# Question about pay deductions



## indexxx (Oct 31, 2011)

Recently I was downsized out of my job, and received severance plus vacation pay on top of my salary. My usual Federal tax deduction on each paycheque was around $350 on a $2200 bi-weekly salary ($4400/month). However, my Federal tax deducted on my last cheque was over $1800. The total amount of earnings, severance, and vacation pay was slightly over $6,000 of which I received a bit over $3900 after all deductions. Is this a normal jump in taxation on this amount? Seems pretty high to me.


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## MoneyGal (Apr 24, 2009)

Severance pay = "retiring allowance" in CRA terms. Retiring allowances are subject to specific lump sum tax withholding rates, here: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/spcl/lmpsm/wthhldng-eng.html

You'll get any excess tax withheld back when you file for 2013.


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## indexxx (Oct 31, 2011)

Thx MG- I got my 2012 taxes done today and my accountant explained that to me also.


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