Income Tax Regulations (C.R.C., c. 945)

Short Title

1 These Regulations may be cited as the Income Tax Regulations.

Interpretation

2 In these Regulations, Act means the Income Tax Act.

PART ITax Deductions

Interpretation

• 100 (1) In this Part and in Schedule I,

  employee

  employee means any person receiving remuneration; (employé)

  employer

  employer means any person paying remuneration; (employeur)

  estimated deductions

  estimated deductions means, in respect of a taxation year, the total of the amounts estimated to be deductible by an employee for the year under any of paragraphs 8(1)(f), (h), (h.1), (i) and (j) of the Act and determined by the employee for the purpose of completing the form referred to in subsection 107(2); (déductions estimatives)

  exemptions

  exemptions[Repealed, SOR/89-508, s. 1]

  pay period

  pay period includes

  • (a) a day,

  • (b) a week,

  • (c) a two week period,

  • (d) a semi-monthly period,

  • (e) a month,

  • (f) a four week period,

  • (g) one tenth of a calendar year, or

  • (h) one twenty-second of a calendar year; (période de paie)

  personal credits

  personal credits means, in respect of a particular taxation year, the greater of

  • (a) the amount referred to in paragraph 118(1)(c) of the Act, and

  • (b) the aggregate of the credits which the employee would be entitled to claim for the year under

    • (i) subsections 118(1), (2) and (3) of the Act if the description of A in those subsections were read as “is equal to one”,

    • (ii) subsections 118.3(1) and (2) of the Act if the description of A in subsection 118.3(1) of the Act were read as “is equal to one” and if subsection 118.3(1) of the Act were read without reference to paragraph (c) thereof,

    • (iii) subsections 118.5(1) and 118.6(2) of the Act if subsection 118.5(1) of the Act were read without reference to “the product obtained when the appropriate percentage for the year is multiplied by” and the description of A in subsection 118.6(2) of the Act were read as “is equal to one”, and after deducting from the aggregate of the amounts determined under those subsections the excess over $3,000 of the aggregate of amounts that the employee claims to expect to receive in the year on account of a scholarship, fellowship or bursary,

    • (iv) section 118.8 of the Act if the formula A + B - C in that section were read as

      (A + B) / C

      where

      A

      is the value of A in that section,

      B

      is the value of B in that section, and

      C

      is the appropriate percentage for the year,

    • (v) section 118.9 of the Act if the formula A - B in section 118.81 of the Act were read as

      A / B

      where

      A

      is the value of A set out in that section, and

      B

      is the appropriate percentage for the year. (crédits d’impôts personnels)

  remuneration

  remuneration includes any payment that is

  • (a) in respect of

    • (i) salary or wages, or

    • (ii) commissions or other similar amounts fixed by reference to the volume of the sales made or the contracts negotiated (referred to as commissions in this Part)

  paid to an officer or employee or former officer or employee,

  • (a.1) in respect of an employee’s gratuities required under provincial legislation to be declared to the employee’s employer,

  • (b) a superannuation or pension benefit (including an annuity payment made pursuant to or under a superannuation or pension fund or plan) other than a distribution

    • (i) that is made from a pooled registered pension plan and is not required to be included in computing a taxpayer’s income under paragraph 56(1)(z.3) of the Act, or

    • (ii) that subsection 147.5(14) of the Act deems to have been made,

  • (b.1) an amount of a distribution out of or under a retirement compensation arrangement,

  • (c) a retiring allowance,

  • (d) a death benefit,

  • (e) a benefit under a supplementary unemployment benefit plan,

  • (f) a payment under a deferred profit sharing plan or a plan referred to in section 147 of the Act as a revoked plan, reduced, if applicable, by amounts determined under subsections 147(10.1), (11) and (12) of the Act,

  • (g) a benefit under the Employment Insurance Act,

  • (g.1) an amount that is required by paragraph 56(1)(a.3) of the Act to be included in computing a taxpayer’s income,

  • (h) an amount that is required by paragraph 56(1)(r) of the Act to be included in computing a taxpayer’s income, except the portion of the amount that relates to child care expenses and tuition costs,

  • (i) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146(1) of the Act out of or under a registered retirement savings plan of that annuitant, other than

    • (i) a periodic annuity payment, or

    • (ii) a payment made by a person who has reasonable grounds to believe that the payment may be deducted under subsection 146(8.2) of the Act in computing the income of any taxpayer,

  • (j) a payment out of or under a plan referred to in subsection 146(12) of the Act as an amended plan other than

