A single payment is a payment that is not part of a series of periodic payments. A single payment is generally a payment made to an individual only once in the year, in settlement of an amount to which the individual is entitled. For example, a retiring allowance is considered a single payment if the employer pays the allowance in one payment or in several annual payments.
If, at the time you pay an amount to an individual, you do not know whether you will be making other such payments to the individual during the year, you must withhold income tax at the rate of 15% or 20%, as applicable.
However, if you expect to make other such payments to the individual during the year, contact us to find out whether these payments can be considered single payments. If that is not the case, you must withhold income tax using the usual method.
Income tax rate on a single payment
To calculate the source deduction of income tax on certain single payments, you must use the following rates:
- 15% (if the payment does not exceed $5,000);
- 20% (if the payment is over $5,000).
These rates apply to the following single payments:
- a retiring allowance;
- certain payments made under a registered education savings plan (RESP);
- a payment made under a pension plan, including a payment from a pooled registered pension plan (PRPP) or a voluntary retirement savings plan (VRSP):
- upon the death, resignation or retirement of an employee or a former employee,
- upon the winding-up of the plan, in full satisfaction of all the participant's rights in the plan, or
- upon an amendment of the plan, where the amendment entitles the participant to receive the payment even if he or she continues to participate in the plan;
- a payment made under a deferred profit-sharing plan (DPSP), including a DPSP whose registration has been revoked;
- a death benefit;
- a payment made further to an order or judgment, as salary or wages owed to an employee or a former employee, if a portion of the amount paid relates to a previous year;
- a payment made under a profit-sharing plan, in full satisfaction of all an employee's rights in the plan, if the payment must be included in the employee's income for the year in which the payment is received (otherwise, you do not have to withhold income tax on the payment);
- an amount paid as consideration for the surrender, cancellation or redemption of an income-averaging annuity contract;
- a payment made in the context of closing a farm income stabilization account under sections 45 and 46 of the Farm Income Stabilization Account program established under the Act respecting the Financière agricole du Québec.
You cannot use the formulas in the guide entitled Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V) to calculate the source deduction of income tax on single payments. Follow the instructions above.