Canadian pay guide
How Canadian bonus tax withholding works
A bonus is employment income, but its withholding on one payment can look different from the final tax effect over a full year.
In short
Payroll withholding can include federal and provincial income tax plus CPP/QPP and EI where applicable. The final amount owed is determined through the annual tax process.
Why a bonus can look heavily deducted
A large payment can cause more tax to be withheld at that time. Annual limits for CPP, QPP and EI can also affect whether deductions apply later in the year.
Annual estimate versus payslip
Comparing estimated annual take-home pay with and without the bonus is useful for planning, but cannot exactly reproduce a particular payroll system.
Use the Canada bonus tax calculator for an annualised estimate.