    • (i) a periodic annuity payment, or

    • (ii) where paragraph 146(12)(a) of the Act applied to the plan after May 25, 1976, a payment made in a year subsequent to the year in which that paragraph applied to the plan,

  • (j.1) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146.3(1) of the Act under a registered retirement income fund of that annuitant, other than a particular payment to the extent that

    • (i) the particular payment is in respect of the minimum amount (in this paragraph having the meaning assigned by subsection 146.3(1) of the Act) under the fund for a year, or

    • (ii) where the fund governs a trust, the particular payment would be in respect of the minimum amount under the fund for a year if each amount that, at the beginning of the year, is scheduled to be paid after the time of the particular payment and in the year to the trust under an annuity contract that is held by the trust both at the beginning of the year and at the time of the particular payment, is paid to the trust in the year,

  • (k) a benefit described in section 5502,

  • (l) an amount as, on account or in lieu of payment of, or in satisfaction of, proceeds of the surrender, cancellation or redemption of an income-averaging annuity contract,

  • (m) in respect of an amount that can reasonably be regarded as having been received, in whole or in part, as consideration or partial consideration for entering into a contract of service, where the service is to be performed in Canada, or for an undertaking not to enter into such a contract with another party,

  • (n) a payment out of a registered education savings plan other than

    • (i) a refund of payments,

    • (ii) an educational assistance payment, or

    • (iii) an amount, up to $50,000, of an accumulated income payment that is made to a subscriber, as defined in subsection 204.94(1) of the Act, or if there is no subscriber at that time, that is made to a person that has been a spouse or common-law partner of an individual who was a subscriber, if

      • (A) that amount is transferred to an RRSP in which the annuitant is either the recipient of the payment or the recipient’s spouse or common-law partner, and

      • (B) it is reasonable for the person making the payment to believe that that amount is deductible for the year by the recipient of the payment within the limits provided for in subsection 146(5) or (5.1) of the Act,

  • (o) an amount of a disability assistance payment made under a registered disability savings plan that is required by paragraph 56(1)(q.1) of the Act to be included in computing a taxpayer’s income,

  • (p) an amount that is required by paragraph 56(1)(z.5) of the Act to be included in computing a taxpayer’s income,

  • (q) a payment described in paragraph 153(1)(v) of the Act, or

  • (r) an amount that is required by subparagraph 56(1)(a)(viii) of the Act to be included in computing the taxpayer’s income; (rémunération)

  total remuneration

  total remuneration means, in respect of a taxation year, the total of all amounts each of which is an amount referred to in paragraph (a) or (a.1) of the definition remuneration. (rémunération totale)

• (2) Where the amount of any credit referred to in paragraph (a) or (b) of the definition personal credits in subsection (1) is subject to an annual adjustment under section 117.1 of the Act, such amount shall, in a particular taxation year, be subject to that annual adjustment.

• (3) For the purposes of this Part, where an employer deducts or withholds from a payment of remuneration to an employee one or more of the following amounts, the balance remaining after the deducting or withholding of the amount or amounts shall be deemed to be the amount of that payment of remuneration:

  • (a) a contribution to or under a pooled registered pension plan, a registered pension plan or a specified pension plan, or

  • (b) dues described in subparagraph 8(1)(i)(iv), (v) or (vi) of the Act paid on account of the employee,

  • (b.1) a contribution by the employee under subparagraph 8(1)(m.2) of the Act,

  • (c) a premium under a registered retirement savings plan, to the extent that the employer believes on reasonable grounds that the premium is deductible under paragraph 60(j.1) or subsection 146(5) or (5.1) of the Act in computing the employee’s income for the taxation year in which the payment of remuneration is made,

  • (c.1) a contribution to or under a FHSA, to the extent that the employer believes on reasonable grounds that the contribution is deductible under subsection 146.6(5) of the Act in computing the employee’s income for the taxation year in which the payment of remuneration is made, or

  • (d) an amount that is deductible under paragraph 60(b) of the Act, or

  • (e) an amount that is deductible under paragraph 60(e.1) of the Act.

• (3.1) For the purposes of this Part, where an employee has claimed a deduction for a taxation year under paragraph 110.7(1)(b) of the Act as shown on the return most recently filed by the employee with the employee’s employer pursuant to subsection 227(2) of the Act, the amount of remuneration otherwise determined, including the amount deemed by subsection (3) to be the amount of that payment of remuneration, paid to the employee for a pay period shall be reduced by an amount equal to the amount of the deduction divided by the maximum number of pay periods in the year in respect of the appropriate pay period.

