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Ottawa, December 23, 1997
1997-126
Draft Regulations Released on Income Tax Withholdings
Related document:
Finance Minister Paul Martin made public today draft amendments to the Income Tax Regulations concerning income tax to be withheld from the remuneration of certain employees who receive gratuities. These amendments are to take effect on January 1, 1998.
The proposed changes are part of the federal government's commitment to qualify, for employment insurance purposes, gratuities received by employees and which are required, under provincial legislation, to be declared to the employer. Quebec is the only province that has introduced such legislation. Revenue Canada has already proposed amendments to the Insurable Earnings and Collection of Premiums Regulations with respect to withholdings of employment insurance premiums on such gratuities.
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For further information:
Robert Dubrule
Tax Legislation Division
(613) 992-3763
Draft Amendments to the Income Tax Regulations
1. (1) The definition "remuneration" in subsection 100(1) of the Income Tax Regulations is amended by adding the following after paragraph (a):
(a.1) in respect of an employee's gratuities required under provincial legislation to be declared to the employee's employer,
(2) The definition "total remuneration" in subsection 100(1) of the Regulations is replaced by the following:
"total remuneration" means, in respect of a taxation year, the total of all amounts each of which is an amount referred to in paragraph (a) or (a.1) of the definition "remuneration" in this subsection.
2. Paragraph 102(1) (c) of the Regulations is replaced by the following:
(c) an amount that is a notional remuneration for the year in respect of
(i) a payment to the employee, and
(ii) the amount, if any, of gratuities declared by the employee and referred to in paragraph (a.1) of the definition "remuneration" in subsection 100(1)
shall be established by multiplying
(iii) the amount that is deemed for the purpose of this paragraph to be the mid-point of the applicable range of remuneration for the pay period, as provided in Schedule I, in which falls the total of
(A) the payment referred to in subparagraph (i) made in the pay period, and
(B) the amount of gratuities referred to in subparagraph (ii) declared by the employee for the pay period
by
(iv) the maximum of such pay periods in that year;
3. Sections 1 and 2 apply after 1997.
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