1

See screenshot from the CRA T1213. In requesting to reduce the tax withholding from an employment payment, you can select either 'Lump sum' or 'Salary'.

What does "Lump sum" mean? How is it different from "Salary"?

enter image description here

1 Answer 1

1

A Lump-Sum payment is what it sounds like. A single payment of money, typically a bonus, or as mentioned there, payout of unused vacation, perhaps severance pay, etc.

The point is that you might want to reduce your tax withholdings on all regular salary payments [likely because you are making consistent RRSP contributions on your own, and want the tax benefit immediately]. OR, you might want to only reduce your tax withholding on a lump-sum payment [likely because you want to make a single RRSP contribution from your bonus, for example].

If you receive a $5k bonus, and want to commit to making a $5k RRSP contribution, that is very different than wanting to make a $5k contribution every month! So the CRA allows you to clarify.

You must log in to answer this question.