Overtime payments

You may be required to pay your employees overtime payments.

On this page

• Steps
• References

Steps

1. 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 overtime payments are received.

2. Withhold payroll deductions from the overtime payment

   You must withhold the following deductions from the overtime payment:

   • Income tax
   • EI premiums
   • CPP contributions

   Depending on the situation, you must use a different method to calculate the deductions to withhold from the payment.

   • Overtime payments paid in the same pay period

     If you pay your employee overtime payments in the same pay period, you have to calculate income tax withholdings, EI premiums and CPP contributions in the same manner as you would for regular salary.

   • Overtime payments paid in a later pay period

     If you pay your employee overtime payments in a later pay period, you have to calculate:

     • Income tax withholdings using the bonus or irregular payments method
     • EI premiums in the same manner as you would for regular salary
     • CPP contributions using the bonus or irregular payments method

    Learn how to calculate payroll deductions: How to calculate

3. 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
   • Box 56 - PPIP insurable earnings if your employee worked in the province of Quebec

    Learn how to report the payment: T4 slip - Information for employers

References

Legislation