Reduction of tax withholding on lump-sum employment income payments - Information Notices

DATE: November 22, 2001

TO: Compensation Managers

c.c.: Chiefs of Staff Relations

This bulletin is further to our previous bulletins dated July 15, 1998 and January 4, 1999 on the same subject matter.

This current bulletin relates specifically to a special procedure developed by Canada Customs and Revenue Agency ( CCRA) regarding the reduction of tax withholding on lump-sum employment income payments of $2,000 or less.

CCRA developed a special procedure to allow a reduced amount of tax to be withheld from a lump-sum payment of $2,000 or less without the employee having to obtain a written Letter of Authority from CCRA. This procedure requires that an Employer obtain written approval from CCRA to permit employees of that Employer to use same. The Treasury Board does not have this approval from CCRA. Consequently, employees in Treasury Board organizations (PSSRA Schedule I, Part I service) are not eligible to use this special CCRA procedure.

Employees in Treasury Board departments who wish to have a lump-sum employment income payment issued without income tax withheld, or with a reduced amount of tax withheld, must send a request to CCRA to obtain a Letter of Authority from them. Such payments include cash out of vacation leave, promotions and retroactive salary revisions.

Please note that if the Letter of Authority is received after the lump-sum payment is issued, the payment is not to be cancelled and re-issued in order to take advantage of the Letter of Authority.

Departmental Compensation and Staff Relations managers should direct any questions that they may have to their corporate Compensation officials who, if need be, can contact the Pay Administration Section.

original signed by

Thomas A. Smith
Director, Pay Administration,
Labour Relations Division,
Human Resources Branch