Income Tax Source Deductions Regulation

Income Tax Source Deductions Regulation, M.R. 31/2001 The Income Tax Act , C.C.S.M. c. I10 Regulation 31/2001 Registered March 8, 2001 bilingual version (HTML) Definitions 1 In this regulation, "Act" means The Income Tax Act ; («  Loi  ») "employee" means a person receiving remuneration who reports for work at an establishment of an employer in Manitoba; (« employé ») "personal credits" of an employee for a taxation year means the total of (a) the amounts that the employee may claim for the year under subsections 4.6(3) to (8), (10) and (15) of the Act, (b) the amounts that the employee would be entitled to claim for the year under subsections 4.6(11) and (12) of the Act if subsection 118.3(1) of the federal Act were read without reference to paragraph (c), (c) the amount that the employee may claim for the year under subsection 4.6(14) of the Act, less the amount, if any, by which the total scholarships, fellowships and bursaries the employee expects to receive in the year exceeds $3,000, and (d) the amount that the employee would be entitled to claim for the year under subsection 4.6(16) of the Act if the formula in that subsection were read without reference to " - (C/.109)". (« crédits d'impôt personnels ») Interpretation 1(2) Unless otherwise defined in the Act, terms and expressions that are not defined in this regulation have the same meaning in this regulation as they have in Part 1 of the federal regulations. Application of federal provisions 2 Subsections 100(3), (3.1), (3.2) and (4) of the federal regulations apply, with necessary modifications, for the purposes of the Act and this regulation. PERIODIC PAYMENTS Deduction with no election in effect 3(1) If subsection 102(1) of the federal regulations applies to a payment for a pay period to an employee, the amount to be deducted or withheld for the purposes of the Act by the employer from the payment shall be determined in accordance with the following rules: Rule 1 Determine the employee's notional remuneration for the year, based on the payment, according to the following formula: R = A x B In this formula, R is the employee's notional remuneration for the year for the purposes of that payment, A is the mid-point of the range of remuneration set out under section 1 of Schedule 1 within which the amount of the payment falls, B is the number of pay periods ending in the year. Rule 2 Determine the employee's notional tax payable for the year in relation to the payment using the following formula: T = A - B(C + D) In this formula, T is the employee's notional tax payable for the year, A is the amount that would be employee's basic tax payable for year under section 4.1 of the Act if his or her taxable income for the year were his or her notional remuneration for the year determined under rule 1 in relation to the payment, B is the percentage referred to in clause 4.6(2)⁠(a) of the Act, C is the mid-point, determined under section 2 of Schedule 1, of the range of personal credits within which the employee's personal credits fall, unless the employee is not resident in Canada at the time of the payment, in which case it is nil, D is the amount that the employee would be entitled to claim under subsection 4.6(9) of the Act based on his or her notional remuneration for year in relation to the payment. Rule 3 Divide the employee's notional tax payable for the year by the number of pay periods ending in the year and round the result to the nearest multiple of five cents or, if it is equidistant from two such multiples, to the higher multiple. The result, so rounded, is the amount to be deducted or withheld from the payment. Deduction with election in effect 3(2) If subsection 102(2) of the federal regulations applies to a payment for a pay period to an employee, the amount to be deducted or withheld for the purposes of the Act by the employer from the payment shall be determined according to the following rules: Rule 1 Determine the employee's notional taxable income for the year. It is the mid-point of the range of estimated annual taxable income set out in section 3 of Schedule 1 within which the employee's estimated annual taxable income determined under clause 102(2)⁠(c) of the federal regulations falls. Rule 2 Determine the employee's notional tax payable for the year according to the following formula: T = A - B(C + D) In this formula, T is the employee's notional tax payable for the year, A is the amount that would be employee's basic tax payable for year under section 4.1 of the Act if his or her taxable income for the year were his or her notional taxable income for the year determined under rule 1, B is the percentage referred to in clause 4.6(2)⁠(a) of the Act, C is the mid-point, determined under section 2 of Schedule 1, of the range of personal credits within which the employee's personal credits fall, unless the employee is not resident in Canada at the time of the