Bonuses payable – Limit on deferral

Question 1

Bonuses payable – Limit on deferral

Answer 1

• All outstanding remuneration must be paid to the employee within 180 days of the year-end balance sheet date in order to be deductible by the company.
• If amounts remain unpaid for 180 days after the year end,
  o the amount shall be deemed not to have been incurred as an expense for that taxation year.
  o the company will claim a deduction for the expense when the amount is paid, and the employee will include the amount as income in the taxation year that it is received.

Reference: ITA 78(4)