Keep in the loop with the latest payroll services, work management news and expert advice from Blue Canvas.
There are many businesses that make a practice of declaring bonuses at the end of their fiscal year end in order to reduce taxable income and to postpone the bonus amount from showing up in their employee’s income until the next year’s T4. For those companies that have a Dec 31st year end, take heed. The CRA allows the payment of the bonus to occur within 180 days of the year end. If the bonus is paid after that, it will not be allowed.
Organizations with a Dec 31st year-end will note that this year, the 180th day falls on Monday, June 29, 2015. Therefore to ensure compliance with the CRA, you will need to payout the bonus on or before this date. As bonus payments are generally taxable as employment income, related source deductions on bonus payments will also take effect. These source deductions should be remitted on your corporation’s next remittance deadline after the bonus paid date.
Do you have a different year end date? See the table below for some important upcoming dates for you and your payroll department to remember. If you have any questions, your payroll provider should be able to assist. The staff at Blue Canvas can advise of how to pay your accrued bonus using the bonus method to compute any related source deductions.
What to do now with your bonus money? Sorry, that question is beyond our scope but you may want to speak to your financial planner!
Year End Date Bonus Accrual Paid By
Dec 31, 2014 June 29, 2015
Jan. 31, 2015 July 30, 2015
Feb 28, 2015 Aug. 27, 2015
March 31, 2015 Sept. 27, 2015
April 30, 2015 Oct. 27, 2015