• (3.2) [Repealed, SOR/2001-209, s. 1]

• (4) For the purposes of this Part, where an employee is not required to report for work at any establishment of the employer, he shall be deemed to report for work

  • (a) in respect of remuneration that is salary, wages or commissions, at the establishment of the employer from which the remuneration is paid; or

  • (b) in respect of remuneration other than salary, wages or commissions, at the establishment of the employer in the province where the employee resides at the time the remuneration is paid but, if the employer does not have an establishment in that province at that time, he shall, for the purposes of this paragraph, be deemed to have an establishment in that province.

• (5) For the purposes of this Part, where an employer deducts or withholds from a payment of remuneration to an employee an amount in respect of the acquisition by the employee of an approved share, as defined in subsection 127.4(1) of the Act, there shall be deducted from the amount determined under paragraph 102(1)(e) or (2)(e), as the case may be, in respect of that payment the lesser of

  • (a) $750, and

  • (b) 15% of the amount deducted or withheld in respect of the acquisition of an approved share.

Deductions and Remittances

101 Every person who makes a payment described in subsection 153(1) of the Act in a taxation year shall deduct or withhold therefrom, and remit to the Receiver General, such amount, if any, as is determined in accordance with rules prescribed in this Part.

Periodic Payments

• 102 (1) Except as otherwise provided in this Part, the amount to be deducted or withheld by an employer

  • (a) from any payment of remuneration (in this subsection referred to as the payment) made to an employee in his taxation year where he reports for work at an establishment of the employer in a province, in Canada beyond the limits of any province or outside Canada, and

  • (b) for any pay period in which the payment is made by the employer

  shall be determined for each payment in accordance with the following rules:

  • (c) an amount that is a notional remuneration for the year in respect of

    • (i) a payment to the employee, and

    • (ii) the amount, if any, of gratuities referred to in paragraph (a.1) of the definition remuneration in subsection 100(1)

    is deemed to be the amount determined by the formula

    A × B

    where

    A

    is the amount that is deemed for the purpose of this paragraph to be the mid-point of the applicable range of remuneration for the pay period, as provided in Schedule I, in which falls the total of

    • (A) the payment referred to in subparagraph (i) made in the pay period, and

    • (B) the amount of gratuities referred to in subparagraph (ii) declared by the employee for the pay period, and

    B

    is the maximum number of such pay periods in that year;

  • (d) if the employee is not resident in Canada at the time of the payment, no personal credits will be allowed for the purposes of this subsection and, if the employee is resident in Canada at the time of the payment, the employee’s personal credits for the year are deemed to be the mid-point of the range of amounts of personal credits for a taxation year as provided for in section 2 of Schedule I;

  • (e) an amount (in this subsection referred to as the notional tax for the year) shall be computed in respect of that employee by

    • (i) calculating the amount of tax payable for the year, as if that amount were calculated under subsection 117(2) of the Act and adjusted annually pursuant to section 117.1 of the Act, on the amount determined in accordance with paragraph (c) as if that amount represented the employee’s amount taxable for that year,

    and deducting the aggregate of

    • (ii) the amount determined in accordance with paragraph (d) multiplied by the appropriate percentage for the year,

    • (iii) an amount equal to

      • (A) the amount determined in accordance with paragraph (c) multiplied by the employee’s premium rate for the year under the Employment Insurance Act, not exceeding the maximum amount of the premiums payable by the employee for the year under that Act,

      multiplied by

      • (B) the appropriate percentage for the year, and

    • (iv) an amount equal to

      • (A) the product obtained when the difference between the amount determined in accordance with paragraph (c) and the amount determined under section 20 of the Canada Pension Plan for the year is multiplied by the employee’s contribution rate for the year under the Canada Pension Plan or under a provincial pension plan as defined in subsection 3(1) of that Act, not exceeding the maximum amount of such contributions payable by the employee for the year under the plan,

      multiplied by

      • (B) the appropriate percentage for the year;

  • (f) the amount determined in accordance with paragraph (e) shall be increased by, where applicable, the tax as determined under subsection 120(1) of the Act;

  • (g) where the amount of notional remuneration for the year is income earned in the Province of Quebec, the amount determined in accordance with paragraph (e) shall be reduced by an amount that is the aggregate of

    • (i) the amount that is deemed to be paid under subsection 120(2) of the Act as if there were no other source of income or loss for the year, and

    • (ii) the amount by which the amount referred to in subparagraph (i) is increased by virtue of section 27 of the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act; and

  • (h) [Repealed, SOR/92-667, s. 1]

  • (i) the amount to be deducted or withheld shall be computed by

    • (i) dividing the amount of the notional tax for the year by the maximum number of pay periods for the year in respect of the appropriate pay period, and

    • (ii) rounding the amount determined under subparagraph (i) to the nearest multiple of five cents or, if such amount is equidistant from two such multiples, to the higher multiple.

