Typically, one of the first tasks you’ll be asked to do when you start a new job is complete some paperwork for the Human Resources department. One important form to complete is the TD1 form. There are federal and provincial versions of these forms and you will be required to complete both. Which provincial form you complete will depend on the location of your employer. For example, if your employer is in Ontario you will need to complete the TD1 and the TD1ON. These forms apply to the calendar year (January to December), should be prepared for each new employer you have in a given calendar year and updated each calendar year if you are returning to a previous employer and/or working continuously in more than one calendar year (i.e. September to April).
The TD1 forms are used by your employer to determine the rate of income tax to withhold from your pay, so it is important to complete these forms accurately and completely. If the rate is too high, the government of Canada is enjoying your hard-earned money instead of you. If the rate is too low, you may have an unexpected tax bill when you file your tax return.
In most cases, SAF students will be able to claim the Basic Personal Amount and Tuition Amount as tax credits. However, it is important that you read the forms carefully and thoroughly as other credits may apply to your particular situation. As a SAF student, you may be uncertain about the number of school terms and work terms you may have in a given calendar year and therefore the amount of income you will earn and/or tuition you will pay. We recommend that you complete these forms on the basis of your current work term sequence and make adjustments when and if necessary.
In some instances, the amount of your expected earnings will not exceed the tax credits available to you. In this case, you can indicate that no tax should be taken from your pay by checking the box on the back of the form under “Total income less than total claim amount”. When checked, your employer will not deduct income tax from your pay, putting more money in your pocket when you need it most. This is more likely to be true in years when you have one co-op work term and two academic terms.
General information on the TD1 forms is provided on the CRA website.
-Tiana, Young Tax Professional