Which of the following types of remuneration is subject to income tax withholding's?

• A. Salary, wages, overtime, retroactive payments, commissions and wages in lieu of notice, bonuses, vacation pay and gratuities, pensions, retiring allowances, severance pay, death benefits, and the value of any taxable benefits and allowances.
• B. Salary and wages only.
• C. Pensions and retiring allowances only.
• D. Bonuses, vacation pay and gratuities only.

Answer: (A)

In Canada, income tax is withheld at the source from most amounts paid to an employee for work. This means anything that counts as employment income is typically subject to withholding, not just regular pay.

All the items listed fall under that broad rule. Salary and wages, including overtime, are the basics, but withholding also applies to retroactive pay adjustments because they are compensation for past work. Commissions and wages in lieu of notice are earned through employment and thus taxed at source, as are bonuses. Vacation pay is considered part of earnings when paid, and gratuities or tips are treated as employment income if the employer handles them through payroll. Pensions paid to employees are taxed at the source, and retiring allowances or severance pay are included in taxable income when received. Death benefits paid in the context of employment arrangements can also be taxed as income, and the value of taxable benefits and allowances provided by the employer—such as a company car or coverage—adds to the employee’s taxable income and is withheld accordingly.

So, the best choice reflects the reality that withholding applies to a wide range of remuneration linked to employment, not just the basics. The other options are narrower and omit many of these items that are commonly subject to tax withholding.