For example, let’s say we are giving an employee a $6000 bonus of which the employee wants $3000 to be put toward their RRSP before tax. I believe we still need to deduct EI and CPP, however on half of the bonus, no tax will be withheld. I’ve set up the RRSP Contribution as a ‘Other Payroll Item” and have indicated that only Federal Income Tax should be affected by this deduction.
The original cheque with no bonus would equal $2070.57 net to the employee with $540.93 federal income tax.
When I input the Bonus number of $6000, the cheque is $5837.37 with $2370.93 federal income tax.
When I then add the $3000 RRSP contribution, the cheque equals $4293.30 with only $915 federal income tax.
To me it looks like it is only deducting the tax on the $3000 bonus and not adding the original $540.93 tax on the salary. I think the total tax should be $1455.93. I’m not sure why it is missing this part or how I can have it properly adjusted?
As a double check, if I run the same cheque with the salary and only a $3000 bonus (no RRSP contribution deduction), I get the $1455.93 federal income tax.
I know, my explanation is probably clear as mud but any insight would be greatly appreciated!
