When you start a new job in Canada, your employer will usually ask you to complete two tax forms: the TD1 Personal Tax Credits Return and the TD1ON Ontario Personal Tax Credits Return.
These forms help your employer calculate how much income tax to deduct from your paycheque. They are not tax returns, and you do not send them directly to the CRA. Instead, you complete them and give them to your employer or payroll department.
For employees working in Ontario, the two most common forms are:
The CRA provides the current federal TD1 form and Ontario TD1ON form online. Employers can give employees the official CRA webpage link or paper copies, and completed forms can be submitted electronically or on paper.
You can access the official CRA forms here:
You generally need to complete a TD1 form when:
Employers must get completed TD1 forms when an employee starts work or when the employee wants to increase the amount of income tax deducted from their pay. You do not usually need to complete a new TD1 every year unless your personal tax credit amounts change.
The TD1 tells your employer how much of your income may be covered by personal tax credits. These credits reduce the amount of tax that should be deducted from your pay during the year.
Common amounts on the TD1 may include:
Most employees only claim the basic personal amount, unless they qualify for additional credits.
The TD1ON is the Ontario version of the TD1. It helps your employer calculate the Ontario provincial tax to deduct from your pay.
If you work in Ontario and are only claiming the basic personal amount, your payroll may be straightforward. However, if you are claiming additional Ontario credits, you should complete the TD1ON carefully.
The Ontario form includes provincial tax credit amounts, which may be different from the federal TD1 amounts.
At the top of the form, enter:
Make sure your SIN and name match your payroll records.
The TD1 includes different lines for personal tax credit amounts. Some people only need the basic personal amount, while others may qualify for additional amounts.
Do not claim a credit unless you are reasonably sure you qualify.
If you only qualify for the basic personal amount, you will usually enter the basic amount and leave the other lines blank.
If you qualify for other credits, enter the applicable amounts and add everything together.
At the end of the calculation section, enter your total claim amount. This is the amount your employer will use to calculate federal income tax deductions.
The second page includes important sections for special situations, such as:
Read these sections carefully before signing.
Once complete, sign and date the form and give it to your employer. Employers keep the form in their records and do not send it to the CRA.
The Ontario TD1ON is completed in a similar way to the federal TD1.
Include your name, date of birth, address, SIN, and employee number if applicable.
The Ontario form includes provincial credits, which may be different from the federal credits.
Common Ontario amounts may include:
If you are not sure whether you qualify for a credit, review the CRA instructions or ask a tax professional before claiming it.
Add all applicable Ontario credit amounts and enter the total claim amount.
Give the signed TD1ON to your employer or payroll department.
Maria starts a new full-time job in Ontario. She is single, has no dependants, is not a student, and does not qualify for additional credits.
She would generally:
This is the most common situation for many employees.
David works two jobs at the same time. He already claimed the basic personal amount on the TD1 forms for his first employer.
For his second employer, he should generally not claim the same personal credits again. If he claims the basic personal amount on both forms, both employers may reduce his payroll tax deductions, which could result in not enough tax being deducted during the year.
In this situation, David may need to check the section for more than one employer or payer at the same time and enter 0 as the total claim amount for the second employer.
Ana has other income outside her job and wants to avoid owing tax when she files her personal tax return.
She can complete the Additional tax to be deducted section on the TD1 and ask her employer to deduct an extra amount from each paycheque.
For example, she may ask for an extra $50 per paycheque to be deducted.
This does not reduce her total tax for the year, but it can help reduce a balance owing at tax time.
Carlos is a student working part-time and expects to pay eligible tuition during the year.
He may be able to claim a tuition amount on his TD1, depending on his situation. If he claims tuition on the TD1, his employer may deduct less tax from his pay.
However, he should only claim amounts he reasonably expects to be eligible for. If he claims too much, he may have less tax deducted during the year and could owe money when he files his tax return.
Sofia starts a part-time job and expects her total income for the year to be less than the total claim amount on her TD1.
In this case, she may be able to complete the section stating that her total income will be less than her total claim amount. If applicable, this may result in no income tax being deducted from her pay.
However, she should be careful. If her income later increases, or if she has another job or other income, she may need to update her TD1 to avoid owing tax at the end of the year.
If you have more than one employer, be careful not to claim the same credits on both TD1 forms.
An unsigned form may not be valid for payroll purposes.
Only claim amounts that apply to your situation.
You should update your TD1 if your personal tax credit amounts change. This could happen if you start or stop having multiple jobs, become eligible for a new credit, or no longer qualify for a credit.
The TD1 is not the same as your personal income tax return. It only helps your employer estimate payroll tax deductions.
If an employee does not provide the required TD1 form, the employer still has to calculate and remit payroll deductions. In this case, the employer will generally calculate deductions using only the basic personal amount.
To avoid payroll issues, it is best to complete the forms when your employer asks for them.
No. You give the TD1 and TD1ON to your employer. Your employer keeps the forms with your payroll records.
The completed TD1 forms are generally not sent to the CRA, but employers should keep them on file in case they are needed later.
Before submitting your TD1 and TD1ON:
Completing your TD1 and TD1ON correctly helps your employer deduct a more accurate amount of tax from your paycheque. If the forms are completed incorrectly, you may have too much tax deducted during the year or not enough tax deducted, which could lead to a balance owing when you file your tax return.
If you are unsure how to complete your TD1 or TD1ON, Toro Accounting can help you review your situation and understand what should be claimed.
You can book a free consultation with Toro Accounting here:
https://calendly.com/d/cvs3-qq3-ymk/free-consultation-w-toro-accounting