When managing automatic withdrawal deposits (AWDs), it is important for Representatives to pay close attention to tax rates set for these transactions to prevent discrepancies for clients. 

Below are key considerations and reminders:

• In accordance with Canada Revenue Agency (“CRA”) requirements, since AWDs are installments, the withholding tax rate is based on the total amount claimed, not on each separate payment. Please note that the minimum annual payment (“MAP”) is excluded from this requirement.
• It is the Representative’s responsibility to ensure that the tax rate requested when setting up or modifying an AWD is sufficient and not lower than the required rates. The attached table will help you select the minimum tax rate required based on the total amount to be withdrawn.

Tax brackets grid:

* You must take into account the total amount of the AWD over a year, minus the MAP, to find the minimum rate applicable. The rate chosen must be equal to or higher than the applicable rate.

• Entering the correct tax rate will avoid a discrepancy between the net amount the client wishes to receive and the actual net amount they will receive. In fact, despite the fact that a specific tax rate is requested, if it does not meet the minimum rate required by the CRA, the system will automatically adjust the required tax rate to the payment, so that the net payment to your client will be less than the desired amount. 
  

• As information differs from one client to another (gross or net amount, MAP, province of residence, etc.), Investia cannot systematically validate the tax rates indicated on the forms correspond to the minimum prescribed rate.

Below are some examples:

Net amount requested:

It is also important to note that the tax rate is always calculated on the gross amount, not on the net amount.

For help calculating net amounts, please consult the Nominee Redemption Calculator available on the Advisor Centre by clicking on this link : Nominee Redemption Calculator