Ontario–Payroll Tax Deductions: Is a Company bonus taxable if I transfer the full amount to my work RRSP?

At the end of each year I receive a bonus from my company. When this bonus is paid out to me, I get hit with high payroll tax deductions. I was ...

At the end of each year I receive a bonus from my company.
When this bonus is paid out to me, I get hit with high payroll tax deductions.

I was told that if I put this money towards my company’s RRSP program that I currently participate in, the “full” bonus amount goes straight into my RRSP with no taxes deducted from the bonus amount … is this correct?

Any information is much appreciated!

Tags: bonus, money, payroll tax deductions, rrsp
Posted in Tax Deductions Q & A

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One Response to “Ontario–Payroll Tax Deductions: Is a Company bonus taxable if I transfer the full amount to my work RRSP?”

Sparky says:

February 16, 2010 at 9:01 am

It is correct. Your employer does not have to withhold tax on any amounts that are transferred directly into an RRSP. Your employer has to be willing to do this for you, and they have the right to ask for proof of your RRSP limit for the year.

This would not stop them from withholding CPP and EI premiums. However, if your regular income is over $45,000, you would have reached the cap on those anyway, and won’t have to worry about that either.