Canada Revenue Agency requires that all income be taxable including bonuses.
Example 1: for a 500$ bonus with applicable rates for July 2013
1.88% EI rate
4.95% CPP rate
10.0% Fed tax rate
16.83% total
100% - 16.83% = 83.17%
$500 / 83.17% = $601.18
So, with a gross of $601.18
$11.30 EI
$29.76 CPP
$60.12 tax (10%)
$101.18 total
$601.18 - $101.18 = $500.00
Example 2: for a $10,000 bonus with applicable rates for july 2013
$10000 / .7317 = $13,666.80
$256.94 EI
$676.51 CPP
$2733.36 tax (20%)
$3666.81 total
$13666.80 - $3666.81 = $9999.99
Note1: CPP needs to be a manual calculation at 4.95% as there should be no use of the 3500 exemption amount
Note2: If there is a penny difference. Make a simple adjustment on one of the lines
Note3: If CPP, EI, or both are maxed out (or max out during the bonus cheque), verify the procedure with an accountant.
Note4: All these rates are for july 2013 and affect all provinces except for Quebec.
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