A TD1 form is a document issued by the Canada Revenue Agency (CRA) to enable employers to collect tax information from their workers. When conducting payroll tasks (usually on a monthly and annual basis), organizations use the information provided in their employees’ TD1 forms to make necessary earnings deductions and pay tax to the CRA.
Canadian citizens have both federal and provincial tax obligations and, as such, they must fill out two respective tax credit returns to give to their employer. The three-letter acronym “TD1” refers to the federal form. Provincial forms are followed by additional letters to signify a territory. In this case, the “ON” in “TD1ON” stands for Ontario.
Provincial and federal tax rates are published on the official website of the government of Canada. Allowances for Ontario are stipulated in the TD1ON form itself (forms published for different years have different tax allowances).
All employees of public and private organizations are required to complete both federal and provincial forms if they receive monetary compensation for their work. Similarly, employees that undergo a change of circumstances that affects their tax credit entitlements must also let their employers know.
Generally speaking, individuals that meet at least one of the following criteria should fill out a TD1 form:
They have recently started a new job and will be paid for their work.
They experience a change in their tax entitlements (for example, they begin caring for children or elderly relatives).
They move to a new province or “prescribed zone” with different tax obligations.
They wish to increase the amount of tax on their recurrent earnings. People that have other sources of income but do not wish to pay a large lump sum at the end of the year can instead opt to pay a higher amount of tax on their regular earnings.
If you are an employee, your employer will usually ask for federal and provincial TD1 forms when you start working for them. If you do not receive a request from the Accounting or Human Resources department, it is worth following up with the relevant person, as failure to complete required TD1 forms can result in fines. You do not need to fill out a new form every year if your tax circumstances do not change.
Completing a TD1ON form is a relatively straightforward process, and the CRA provides guidance worksheets (see the resources section below). The TD1ON forms for 2021 and previous years are made up of various sections for individuals to enter their current tax credits. Information about allowances for the year is included in the form.
Employers also have the option to create their own TD1ON form to send to their staff. If organizations decide to go down this route, they must meet certain guidelines and the form must mirror the official TD1ON form provided by the CRA.
Often, it is easier and less resource-intensive for employers to create custom forms and host them online. This allows for the speedy automated transfer of information to a connected database, which can be consulted when calculating taxes on employee earnings.
All tax credit amounts are stipulated in the TD1ON for 2021. The government-provided worksheet can be used to calculate amounts that are contingent on earnings.
Here is an overview of the main allowances:
Basic personal amount – $10,880
Aged over 65 with net income lower than $39,546 – $5,312
Pension income amount – $1,504 (or full pension amount if it is lower)
Disability amount – $8,790
Spouse or common-law partner amount (if you are supporting them) – $9,238
Amount for eligible dependents – $9,238
It is important to note that the TD1ON doesn’t cover all tax credits. If you are an employee, you may need to fill out other forms to claim all your entitlements. You must complere a T1213, for example, to claim certain expenses related to childcare.
From 2020 onwards, employers are expected to provide their members of staff with web page links to federal and provincial TD1ON forms (rather than paper forms). Employees can then print the forms off, fill out the relevant sections, and submit them to the relevant organizational department. It is the responsibility of the employer to store and maintain employee tax data.
Alternatively, employers can use self-created forms as long as they meet certain requirements, particularly in regards to identity verification and the safe storage of data. The benefit of custom forms is that they can be synced with backend databases, eliminating the need for time-consuming manual data entry.
If you are an employer, PandaDoc can significantly streamline the process of distributing TD1ON forms and collecting worker information. If you’re still relying on paper forms, your organization is needlessly wasting time on manual data entry.
Use our free TD1ON templates to create custom forms and host them on a secure online portal for your employees to access. Drag-and-drop verification buttons and backend syncing integrations help ensure that your TD1ON forms are fully compliant with government regulations.
Templates are included free of charge on all plans. Take advantage of a free trialto see if PandaDoc is a fit for your business.
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Create a custom TD1ON form (personal tax credits return for Ontario) and distribute it to your employees through a secure online portal. Automatically collect, store, and access data on PandaDoc’s secure servers.
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