Lump Sum Tax Method
The lump sum tax method determines the withholding for the payment (earnings code set up using the Lump Sum Tax Method) using the corresponding rate(s) specified on the Federal CIT Lump-Sum Rates (federal Canadian income taxes lump-sum rates) group box or Quebec (QIT) Lump-Sum Rates (Quebec [Quebec income taxes] lump-sum rates) group box on the Tax Rates, Credits, and Other page.
This table shows how the system calculates the lump sum tax method:
|
Calculation Step |
Calculation Input |
Calculation Output |
|---|---|---|
|
1. Establish the applicable tax rate to use from the Tax Rates, Credits and Other page - Federal (CIT) Lump Sum Rates and if Quebec applies, also use the Quebec (QIT) Lump Sum Rates. |
Select the applicable rate to use based on the amount of the payment; for Quebec, also select the appropriate rates (CIT and QIT) |
Selected tax rate(s). |
|
2. Determine the CIT payable for the payment ; if Quebec, determined both CIT and QIT payable for the period. |
(Lump-sum payment) Х (selected rate(s)) |
(after tax calculation) Tax payable on the current lump-sum payment; if province is Quebec, both CIT and QIT are calculated. |