payment, in which case it is nil, D is the amount that the employee would be entitled to claim under subsection 4.6(9) of the Act based on his or her notional remuneration for year determined under rule 1. Rule 3 Determine the employee's notional tax rate for the year according to the following formula: R = A/B In this formula, R is the notional tax rate, expressed as a percentage and rounded to the nearest percentage point or, if it is equidistant between two percentage points, to the higher percentage point, A is the employee's notional tax payable for the year determined under rule 2, and B is the employee's notional taxable income for the year determined under rule 1. Rule 4 Multiply the payment by the employee's notional tax rate determined under rule 3. The result is the amount required to be deducted or withheld from the payment. Commissions reported in previous year 3(3) Despite subsections (1) and (2), no amount shall be deducted or withheld in the year by an employer from a payment of remuneration to an employee in respect of commissions earned by the employee in the immediately preceding year where those commissions were previously reported by the employer as remuneration of the employee in respect of that year on an information return. LSVCC tax credit 3(4) If all or any part of a payment to which subsection (1) or (2) applies is applied by the employer to the acquisition of a share that entitles the employee to a labour-sponsored funds tax credit under subsection 11.1(2.1) of the Act, the amount determined under rule 3 of subsection (1) or rule 4 of subsection (2), as the case may be, in respect of that payment shall be reduced by the lesser of (a) 15% of the amount otherwise required to be deducted or withheld from the part of the payment so applied; and (b) the amount, if any, by which $750. exceeds the total of the reductions made under this subsection for prior pay periods in the year. NON-PERIODIC PAYMENTS Bonus or retroactive pay increase 4(1) The amount to be deducted or withheld from the payment of a bonus or retroactive increase (referred to in this subsection as a "non-periodic payment") by an employer to an employee during a pay period is the amount determined according to the following rules: Rule 1 The amount to be deducted or withheld is five percent of the payment, unless the employee's total remuneration (including the bonus or retroactive increase) for the employee's taxation year in which payment was made can reasonably be expected to exceed $5000. Rule 2 If rule 1 does not apply and subsection 3(1) applies to any regular remuneration paid by the employer to the employee during the pay period, the amount to be deducted or withheld from the non-periodic payment is the amount determined by the following formula: A x (B - C) In this formula, A is the number of pay periods to which the bonus or retroactive increase relates, B is the amount that would be required by subsection 3(1) to be deducted or withheld from a payment that was the total of (i) the regular remuneration paid to the employee in the pay period, and (ii) the amount of the non-periodic payment divided by the number of pay periods to which it relates, and C is the amount deducted or withheld under subsection 3(1) from the payment of regular remuneration in the pay period. Rule 3 If rule 1 does not apply and the employee received no other remuneration from the employer in the pay period, the amount to be deducted or withheld from the non-periodic payment is the amount determined by the following formula: A x B In this formula, A is the number of pay periods to which the payment relates, and B is the amount that would be required by subsection 3(1) to be deducted or withheld from a payment, for that pay period, equal to the quotient obtained when the amount of the non-periodic payment is divided by the number of pay periods to which it relates. Lump sum payment 4(2) Subject to subsection (3), where a lump sum payment as defined in subsection 103(6) of the federal regulations is made by an employer to an employee who is a resident of Canada, the employer must deduct or withhold from the payment, in lieu of the amount determined under section 3, (a) if the payment is not more than $5,000, an amount equal to three per cent of the payment; (b) if the payment is more than $5,000 but not more than $15,000, an amount equal to seven per cent of the payment; or (c) if the payment is more than $15,000, an amount equal to 10 per cent of the payment. Pension income 4(3) Where the payment referred to in subsection (2) would be pension income or qualified pension income of the employee in respect of which subsection 118(3) of the federal Act would apply if the definition "pension income" in subsection 118(7) of that Act were read without reference to subparagraphs (a)⁠(ii) and (iii), the payment shall be deemed to be the amount of the payment minus (a) if the payment is within the lowest taxable