• Last Updated:
  • Feb 7th, 2021 8:20 am
[OP]
Member
Sep 15, 2018
312 posts
51 upvotes

Tax Deduction

Hey guys,

Long story short, I am basically getting a lump sum payment of $7000 on my paycheck due to unused vacation and sick time from last year.

My employer refuses to put them on a separate paycheck so that I don’t get taxed heavily on it.

Are there any options for me to get the employer to reduce tax deductions in general so that I can even out the deductions eventually? Can I fill out a “Request to Reduce Tax Deductions at Source” T1213 for this amount?

Thanks in advance.
Last edited by Kyle12345 on Feb 5th, 2021 5:17 pm, edited 1 time in total.
11 replies
Deal Addict
Jan 19, 2017
4090 posts
2327 upvotes
Kyle12345 wrote: Hey guys,

Long story short, I am basically getting a lump sum payment of $7000 on my paycheck due to unused vacation and sick time from last year.

My employer refuses to put them on a separate paycheck so that I don’t get taxed heavily on it.

Are there any options for me to get the employer to reduce tax deductions in general so that I can even out the deductions eventually? Can I fill out a “Request to Reduce Tax Deductions at Source” for this amount?

Thanks in advance.
You will pay the same total amt of tax eventually when you file your tax return. So if the deduction is too small, you will have to pay. Otherwise you will get a refund.
Member
May 12, 2003
371 posts
235 upvotes
GTA
Like others have said, you will eventually even out when you file your 2021 Income tax return.

For now, you can request your employer to take lower taxes, or pay the amount over several pay cheques.

But that depends on the employer, and may become an administrative burden, which they may decline.
Kyle12345 wrote: Hey guys,

Long story short, I am basically getting a lump sum payment of $7000 on my paycheck due to unused vacation and sick time from last year.

My employer refuses to put them on a separate paycheck so that I don’t get taxed heavily on it.

Are there any options for me to get the employer to reduce tax deductions in general so that I can even out the deductions eventually? Can I fill out a “Request to Reduce Tax Deductions at Source” for this amount?

Thanks in advance.
Sr. Member
User avatar
Jan 15, 2017
961 posts
499 upvotes
It would be taxed less if it qualified as a bonus or something similar, and I understand not wanting to get a pay with an extra $7000 gross because of the way pay period income is treated, but I don't think there's much else you can do.
[OP]
Member
Sep 15, 2018
312 posts
51 upvotes
ml88888888 wrote: You will pay the same total amt of tax eventually when you file your tax return. So if the deduction is too small, you will have to pay. Otherwise you will get a refund.
ssj4_ootaku1 wrote: Like others have said, you will eventually even out when you file your 2021 Income tax return.

For now, you can request your employer to take lower taxes, or pay the amount over several pay cheques.

But that depends on the employer, and may become an administrative burden, which they may decline.
Yah I understand about getting the money back eventually but I would rather not wait over a year until next year April to get it if possible.
[OP]
Member
Sep 15, 2018
312 posts
51 upvotes
taxrage wrote: It would be taxed less if it qualified as a bonus or something similar, and I understand not wanting to get a pay with an extra $7000 gross because of the way pay period income is treated, but I don't think there's much else you can do.
Ah. So filling that request to reduce tax T1213 form for the lump sums can’t be used for this situation?
Sr. Member
User avatar
Jan 15, 2017
961 posts
499 upvotes
Kyle12345 wrote: Ah. So filling that request to reduce tax T1213 form for the lump sums can’t be used for this situation?
I don't think so. I believe it's treated no differently than over-time. You can request that the tax on the lump-sum be reduced, but you have to have an offsetting deduction like RRSP, child care etc.

There was a good discussion about the treatment of lump-sum payments in /s/PersonalFinanceCanada on Reddit a while back. See: https://www.reddit.com/r/PersonalFinanc ... _employer/
Deal Addict
Jan 19, 2017
4090 posts
2327 upvotes
Kyle12345 wrote: Yah I understand about getting the money back eventually but I would rather not wait over a year until next year April to get it if possible.
If they are allowed to reduce your tax when the lump sum is paid to you, do you have the will to save some money for the extra tax you have to pay when your file your tax return next year(I.e. are you going to spend all money you get from your pay cheque and then you will be short of money to pay tax)?
[OP]
Member
Sep 15, 2018
312 posts
51 upvotes
taxrage wrote: I don't think so. I believe it's treated no differently than over-time. You can request that the tax on the lump-sum be reduced, but you have to have an offsetting deduction like RRSP, child care etc.

There was a good discussion about the treatment of lump-sum payments in /s/PersonalFinanceCanada on Reddit a while back. See: https://www.reddit.com/r/PersonalFinanc ... _employer/
Ah dang. Thanks.
[OP]
Member
Sep 15, 2018
312 posts
51 upvotes
ml88888888 wrote: If they are allowed to reduce your tax when the lump sum is paid to you, do you have the will to save some money for the extra tax you have to pay when your file your tax return next year(I.e. are you going to spend all money you get from your pay cheque and then you will be short of money to pay tax)?
Yah for sure, I would be investing it anyway.

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