Example 2 – More than one bonus payment a year

Example

Mario earns a salary of $400 per week (amount 1). You paid him bonuses of $300 in January and $780 in February. His province of employment is Alberta. The claim code that applies to his TD1 and TD1AB forms is "1."

The calculation must take into account all bonuses you paid during the year. You have to calculate the amount of tax to deduct for the entire year, regardless of when you paid the bonus.

Step 1: Divide the bonus you paid in January by the number of pay periods in the year ($300 ÷ 52 = $5.77) (amount 2). Add the $5.77 to the weekly salary of $400 to determine the adjusted weekly pay before the February bonus ($400 + $5.77 = $405.77).

Step 2: Divide the last bonus you paid to Mario by the number of pay periods in the year ($780 ÷ 52 = $15) (amount 3). Add amounts 1, 2, and 3 to determine the adjusted weekly pay for the year of $420.77 ($400 + $5.77 + $15).

Step 3: In Guide T4032, Payroll Deductions Tables, choose the weekly tables (52 pay periods a year) from Sections D and E to find the increased weekly federal and provincial tax you should deduct on the additional $15 per week.

Calculate as follows:

  • Find the federal and provincial tax that you deduct on $420.77 per week.
  • Subtract the federal and provincial tax that you deduct on $405.77 per week.

The result is the tax you have to deduct on the additional $15.

Step 4: Multiply the additional tax per week by 52 to determine the amount to deduct on the bonus of $780.

To calculate tax on additional bonuses, repeat steps 1 to 4.

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