Income Tax
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      1. PayTrak Payroll Services - General
      2. Canadian Payroll Resources
      3. Income Tax

      Income Tax Deductions

      Learn more about calculating and remitting income tax in Canada.

      In Canada, there are two branches of income tax deductions: federal and provincial. The federal income tax rate applies to all Canadian jurisdictions, while provincial income tax rates vary by jurisdiction. It is important to note that all federal income tax deductions are remitted directly to the CRA. Provincial income tax for all provincial/territorial jurisdictions also go to the CRA except for Quebec provincial income tax, which is remitted to Revenu Quebec.

       

      Click here to access the 2024 federal income tax rate

      Click here to access the 2024 provincial income tax rates by province

       

      As an employer, it is your responsibility to deduct and remit the correct amount of income tax for your employees. With PayTrak's payroll services, these calculations will be automatically deducted and remitted to the CRA on your behalf. 

       

      Important: There is a difference between an employee's province of employment (aka province of taxation) vs. their province of residence. Employee's pay income tax based on their province of employment. 

      When an employee is required to physically report to work at either the employer’s permanent or deemed establishment, the employee’s province of employment is the province where they physically report to work.

      When an employee is not required to physically report to work at either the employer’s permanent or deemed establishment, the employee does not have the authority to contract, and a full-time remote work agreement exists, the new administrative policy for full-time remote worker would ascertain the province of employment based on primary and secondary indicators. If the new administrative policy is not applicable, the employee’s province of employment is the province where the business is located and from where their salary is paid.

      The province of residence (where the employee resides) is not a factor for determining the province of employment. The location from where a third party service provider processes the employer’s payroll is also not a factor for determining the province of employment.

       

      Click to access the CRA's resource for determining the province of employment (POE)

       

      2024 Personal Tax Credits

      In Canada, there is a special form used to calculate the appropriate federal and provincial tax credits for your employees called the TD1 form. The Canadian TD1 forms are used to determine the amount of tax to be withheld from an employee’s income. There are two versions: the TD1 Federal form and the TD1 Provincial or Territorial form.

      • TD1 Federal Form: This form helps employers calculate the amount of federal tax to withhold, based on personal tax credits and other deductions that an employee is eligible for.

      • TD1 Provincial/Territorial Form: This form helps determine the amount of provincial or territorial tax to withhold, with credits and deductions specific to the employee’s province or territory of residence.

      Employees fill out these forms when starting a new job, changing their tax situation, or when personal circumstances change. Employee's are entitle to the basic personal amount at both the federal and provincial level.

      Click here to access up-to-date TD1 forms