does anyone know if this applies to released veterans currently receiving ELB since the announced date?
Is there anyway that this could have been given on a separate pay so that it did not cause everyone to be taxed at a significantly higher level?
Yup, except that I and others could have taken that 20% of over taxation and invested it for 9 months. So, double loss.No but they could have actually calculated the proper source deductions instead of just deducting it at the highest tax rate for everyone which is what appears to have happened.
In any case, take solace in the fact that it doesn't matter. Your tax bill is calculated on Dec 31st based on all of your income for the year. If they over-deducted at source (which appears to have happened here, definitely did to me) then you'll get the rest back when you do your taxes.
Deductions made by software systems have to comply with CRA standards, which get wonky when there are one-time spikes in pay.
If you wish to dig into how it's calculated, the policy document is online at:
There is a form you can fill in to request a change in deductions (ie if you live in Ontario but work in QC, to be taxed at the ON rate), but not sure if you can do it for a one time thing like this.While I knew source deductions had to comply with CRA requirements, I didn't realize the method for lump-sum payments was so... overly simplistic (chalk it up to no experience doing payroll).
I'm surprised to find myself accusing CRA of approaching something too simply, but yes, they basically treat it like you're going to get that lumpsum payment every month for the entire year, in effect source deducting you at the highest marginal rates. So even if you make $30k a year, if you get a $10k lump sum it gets taxed as if you make $120k a year. That method disadvantages people as @Weinie has pointed out, or if they just needed the extra money for something (anything... it's their money).
In any case, I'm always happy to learn something new.
Luxury…You can’t. You have to pay the amount for this tax year. See note here: Qualifying retroactive lump-sum payments - Canada.ca
“An amount paid under normal collective bargaining, such as negotiated back pay, is not a qualifying amount.”
If you are in receipt of a CFSA annuity, a CAF pay raise is only relevant if you receive any retro pay. In that case, your best 5 years will change and your annuity will be adjusted.Has anyone heard what or if those on pension might expect?