TD1: Important for New Employees

2015 TD1, Personal Tax Credit Return and T1213, Request to Reduce Tax Deductions at Source for Year(s) ___

When an employer hires a new employee, they must ensure that the employee completes a 2015 TD1 Personal Tax Credits Return form within seven days of being hired. If not, any adjustments will result in a change in the employee’s personal tax credits for the year. For example, the employee now has an eligible dependant or they want to claim the deduction for living in a prescribed zone or want to increase the amount deducted at source because they have more than one employer.

This form allows the employer to determine the amount of tax deductions that should be withheld from the employee’s salary or wages.

Although TD1 forms are not required to be filed annually, January is a good time for employees to review their TD1 and claim all the credits that are available to them, which would reduce the amount of tax deducted at source. Employees would have more take home pay during the year, instead of a refund next year when they file their taxes.

Employees can also request to have less tax deducted at source by their employers for deductions that are not listed on TD1. In order for the employer to withhold reduced taxes, the employee must complete T1213 form, Request to Reduce Tax Deductions at Source for Year(s) _____, and submit to the Taxpayer Services Division of their tax service office, along with all supporting documents. If the Canadian Revenue Agency (CRA) is in agreement, they will send a letter of authorization to the employee, and this should be given to the employer. For example the employee has tuition and education amounts or employment expenses carried forward from previous the previous year or support payments.

A new T1213 must be submitted to CRA each year. However, where the deduction being claimed relates to deductible alimony or support, the CRA may issue an authorization to cover two taxation years.