What are lump sum payments?

Learn what a "lump sum payment" is and how it affects your payroll.
This applies to;

√ Everyone

What are lump sum payments?

In certain situations, an employer may be paying an employee a larger than usual sum of money. The government has stipulated under which circumstances the employer can pay this out at a lower than usual tax rate. We've included below a list of the most common lump sum payments, with links to the CRA's website detailing what is permissible.

How are lump sum payments taxed?

Taxes on lump sum payments are calculating using the following withholding rates:

Lump Sum Payment Amount All Provinces except Quebec Quebec
Up to and including $5,000 10% 5%
Over $5,000 up to and including $15,000 20% 10%
Over $15,000 30% 15%

These rates are accurate for 2017. Look at current data on the CRA website by clicking  this link.

Processing payroll with lump sum payments? Click  here for information on how to over-ride taxes on the input sheet.

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