• (2) Where an employee has elected pursuant to subsection 107(2) and has not revoked such election, the amount to be deducted or withheld by the employer from any payment of remuneration (in this subsection referred to as the payment) that is

  • (a) a payment in respect of commissions or is a combined payment of commissions and salary or wages, or

  • (b) a payment in respect of salary or wages where that employee receives a combined payment of commissions and salary or wages,

  made to that employee in his taxation year where he reports for work at an establishment of the employer in a province, in Canada beyond the limits of any province or outside Canada, shall be determined for each payment in accordance with the following rules:

  • (c) an employee’s estimated annual taxable income shall be determined by using the formula

    A - B

    where

    A

    is the amount of that employee’s total remuneration in respect of the year as recorded by the employee on the form referred to in subsection 107(2), and

    B

    is the amount of that employee’s expenses in respect of the year as recorded by that employee on that form;

  • (d) if the employee is not resident in Canada at the time of the payment, no personal credits will be allowed for the purposes of this subsection and if the employee is resident in Canada at the time of the payment, the employee’s personal credits for the year shall be the total claim amount as recorded by that employee on the return for the year referred to in subsection 107(1);

  • (e) an amount (in this subsection referred to as the notional tax for the year) shall be calculated in respect of that employee by using the formula

    C - [(D + E + F) × G] + H - I

    where

    C

    is the amount of tax payable for the year, calculated as if that amount of tax were computed under subsection 117(2) of the Act and adjusted annually pursuant to section 117.1 of the Act, on the amount determined under paragraph (c) as if that amount represented the employee’s amount taxable for that year,

    D

    is the amount determined in accordance with paragraph (d),

    E

    is the amount determined in the description of A in paragraph (c) multiplied by the employee’s premium rate for the year under the Employment Insurance Act, not exceeding the maximum amount of the premiums payable by the employee for the year under that Act,

    F

    is the amount determined in the description of A in paragraph (c) less the amount for the year determined under section 20 of the Canada Pension Plan multiplied by the employee’s contribution rate for the year under that Act or under a provincial pension plan as defined in section 3 of that Act, not exceeding the maximum amount of such contributions payable by the employee for the year under the plan,

    G

    is the appropriate percentage for the year,

    H

    is, where applicable, the tax as determined under subsection 120(1) of the Act,

    I

    is, where the amount of total remuneration for the year is income earned in the Province of Quebec, an amount equal to the aggregate of

    • (i) the amount that would be deemed to have been paid under subsection 120(2) of the Act with respect to the employee if the notional tax for the year for the employee were determined without reference to the elements H, I and J in this formula and if that tax were that employee’s tax payable under Part I of the Act for that year, as if there were no other source of income or loss for the year, and

    • (ii) the amount by which the amount referred to in subparagraph (i) is increased by virtue of section 27 of the Federal-Provincial Fiscal Arrangements Act;

  • (f) the employee’s notional rate of tax for a year is calculated by dividing the amount determined under paragraph (e) by the amount referred to in the description of A in paragraph (c) in respect of that employee and expressed as a decimal fraction rounded to the nearest hundredth, or where the third digit is equidistant from two consecutive one-thousandths, to the higher thereof;

  • (g) the amount to be deducted or withheld in respect of any payment made to that employee shall be determined by multiplying the payment by the appropriate decimal fraction determined pursuant to paragraph (f).

  • (h) [Repealed, SOR/2001-221, s. 2]

• (3) [Repealed, SOR/89-508, s. 2]

• (4) [Repealed, SOR/81-471, s. 3]

• (5) Notwithstanding subsections (1) and (2), no amount shall be deducted or withheld in the year by an employer from a payment of remuneration to an employee in respect of commissions earned by the employee in the immediately preceding year where those commissions were previously reported by the employer as remuneration of the employee in respect of that year on an information return.

• (6) Despite subsection (1), no amount shall be deducted or withheld in the year by an employer from an amount determined in accordance with subparagraph 110(1)(f)(iii), (iv) or (v) of the Act.