This article is for you if you are an employer, pension payer, or in legal employment in Canada.
Every employee’s tax situations are different, which means the amount of tax that employers deduct from each individual’s pay differs.
What is a TD1 Form?
All new employees must complete this TD1 form upon starting a new job.
As an employer, you should ensure that your new employee completes form TD 1 when being on boarded or within seven days of changing their personal tax credit amounts to avoid penalties.Federal and provincial/territorial TD1 forms are required to be filled, depending upon the location of employment.
Both the Federal and Provincial TD1 forms list the most common tax credits claimed by taxpayers, Exp RRSP contributions, care expenses, and deductible support payments.
The primary purpose of this form is to ensure the proper collection of taxes.It helps employers to determine how much they should deduct from an employee’s pay cheque and deposit the amount with CRA. This is advantageous to the employee as it ensures that they are paying the precise amount of tax resulting in a minimum amount of taxes due at the end of the year.
Who should file the TD1 Form?
The following categories of individuals are required to file Form TD1:
- Individuals who have a new employer or payer
- Individuals who want to change amounts from previously claimed
- Individuals who want to claim the deduction for living in a prescribed zone
- Individuals who want to increase the amount of tax to be withheld
Following area few examples of changes in circumstances which should prompt the filing of a new TD1 with your employer:
- a change in marital status,
- a taxpayerturning 65,
- a taxpayerstarting post-secondary school or an elderly or disabled parent moving in; all these situations call for filing Form TD1.
- a family member becoming disabled,
What are the responsibilities of employers in relation to TD1 Forms?
As of January 20, 2020, employers are no longer required to provide a paper TD1 Form.Instead,they can give the employees a link to the official government web page where the TD1 Form can be downloaded and filled out. Once the employer receives the TD1 Form from the employee, it’shis responsibility to save the employee’s tax information and consider the same while calculating amounts to be withheld from employee payouts and paid to CRA later.
For further clarification on the TD1 Form, please feel free to contact us.
We at Rav Bhatia CPA Professional Corporation will provide you with all the information and guidance required.