Pocket-Friendly Payroll System Migration for Canadian Businesses

A TD1 Personal Tax Credits Return tells your employer which personal credits to build into your income tax withholding, so the right amount comes off each pay. You normally complete a federal TD1 and a provincial or territorial TD1 when you start a job. File a fresh pair whenever your situation changes, for instance a new dependant, tuition, or a second employer, where you should not claim the basic personal amount twice.

The federal goods and services tax is 5% in 2026, and has been since it dropped from 6% to 5% on 1 January 2008. You pay the 5% on its own in Alberta, the Northwest Territories, Nunavut and Yukon. In British Columbia, Manitoba, Saskatchewan and Quebec it sits alongside a separate provincial tax, and in the five participating provinces it is folded into the HST rate.

Yes, in the year it is received, but the form matters. Salary continuance is ordinary employment income in box 14 of your T4, with regular payroll withholding plus CPP and EI. A lump-sum retiring allowance is reported in box 66 or 67, is not employment income, creates no RRSP room and carries no CPP or EI; tax on it is withheld at the flat lump-sum rates, which rarely match the tax finally owed, so a refund or balance shows up at filing.

By the last day of February following the calendar year the pay relates to. The same date applies to giving employees their copy and to filing the T4 information return with the CRA, and filing late brings a penalty that scales with the number of slips. Filed slips usually appear in CRA My Account within a few weeks. If yours has not arrived, ask your employer first, then fall back on My Account or your own pay records.

Start with the basic personal amount, which is already printed on the form, then add only the credits you genuinely expect to claim, such as tuition you will pay this year, an eligible dependant, the age amount or an amount transferred from a spouse. