This week on #ASKHERMIE
follow site Are severance payments taxable?
site rencontre femme canadienne How does severance pay affect unemployment benefits?
http://www.thewoolshed.com.au/?mirti=recherche-un-homme-riche&755=44 In Episode #2 of #AskHermie, Hermie explains why you have to pay income tax on your severance package and why you can’t receive Employment Insurance benefits while receiving severance.
go I lost my job and was given a severance package from my employer. Do I have to pay tax on my severance package payments? And does the severance package affect whether I can receive employment insurance benefits?
Are severance payments taxable?
see url The short answer is yes.
http://www.degroes.nl/?makros=quel-est-le-meilleur-site-de-rencontre-pour-les-hommes&929=ad If you are terminated on a ‘without cause’ basis (meaning that you are not responsible or have no fault regarding the termination), you are entitled to monetary compensation, which serves as a bridge between your lost job and a new future job. This ‘bridge’ of time is ‘notice of termination’ or your ‘notice period’ and the monetary compensation during this notice period is essentially your severance package. For more information about notice periods and how they are calculated, please refer to this article from our Blog.
emailing rencontre Your former employer can provide your severance package in 1 of 4 ways:
- A http://www.qiongbupa.com/martisd/2904 lump-sum payment equal to the notice period;
- Ongoing http://www.thinkmaya.com/?tyioer=site-de-rencontre-bruxelles&741=e4 salary continuance payments during the notice period, where you continue to receive your salary, but you are not required to work for your former employer;
- http://agencijapragma.com/?kiopoa=opzioni-digitali-strategia-1-ora&3d1=a5 Working notice, where you are required to actively work for your former employer for the duration of the notice period; or
- A here combination of any of the above within the notice period timeframe.
Your employer ultimately gets to decide how to provide your severance package and any of the above ways (i.e. lump-sum, salary continuance, working notice, or a combination) are completely legal and 100% acceptable.
Because the notice period/severance package represents wages and wages are subject to tax under the Canada Revenue Agency, your severance package payments are taxable.
How does Severance Impact Employment Insurance benefits?
Because your severance package represents payment of your wages during the notice period, you cannot receive Employment Insurance (“EI”) benefits until after the notice period ends, assuming you meet the eligibility requirements for EI.
Let’s look at an example…
Assume that an Employee loses her job on January 1st and is given 6-months of notice. During the 6-month notice period (i.e. from January 1 to June 30), the Employee cannot receive EI – this is true whether the employee’s notice period (i.e. severance package) is provided as a lump-sum, salary-continuance, or working notice. Though the Employee can inform Service Canada on January 1st (or anytime thereafter) that she has lost her job, and the Employee can start the process for applying for EI benefits, she cannot receive EI benefits until after June 30th if she still remains unemployed. Her eligible EI benefit period would not be affected by the severance package. So, if she was eligible for 10-months of EI benefits, she would still be entitled to the 10-months starting July 1st (again assuming she was still unemployed).
If you found this video/article useful, please share it with individuals in your professional and personal networks who might benefit from the information. And remember to submit your workplace/human resources law questions to AskHermie@advocation.ca or on the form provided on this page.