Employees paid by commission
If an employee is paid on commission or receives a salary plus commission, you can deduct tax in one of the following ways:
Employees who earn commissions without expenses
If you pay commissions at the same time you pay salary, add this amount to the salary, then use the Payroll Deductions Online Calculator, the Payroll Deductions Formulas (T4127), or the manual calculation method found in Payroll Deductions Tables (T4032).
If you pay commissions periodically or the amounts fluctuate, you may want to use the bonus method to determine the tax to deduct from the commission payment. See Bonuses, retroactive pay increases or irregular amounts to find out how to do this.
Employees who earn commissions with expenses
Employees who are paid in whole or in part by commission and who claim expenses may choose to fill out a Form TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions in addition to Form TD1. To calculate the amount of tax to deduct, you can use the Payroll Deductions Online Calculator, the Payroll Deductions Formulas (T4127), or the manual calculation method found in the Payroll Deductions Tables (T4032).
Employees who claim employment expenses on their income tax and benefit return must have their employer fill out Form T2200, Declaration of Conditions of Employment, or Form T2200S, Declaration of Conditions of Employment for Working at Home due to COVID-19. If an employee is only claiming employment expenses using the temporary flat-rate method, they do not need Form T2200 or Form T2200S.
An employee may choose, at any time during the year, to revoke in writing the election he or she made on Form TD1X. If so, use the total claim amount from the employee's Form TD1 instead.
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