{"id":6137,"date":"2025-10-16T17:37:29","date_gmt":"2025-10-16T17:37:29","guid":{"rendered":"https:\/\/cmy.800.mytemp.website\/?p=6137"},"modified":"2025-10-16T17:37:29","modified_gmt":"2025-10-16T17:37:29","slug":"looking-ahead-to-2024-getting-source-deductions-right-from-the-start-november-2023","status":"publish","type":"post","link":"https:\/\/levypilotte.com\/en\/looking-ahead-to-2024-getting-source-deductions-right-from-the-start-november-2023\/","title":{"rendered":"Looking ahead to 2024 \u2013 getting source deductions right from the start (November 2023)"},"content":{"rendered":"

The day-to-day financial impact of increases in interest rates over the past 18 months, together with higher costs for nearly all goods and services, means that for most Canadians maximizing take-home income isn\u2019t just desirable, it\u2019s a necessity. And the best way to make sure that take-home pay is maximized is to ensure that deductions taken from that paycheque \u2013 especially deductions for income tax \u2013 are no greater than required.<\/p>\n

For most Canadians, (certainly for the vast majority who earn their income from employment), income tax, along with other statutory deductions like Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums, is paid periodically throughout the year by means of deductions taken from each paycheque received, with those deductions then remitted to the Canada Revenue Agency (CRA) on the taxpayer\u2019s behalf by their employer. Eventually, the taxpayer files a tax return for the year. Where things work as intended, the total amount of income tax deducted from the taxpayer\u2019s paycheques throughout the year is very close to the amount of tax they owe for that tax year. Where the amounts withheld for income tax are greater than the taxpayer\u2019s total tax payable for the year, they receive a tax refund. Most taxpayers like receiving such a tax refund, but the fact is that receiving a refund means that the taxpayer has overpaid taxes throughout the year, and essentially provided the tax authorities with an interest-free loan of monies which could have been paid to the taxpayer by their employer throughout the year.<\/p>\n

The amount of tax deducted by employers and remitted to the federal government on the employee\u2019s behalf isn\u2019t arbitrary \u2013 rather, it\u2019s based on information provided to that employer by the employee. That information is provided on a TD1 form, which is completed and signed by each employee, sometimes at the start of each year, but certainly at the time employment commences. Each employee must, in fact, complete two TD1 forms \u2013 one for federal tax purposes and the other for provincial tax imposed by the province in which the taxpayer lives. Federal and provincial TD1 forms for 2024 (which have not yet been released by the CRA but, once published, will be available on the Agency\u2019s website at https:\/\/www.canada.ca\/en\/revenue-agency\/services\/forms-publications\/td1-personal-tax-credits-returns\/td1-forms-pay-received-on-january-1-later.html<\/a>) list the most common statutory credits claimed by taxpayers, including the basic personal credit, the spousal credit amount, and the age amount. Adding together all amounts claimed on each TD1 form gives the Total Claim Amounts (one federal, one provincial) which the employer then uses to determine, based on tables issued by the CRA, the amount of income tax which should be deducted (or withheld) from each of the employee\u2019s paycheques and remitted on their behalf to the federal government.<\/p>\n

While the TD1 completed by the employee at the time their employment commenced will have accurately reflected the credits claimable by the employee at that time, everyone\u2019s life circumstances change. Where a baby is born or a child starts post-secondary education, there is a separation or a divorce, a taxpayer turns 65 years of age, or an elderly parent comes to live with their children, the affected taxpayer(s) will often become eligible to claim tax credits not previously available. And, since the employer can only calculate source deductions based on information provided to it by the employee, those new credit claims won\u2019t be reflected in the amounts deducted at source from the employee\u2019s paycheque.<\/p>\n

Consequently, it\u2019s a good idea for all employees to review the TD1 form prior to the start of each taxation year and to make any changes needed to ensure that a claim is made for any and all credit amounts currently available to them. Doing so will ensure that the correct amount of tax is deducted at source throughout the year.<\/p>\n

As well, it\u2019s often the case that a taxpayer will have available deductions for expenditures like Registered Retirement Savings Plan or First-Time Homeowner Savings Plan contributions, deductible support payments, or child care expenses, none of which can be recorded on the TD1 but all of which reduce the taxpayer\u2019s tax owing for the year. While such claims make things a little more complicated, it\u2019s still possible to have source deductions adjusted to accurately reflect those claims and the employee\u2019s resulting reduced tax liability for 2024. The way to do so is to file Form T1213 \u2013 Request to Reduce Tax Deductions at Source (available on the CRA website at https:\/\/www.canada.ca\/en\/revenue-agency\/services\/forms-publications\/forms\/t1213.html<\/a>) with the CRA. Once that form is filed with the CRA, the Agency will, after verifying that the claims made are accurate, provide the employer with a Letter of Authority authorizing that employer to reduce the amount of tax being withheld from the employee\u2019s paycheque \u2013 and thereby increasing the employee\u2019s take-home income.<\/p>\n

Of course, as with all things bureaucratic, having one\u2019s source deductions reduced by filing a T1213 takes time. While a T1213 can be filed with the CRA at any time of the year, the sooner it\u2019s done, the sooner source deductions can be adjusted, effective for all subsequent paycheques. Providing an employer with an updated TD1 for 2024 as soon as possible, along with filing a T1213 with the CRA where circumstances warrant, will ensure that source deductions made starting January 1, 2024 will accurately reflect all of the employee\u2019s current circumstances, and consequently their actual tax liability for the year. Taking those steps can mean increased take-home income for the employee, making it easier to meet day to day expenses in 2024.<\/p>\n<\/div>

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The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6137","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/posts\/6137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/comments?post=6137"}],"version-history":[{"count":1,"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/posts\/6137\/revisions"}],"predecessor-version":[{"id":6138,"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/posts\/6137\/revisions\/6138"}],"wp:attachment":[{"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/media?parent=6137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/categories?post=6137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/levypilotte.com\/en\/wp-json\/wp\/v2\/tags?post=6137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}