Please build your answer based on the flowing text: Wages in Lieu of Notice In a
ID: 431254 • Letter: P
Question
Please build your answer based on the flowing text:
Wages in Lieu of Notice
In all federal and provincial jurisdictions, except Québec, legislated wages in lieu of notice are considered income from employment and are subject to the following statutory deductions:
? Canada Pension Plan (CPP) contributions
? Employment Insurance (EI) and Québec Parental Insurance Plan (QPIP) premiums
? Income taxes
? Northwest Territories/Nunavut payroll taxes If the legislated wages in lieu of notice are paid together with the final pay period earnings, regular deductions for CPP will apply. If paid separately, the straight percentage method is applied, with no pay period exemption, up to the maximum annual CPP contribution. Whether legislated wages in lieu of notice are paid with, or separately from, the employee’s final pay, the straight percentage method for EI and QPIP premiums is applied, up to the maximum annual premium amount. Federal and non-Québec income taxes can be calculated using the regular pay period deduction methods, or as an alternative, if the amount of the legislated wages in lieu of notice payment being made is large, the bonus tax method is recommended. The method of calculating Quebec income tax is explained in the section on retiring allowances
question:
In your own words, explain how legislated wages in lieu of notice are treated for statutory deduction purposes in all jurisdictions in Canada.
Explanation / Answer
Wages in lieu of notice are payments paid to an employee, for termination instead of giving a notice of termination. In all federal and provincial jurisdictions except Quebec are considered employment income, Which are subject to all statutory deductions, such as Canada Pension Plan contributions, Employment Insurance, Income Taxes and Northwest Territories/Nunavut payroll taxes.
Canada Pension Plan
If wages in lieu of notice is paid in the final pay earnings, all regular CPP deductions will apply. However if wages in lieu of notice is paid in a separate check, there will be no pay period exemption and only the percentage is applied, up to the CPP maximum contribution.
Employment Insurance and Quebec Parental Insurance Plan
It doesn't matter if the wages in lieu is paid in the same or separate check, for EI and QPIP, they are still calculated the same.
Income Taxes
Federal and non-Quebec taxes are calculated using the regular pay period method or if the amount is too large for the tax tables you can use the bonus tax method.
*Quebec treats wages in lieu of notice as a retiring allowance
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