income bracket set out in the subsection of section 4.1 of the Act that applies to the taxation year, the lesser of $1,000 and the amount of the payment; (b) if the payment is within the middle taxable income bracket set out in the subsection of section 4.1 of the Act that applies to the taxation year, $673.; (c) if the payment is within the top taxable income bracket set out in the subsection of section 4.1 of the Act that applies to the taxation year, $623. Deductions not required 5 Sections 104 and 104.1 of the federal regulations apply, with necessary modifications, for the purposes of the Act and this regulation. Variations in deductions 6 If in the taxation year of an employee an employer makes a payment of remuneration to the employee (a) for a period not provided for in Schedule 1, (b) in an amount greater than any amount provided for in Schedule 1, (c) whose total remuneration for the year is reasonably expected to be greater than any amount of total remuneration provided for in Schedule 1, or (d) whose personal credits for the year are greater than any amount provided for in section 3 of Schedule 1, the amount to be deducted or withheld by the employer from the payment is the amount determined by the following formula: A x B/C In this formula, A is the amount of the payment, B is the tax that can reasonably be expected to be payable by the employee under the Act in respect of the amount determined for C, C is the total remuneration that can reasonably be expected to be paid by the employer to the employee for the year. Employee's returns 7(1) Subject to subsection (2), section 107 of the federal regulations applies, with necessary modifications, for the purposes of the Act. Returns when collection agreement in effect 7(2) If a collection agreement is in effect, (a) an employee who elects to file a form under subsection 107(2) of the federal regulations for the purposes of the federal Act must also elect to file a form under that subsection for the purposes of the Act and this regulation; (b) an employee's election under that subsection for the purposes of the Act and this regulation is effective only for so long as the employee's election is in effect for the purposes of the federal Act. Remittances to treasurer 8(1) Subject to subsection (2), section 108 of the federal regulations applies, with necessary modifications, for the purposes of the Act and this regulation. Remittances when collection agreement in effect 8(2) If a collection agreement is effect, the employer must remit amounts to be remitted under section 108 of the federal regulations as it applies for the purposes of the Act and this regulation at the same time as the employer is required to remit amounts under that section for the purposes of the federal Act. Election to increase deductions 9 Section 109 of the federal regulations applies, with necessary modifications, for the purposes of the Act and this regulation. Repeal 10 The Income Tax Source Deductions Regulation , Manitoba Regulation 381/88R, is repealed. Coming into force 11 This regulation comes into force on January 1, 2001. SCHEDULE 1 Manitoba Income Tax Source Deductions c Notional remuneration 1 For the purpose of subsection 3(1) of the regulation, the ranges of remuneration are as follows: (a) for daily pay periods (240 pay periods in the year), the ranges begin at $38. and increase in increments of $1. to $99.99; (b) for weekly pay periods (52 pay periods in the year), the ranges begin at $173. and increase in the following increments: Increment From To $2.00 $173.00 $280.99 $4.00 $281.00 $500.99 $8.00 $501.00 $940.99 $12.00 $941.00 $1,600.99 $16.00 $1,601.00 $2,480.99 $20.00 $2,481.00 $3,580.99 Notional personal credits 2 For the purposes of section 3 of the regulation, the amount set out in or determined under the third column of the following table is deemed to be the mid-point of the range of personal credits set out in the first and second column. From To Mid-point $0.00 $7,361.00 $7,361.00 $7,361.01 $8,961.00 $8,161.00 $8,961.01 $10,561.00 $9,761.00 $10,561.01 $12,161.00 $11,361.00 $12,161.01 $13,761.00 $12,961.00 $13,761.01 $15,361.00 $14,561.00 $15,361.01 $16,961.00 $16,161.00 $16,961.01 $18,561.00 $17,761.00 $18,561.01 $20,161.00 $19,361.00 $20,161.01 $21,761.00 $20,961.00 $21,761.01 or more 10.9%* of the employee's personal credits Notional taxable income 3 For the purpose of subsection 3(2) of the regulation, the ranges of estimated annual taxable income begin at $9400. and increase in the following increments: Increment From To $1,000.00 $9,400.00 $18,399.99 $2,000.00 $18,400.00 $58,399.99 $3,000.00 $58,400.00 $73,399.99 $4,000.00 $73,400.00 $93,399.99 $5,000.00 $93,400.00 $118,399.99 $6,000.00 $118,400.00 $148,399.99 $7,000.00 $148,400.00 $183,399.99 $8,000.00 $183,400.00 $223,399.99 $9,000.00 $223,400.00 $268,399.99 $10,000.00 $268,400.00 $318,399.99 $20,000.00 $318,400.00 $418,399.99 $30,000.00 $418,400.00 $568,399.99