Reduction of tax withholding on lump-sum employment income payments

Background

This bulletin is further to my previous bulletin dated July 15, 1998 on the same subject matter. This current bulletin relates specifically to employees who work and reside in the Province of Quebec. All other details as provided for in the previous bulletin remain unchanged.

Tax waivers - general

Employees who work and reside in the Province of Québec must obtain or provide two waiver letters. For a reduction of federal income tax, they must provide their compensation specialist with a Letter of Authority issued by Revenue Canada. For a reduction to their provincial income tax the employees must provide a Letter of Authority issued by the Ministère du Revenu du Québec.

Modified procedures for Pay Equity

For pay equity only, the Ministère du Revenu du Québec has agreed to follow the procedures put in place for federal income tax as specified by Revenue Canada. When an employee presents to his or her employer a Revenue Canada Letter of Authority, for payments in excess of $10,000 or a modified Letter of Authority for payments up to $10,000 then neither federal income tax deductions nor Quebéc provincial income tax deductions will be withheld.

It must be remembered that this approval is conditional on the employee making a deductible RRSP contribution for the year in which the payment is received. Likewise, the allowable transfer of funds to an employee's RRSP is conditional upon final approval of either Revenue Canada or the Ministère du Revenu du Québec when the employee completes his or her income tax return for the year concerned.