Reducing remuneration subject to income tax

Certain amounts that you deduct from the remuneration you pay an employee, as well as other authorized or claimed amounts, can reduce the amount of remuneration from which you deduct tax for the pay period. Reduce the remuneration by the following amounts before you calculate tax:

• a deduction for living in a prescribed zone;
• an amount that a tax services office has authorized (see Letter of authority);
• employee's contributions to a registered pension plan (RPP). For details on how to determine the exact amount of these contributions, go to Contributions to a registered pension plan (RPP);
• union dues;

  Note
  The Quebec provincial rules for reducing remuneration for union dues are different—see the Guide TP-1015.G-V, Guide for Employers: Source Deductions and Contributions.

• employee's contributions to a retirement compensation arrangement (RCA) or certain pension plans. For more information on determining whether an employee can deduct contributions to an RCA, see Guide T4041, Retirement Compensation Arrangements Guide;
• employee's and employer's contributions to a registered retirement savings plan (RRSP) provided you have reasonable grounds to believe the employee can deduct the contribution for the year. For more information, go to RRSP contributions you withhold from remuneration;
• employee's contributions to a pooled registered pension plan (PRPP), or a similar provincial pension plan, as long as the plan is registered with the Minister of National Revenue and you have reasonable grounds to believe the employee can deduct the contributions for the year. For more information, go to The Pooled Registered Pension Plan (PRPP).

Do not subtract CPP contributions and EI premiums to determine the remuneration that requires tax deductions.