Bonus Paid on a Separate Cheque

This table shows how the system calculates the tax payable when the bonus is paid on a separate cheque with no regular earnings:

Calculation Step	Calculation Input	Calculation Output
1. Determine annual taxes payable based on estimated annualized earnings including the bonus payment.	The following will derive projected annual taxable gross: (CIT taxable earnings gross YTD, including YTD bonus) + (pay period pay rate from the employee's Job Data record X No. of pay periods remaining in the year including the current pay period) + (current bonus payment)	Perform tax calculation and the result will be annual income taxes which for this exercise will be Base Amount A.
2. Determine annual taxes payable based on estimated annualized earnings excluding the current bonus payment.	The following will derive projected annual taxable gross: (CIT taxable earnings gross YTD, including YTD bonus) + (pay period pay rate from the employee's Job Data record X No. of pay periods remaining in the year including the current pay period)	Perform tax calculation and the result will be annual income taxes which for this exercise will be Base Amount B.
3. Determine taxes payable on the bonus payment.	(Base Amount A – Base Amount B)	Tax payable on bonus payment.

Calculation Step

Calculation Input

Calculation Output

1. Determine annual taxes payable based on estimated annualized earnings including the bonus payment.

The following will derive projected annual taxable gross: (CIT taxable earnings gross YTD, including YTD bonus) + (pay period pay rate from the employee's Job Data record X No. of pay periods remaining in the year including the current pay period) + (current bonus payment)

Perform tax calculation and the result will be annual income taxes which for this exercise will be Base Amount A.

2. Determine annual taxes payable based on estimated annualized earnings excluding the current bonus payment.

The following will derive projected annual taxable gross:

(CIT taxable earnings gross YTD, including YTD bonus) + (pay period pay rate from the employee's Job Data record X No. of pay periods remaining in the year including the current pay period)

Perform tax calculation and the result will be annual income taxes which for this exercise will be Base Amount B.

3. Determine taxes payable on the bonus payment.

(Base Amount A – Base Amount B)

Tax payable on bonus payment.

The estimated projected earnings from the employee's Job Data record is calculated by this formula: (annual rate from the employee's Job Data record / no. of pays in the year to derive a pay period rate) × number of pays remaining in the year including the current period.