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Canada Revenue Agency provides employers with TD1 Personal Tax Credits Return forms, both federal and provincial. Employees and pensioners complete the federal form, indicating which non-refundable tax credits they can claim. If more than the basic personal amount is claimed on the federal TD1, then a TD1 should also be completed for their province/territory of residence. The total of the claimable credits is then used to determine the employee's or pensioner's federal or provincial claim code, which is used to calculate how much income tax will be deducted from their pay.

The federal and provincial/territorial TD1 Personal Tax Credits Return forms can be found on the CRA website.

When Must a TD1 Form Be Completed?

New employees must complete the TD1 form when they are hired, and are not required to complete them again unless there is a change which may reasonably be expected to result in a change to their personal tax credits. In this case, a new TD1 must be completed within 7 days of the change. Where an employer has not received a completed TD1 form, taxes will be calculated using only the basic personal exemption.

Circumstances Requiring a New TD1

Circumstances could require a change in the federal or provincial/territorial forms, such as getting married or divorced, uniting with or splitting up with a common-law spouse, turning age 65, or becoming eligible for the disability tax credit (doctor or nurse practitioner certification required).

Penalties For Not Completing a New TD1

Employees who do not provide their employer with a new completed TD1 form when required may be subject to a penalty of $25 for each day the form is late, with a minimum penalty of $100, and a maximum penalty of $2,500.

TD1 Completion Can Reduce Tax Deductions

Completing the form allows tax deductions to be reduced if the employee is eligible for tax credits other than the basic personal exemption. Where applicable, students can report their tuition, education and textbook amounts on the provincial TD1 form to reduce their tax deductions.

Deductions for Infirm Dependants on the TD1

The Canada Caregiver Amount claim can be made on the TD1 for:

	infirm children under age 18
	infirm eligible dependant or spouse or common-law partner
	infirm dependant age 18 or older

TD1 Claim Codes

The CRA T4032 Payroll Deductions Tables have tables indicating the federal and provincial/territorial TD1 claim codes based on the total claims entered on the TD1 forms.

Deduction of Additional Tax

If you have employment income, as well as income from sources where no withholding tax is deducted, such as rental, investment, or self-employment, you can avoid having to pay tax instalments by indicating on your TD1 form an additional tax amount to be deducted.

Income Less Than Total Personal Tax Credits

If you are in a temporary or part-time job, and you know that your total income for the year will be less than your total claim amounts on the TD1 form, you can check the box on page 2 of the form, and your employer will not deduct tax from your earnings.

Of course, if it turns out that you earn more than your personal tax credits, when you file your tax return you will have some tax owing.

If you are a student and under 18 years of age, or if you are over 69, no Canada Pension Plan contributions will be deducted from your income. However, Employment Insurance premiums are almost always deducted.

TD1 For Non-Resident Employees

On page 2 of the federal TD1 there is a question for non-resident workers. If as a non-resident employee, your taxable income earned in Canada will be 90% or more of your world income for the year, you can answer "yes" and claim exemptions available to you on page 1 of the TD1. If the response to this question is "no", then no exemptions are allowed in calculating payroll deductions. If "yes" is answered, and the total exemptions are greater than the basic personal amount, then a provincial TD1 form should also be completed. See also our article on Non-Resident Workers in Canada.

TD1 When You Have Multiple Jobs

Individuals who have more than one employer or payer at the same time might not be able to claim personal tax credit amounts on more than one TD1 form. If total income from all employers and payers will be more than the amounts claimed on the TD1 already filed with an employer, then the box "More than one employer or payer at the same time" on the back of the TD1 form should be ticked, and "0" should be entered as "Total Claim Amount" on page 1 of the TD1. Lines above should not be completed.

Multiple Jobs, But Total Income Less Than Claim Amount

However, if total income from all employers and payers will be less than the total claim amount on the TD1, do not tick the "More than one employer" box. Instead, tick the "Total income less than total claim amount" box, so that none of your employers will deduct tax from your earnings. In this case, you should still fill out the claim amounts on the TD1 forms for each employer.

Letter of Authority to Reduce Tax Deductions

An employee can submit form T1213 Request to Reduce Tax Deductions at Source to Canada Revenue Agency to request permission for their employer to utilize certain deductions in order to reduce tax withholdings.

Examples of deductions are:

	RRSP contributions which have been made (not through payroll deductions),
	child care expenses,
	support payments (see links at bottom),
	employment expenses,
	carrying charges and interest expenses on investment loans,
	charitable donations, and
	rental losses.

It may take 4 to 6 weeks for CRA to provide a Letter of Authority, which would then be given to the employer. The request will not usually be approved if the employee has a balance owing, or has not filed outstanding tax returns.

Tuition Carried Forward and Other Carry-Forwards

The TD1 form includes a line for tuition, which appears to refer to tuition for the current year. We contacted the CRA individual enquiries line to ask if this could also be used for tuition carried forward from a prior year. One person said yes, and another said no. It seems there are no clear guidelines in this area. If you have deductions for the current year that you would like to use to reduce your tax withholdings, but they are not included on the TD1, we would advise you to contact CRA, and if still in doubt, complete and submit the T1213 form as mentioned above.

Commission Employees - TD1X Form

Commission employees who are able to claim expenses (see the employment expenses article) can complete the TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions, so that their expenses are taken into consideration in the calculation of the income taxes deducted from the commission.

Quebec TP-1015.3-V Source Deductions Return Form

The Quebec equivalent to the TD1 form is the Source Deductions Return TP-1015.3-V, found on the Revenu Quebec website.

Take-Home Pay Calculator

Take-home pay calculators, to check your payroll tax calculations

Employers - Electronic TD1 Forms

Employers now have the ability to create a provincial or territorial Form TD1 Personal Tax Credits Return and have the employees send the form electronically rather than on paper. See Electronic Form TD1 on the CRA website.

Canada Revenue Agency (CRA) Resources

T4001 Employers' Guide - Payroll Deductions and Remittances - Chapter 5 - Deducting income tax

Failure to complete the TD1

P102 Support Payments - includes form T1158, registration of family support payments

Income Tax Folio S1-F3-C3, Support Payments

Tax Tip for employees: Update your TD1 forms if you have changes to your non-refundable tax credits!

Revised: September 20, 2024