HR's tax form obligations

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There is a provincial and a federal TD1 to complete, which provide different exemptions and even allow for the employee to request for additional taxes to be taken.  Is the employer responsible for incorrect information supplied by the employee?  What if the employee doesn't complete and submit the TD1s?

This form allows for additional exemptions to be claimed which results in lower income taxes being deducted when a child is added to the family, a person becomes 65 no later than December 31, a person starts receiving pensions other than Canada Pension, Quebec Pension, old age security, a person becomes a student enrolled in a university, etc. It used to be that the deductions were the same for the Federal Government and the Provincial Government, but this is no longer the case.

When an employee is hired, or when there is a change to an employee's personal tax credits, an employee should complete both a Federal and a Provincial Personal Tax Credit return and provide a fully completed copy to the employer.  In the event an employer does not receive these forms, the employer must then apply the basic exemption when calculating income tax deductions for payroll purposes.
Yes. It is the employer's responsibility to ensure that the TD1 has been filled in correctly and that any amounts claimed over the basic personal amount by the employee are reasonable.

Here's a checklist of items to check for:
  • make sure the employee has used the correct amounts as specified on the form
  • the amount(s) being claimed has been added up correctly
  • the form does not claim any obvious false information
  • the social insurance number is correct
Where there may be questionable items or amounts being claimed on the TD form, the employer may need to show proof that they have made a reasonable attempt to validate the information. As long as the employer has sufficient proof, then no further action is needed.
  • Natasha Smyth, B.SC.(Agr.), CPM
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