Hi Sherry321:

The first method is best depending upon the federal income tax bracket the individual is in. The second method is another way to pay retros and lump sum payments. Up to $5000.00 the federal tax is calculated as 10% on lump sum payments with the exception of Quebec the rate is 5%; over $5000.00 to $15000.00 the rate is 20% (Quebec 10%); and over $15000.00 the rate is 30% (Quebec 15%).

Hope this helps!

Hi Sherry321:

The first method is best depending upon the federal income tax bracket the individual is in. The second method is another way to pay retros and lump sum payments. Up to $5000.00 the federal tax is calculated as 10% on lump sum payments with the exception of Quebec the rate is 5%; over $5000.00 to $15000.00 the rate is 20% (Quebec 10%); and over $15000.00 the rate is 30% (Quebec 15%).

Hope this helps!

Hi, thank you for the response. I'm going back to 2018, so 4 separate years. I will enter them as retroactive 2018,2019 etc. I have already calculated the amounts based on each year, so I will go that route. 

The answer you provided was helpful, I wasn't certain if it would be to their benefit to do the 10% method considering they are in the up to $49,020 and up to $98,040 brackets and the total amounts are under $5,000. 

Hi Sherry, if the above suggested answer helped, please do mark it as verified  for the benefit of others in this forum :). Thank you!

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Hi Sherry321:

If they are under $5000.00 CRA the minimum tax to take is 10% but it is up to the individual if they would like more tax taken off of their retroactive amounts. If you had many employees you would just take the minimum tax of 10% for those amounts to $5000.00.

Hope this clarifies!

Thank you again, I just wanted to be certain it fell within the CRA regulations. I guess either way will work, but will go with the calculated amounts for each year. Feels like the best option. 

Hi Sherry321, if the above suggested answer helped, please do mark it as verified  for the benefit of others in this forum :). Thank you!

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