Example 3 – Retroactive pay increase


Irene's pay increased from $440 to $460 per week. The increase was retroactive to 12 weeks, which gives her a total retroactive payment of $240 (12 × $20). Her province of employment is Nova Scotia. The claim code that applies to her TD1 and TD1NS forms is "6."

Step 1: In Guide T4032, Payroll Deductions Tables, choose the weekly tables (52 pay periods a year) from Sections D and E to find the increase in the weekly federal and provincial tax that you should deduct because of the increased pay rate.

Calculate as follows:

  • Find the federal and provincial tax that you deduct on $460 per week.
  • Subtract the federal and provincial tax that you deduct on $440 per week.

The result is the tax you have to deduct on the additional $20 per week.

Step 2: Multiply the increase in the weekly tax that you deduct by the number of weeks to which the retroactive pay increase applies. This amount is the tax that you must deduct from the retroactive payment.

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