Make sure to use income tax rates in effect in the year you are making the payment
Question: We are paying a retroactive pay increase to our employees as part of a new collective agreement. The pay raise actually applies to 2011. To calculate income tax source deductions, do I use the rates from 2011 or now? Alternatively, can I use the lump sum tax rates?
Answer: When paying a retroactive pay increase from a previous year, use the income tax rates in effect in the year you are making the payment.
