Bonuses, retroactive pay increases or irregular amounts
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Calculate payroll deductions and contributions
- Get ready to make deductions
- Determine if a benefit is taxable
- Determine the tax treatment of payments other than regular employment income
- Bonuses, retroactive pay increases or irregular amounts
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Other payments
- Advance payments
- Annuity payments
- Commission payments
- Employee who dies
- Employee who is a non-resident
- Employee who is hired as a family member or a related person
- Employee who is leaving
- Employee who is on parental leave
- Employee who is registered, or entitled to be registered under the Indian Act
- Employee who is working outside Canada for a Canadian company or the Canadian government
- Employee's life events: Start, stop or restart CPP deductions
- Employer who is a non-resident employer
- Employer who provides a wage-loss replacement plan for short-term disability (reduced EI premium rate)
- Lump-sum payments
- Patronage payments
- Payments from a profit sharing plan
- Payments from a registered disability savings plan (RDSP)
- Payments from retirement compensation arrangements (RCA)
- Payments from supplementary unemployment benefit plan (SUBP)
- Payments from wage-loss replacement plans
- Payments of directors' fees
- Payments of fees for services
- Payments of retiring allowances
- Payments of wages in lieu of termination notice
- Payments related to death benefits
- Payments related to pension or superannuation
- Payments related to research grants
- Payments related to salary deferral arrangements
- Payments of stipends, fees or remuneration related to tenure of office (elected or appointed officials)
- Payments related to worker's compensation claims
- Payments to agriculture and horticulture workers
- Payments to barbers and hairdressers
- Payments to caregivers, baby-sitters and domestic workers
- Payments to emergency services volunteers
- Payments to employee of an employment agency (temporary-help)
- Payments to fishers
- Payments to forestry workers for power saws or tree trimmers
- Payments to police officers for special or extra duty from third parties
- Payments to taxi and other passenger-carrying drivers
- Payments to workers at a circus, fair, parade or similar activity
- Qualifying retroactive lump-sum payments
- Retroactive payments
- Taxable benefits
- Tips and gratuities
- Vacation pay and public holidays payments
- How to calculate
- Make corrections before filing
Bonuses, retroactive pay increases or irregular amounts
This new content has been developed for clarity, completeness and plain language. No changes were made to the CRA's treatment of bonuses, retroactive pay increases or irregular amounts.
You may pay bonuses, retroactive pay increases, or any other additional or unusual payments to your employee.
On this page
Steps
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Determine if you need to report the payment on a slip
You must report the payment as employment income on your employee’s T4 slip in the year the bonuses, retroactive pay increases, or any other additional or unusual payments are received.
Example: Bonuses
Can be paid at any time but are usually paid at the end of a fiscal or calendar year
Example: Retroactive pay increasesAre normally paid when a new contract has been finalized and there is a backdated increase in pay
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Withhold payroll deductions
You must withhold the following deductions:
- Income tax - Calculate using the bonus or irregular payments method
Learn more on how to calculate, including examples: Calculate income tax deductions
- EI premiums
Learn more on how to calculate, including examples: Calculate EI premiums deductions
- CPP contributions - Calculate using the bonus or irregular payments method
Learn more on how to calculate, including examples: Calculate CPP contributions deductions
- Income tax - Calculate using the bonus or irregular payments method
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Report the payment on a T4 slip
You must report the following on the T4 slip:
- Box 14 - Employment income
- Box 24 - EI insurable earnings
- Box 26 - CPP/QPP pensionable earnings
Special situation: Qualifying retroactive lump-sum payments (QRLP)
If the retroactive payment is related to previous years that are paid in the current year, it may be considered a QRLP. Your employee may be eligible for a special tax calculation when they file their personal income tax and benefit return.
Learn more: Lump-sum payments
Learn how to report the payment: T4 slip - Information for employers
References
Legislation
- ITA: 5(1)
- Income from office or employment
- ITA: 153(1)(a)
- Withholding
- ITR: 103
- Non-periodic payments
- ITR: 200
- Remuneration and benefits
- CPP: 12(1)
- Amount of contributory salary and wages
- IECPR: 2(1)
- Amount of insurable earnings
- IECPR: 2(3)
- Amounts not included in insurable earnings
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2026-03-16