Tax Withheld On Cash Payments
By law, HOOPP must withhold taxes, at the following rates, from any lump sum benefits paid out in cash:
| Amount of cash payment | Withholding tax rate |
|---|---|
| $5,000 or less | 10% |
| $5,000.01 to $15,000 | 20% |
| More than $15,000 | 30% |
The taxes we deduct are paid to the Canada Revenue Agency. The tax rates are specified in the Income Tax Act, and are subject to change.
As well, any termination benefit you receive in cash counts as taxable income for the year in which the payment is received. This could boost your income to a level where additional taxes are required when you file your annual tax return.
