Can my employer withhold my final pay and vacation pay?

Should the employer include all severence pay, one time sick pay and vacation pay in T4 inurable earning?

• Should the employer include all severence pay, one time sick pay and vacation pay in T4 inurable earning, what should we do? should the employer amend T4 and T4A and resubmit it?

• Answer:

  Yes and no. No to sick pay paid out on termination, no to severance pay (but yes to pay in lieu of notice) yes to vacation pay. They should issue a T4A for the retiring allowances. However, the money is taxable in either case. I makes a difference to CPP and EI, and maybe to limits on RRSP contributions. "Retiring allowances "A retiring allowance (also called severance pay) is an amount paid to officers or employees when or after they retire from an office or employment in recognition of long service or for the loss of office or employment. "A retiring allowance includes: * payments for unused sick leave credits on termination; and * amounts individuals receive when their office or employment is terminated, even if the amount is for damages (wrongful dismissal when the employee does not return to work). "A retiring allowance does not include: * a superannuation or pension benefit; * an amount an individual receives as a result of an employee's death; * a benefit derived from certain counselling services; * payments for accumulated vacation leave not taken prior to retirement; * pay in lieu of termination notice; and * damages for violations or alleged violations of an employees human rights awarded under human rights legislation (these damages are not taxable). "If you pay a retiring allowance to a resident of Canada, deduct income tax from any part you pay directly to the recipient using the lump-sum withholding rates. "Do not deduct CPP contributions or EI premiums from retiring allowances. (snip) "Report retiring allowances on a T4A slip instead of a T4 slip."