travel deduction the employee can claim in their income tax return in respect of the benefit.
Before subtracting the amount, make sure that the employee meets the conditions for claiming the deduction. For more information, see Trips Made by a Resident of a Designated Remote Area.
- the security option deduction;
Learn moreIf an employee's remuneration for a pay period includes a taxable security option benefit (other than shares in a Canadian-controlled private corporation [CCPC]), you have to subtract from the employee's gross remuneration, for that pay period, the amount of the deduction the employee can claim for the benefit in their income tax return.
Before subtracting the amount, make sure that the employee meets the conditions for claiming the deduction. For more information, see Deduction for Stock Options of a Corporation Other than a Canadian-Controlled Private Corporation or Options to Purchase Mutual Fund Units.
- the portion of the remuneration that gives entitlement to:
- the deduction for a foreign employee (foreign specialist, foreign researcher, foreign researcher on a post-doctoral internship, foreign expert, foreign professor),
- the deduction for foreign producers or foreign individuals holding a key position in a foreign production,
- the deduction for foreign farm workers,
- the deduction for employment income situated on a reserve or premises,
- the deduction for employment income earned on a vessel,
- the Canadian Forces personnel and police deduction;
- the deductions included on line 19 of the Source Deductions Return (form TP-1015.3-V);
Learn moreDivide the amount an individual entered on line 19 of form TP-1015.3-V by the number of pay periods remaining in the year. This is the amount you subtract from the individual's gross remuneration for each pay period.
See Source Deductions Return for more information.
- the deductions that we authorized, if the individual completed the Application for a Reduction in Source Deductions of Income Tax (form TP-1016-V);
Learn moreDivide the amount of the annual deductions that we authorized by the number of pay periods remaining in the year. This is the amount you subtract from the individual's gross remuneration for each pay period.
Do not take into account any tax credits that we authorized, since they are used to reduce the income tax payable.
See Application for a Reduction in Source Deductions of Income Tax for more information.
- the deduction for employment income, unless you use the Source Deduction Table for Québec Income Tax (TP-1015.TI-V) to calculate the income tax to withhold, since the table takes the deduction into account;
If you are paying remuneration as a payer, the beneficiary is not entitled to the deduction. Similarly, if you are paying remuneration that includes only a taxable benefit relating to previous employment, the employee is not entitled to the deduction. To ensure that the source deduction of income tax is not less than it should be, make the adjustment outlined in table TP-1015.TI-V.
- additional Québec Pension Plan (QPP) contributions.
Starting January 1, 2023, you have to include the amount that represents an employee's additional contributions to the QPP when you determine what remuneration is subject to Québec income tax.
The Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V), the Source Deduction Table for Québec Income Tax (TP-1015.TI-V) and WebRAS for 2023 have been modified to include the amount.
If you use table TP-1015.TI-V to calculate the Québec income tax that must be withheld, do not subtract the amount that represents the employee's additional contributions to the QPP from the employee's gross remuneration.The table already takes this amount into account.