A Complete Guide to Understand the TD1 Forms

TD1 forms are an essential component of your payroll business.

March 7, 2022

If you have just started your payroll in Canada, you might not be aware of a few things related to payroll. You will need to be familiar with a few tax documents. TD1 form is one of these key tax documents, and you must know about it. If you fill out this form, you can avail many personal tax credits. As a leading advisor of Canadian payroll, we are always active in responding to your questions. Here are some essential tips that we will tell you about the TD1 form. Let’s dive a bit deeper to understand the TD1 forms!

What is meant by TD1 Form?

TD1, Personal Tax Credits Return, is a form necessary for calculating the amount of tax to be deducted from an individual’s income. There are two types of TD1 forms: Federal and Provincial TD1 forms. Employees complete these forms and then submit them to their employers. With the help of TD1 forms, employees provide the government with the information needed for salary and applicable tax credits. The CRA examines this information and calculates the tax amount from employees’ income.

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“The extension and expansion of the payroll tax holidays for workers would be number one on my list and key to avoiding recession.” –Mark Zandi

Conditions for filling out a TD1 form

There are certain conditions for filling out the TD1 form. These are as follows:

  • If an employee is going to receive pension payouts.
  • If an employee wants to claim a deduction for residing in a prescribed zone.
  • An employee who has just started a new job can fill out TD1 form.
  • If an employee is facing a drastic shift in their employment situation and want to update the current form information.

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A point to be noted is that employees don’t need to fill out a new TD1 form each year. However, if an employee wants to change their tax credit amounts, they must fill out a new TD1 form and submit it to their employer within seven days of said change. 

Things you must know while completing a TD1 form

New employees must fill out two TD1 forms. A new employee will fill out one federal TD1 form and one provincial TD1 form if more than the basic personal amount is claimed. While filling out the form, individuals need to:

  • For a Provincial TD1 form, the number of lines in the form depends on whether you live in a province or a territory.
  • Follow the instructions of both the Federal and Provincial forms.
  • Add each of the amounts on the paper lines and calculate the amount.
  • The total sum is entered into the last line of page 1 in TD1 form named as "Total Claim Amount."
  • For a Federal TD1 form, employees should add lines 1-12 together and the total amount in line 13.

Electronic TD1 Form

You can create a Federal or Provincial/Territorial TD1 form as an employer. After filling out the form, your employee can send it electronically rather than you send the actual completed TD 1 form. To create, maintain and store the TD1 forms electronically, you will need to meet the following conditions:

Conditions:

  • It should reflect the CRA-approved TD1 paper form.
  • Must include a date to know when your employee submits you a new TD1 form.
  • The form should meet all the CRA’s guidelines regarding electronic records.
  • Must contain a certification confirming that the information given by the employee is valid. For instance, clicking on a button saying "I agree" to a statement precisely like the certification statement on the paper TD1 form.
  • The form should be accessible to the CRA whenever requested in a format that the CRA representatives can read.

Final Words!

In Canada, the minimum wage rate varies with every province and territory. The minimum wage rates may increase annually. The new rates get updated on October 1 of every year. If you want to review the current minimum wage rates of different provinces in Canada, please click on this link, Current Minimum Wage Across Canada. And if you face any difficulty, or you are confused about minimum wage requirements, contact Yogi And Associates to get the most relevant and accurate information. 

Laila Batool

Executive Journalist

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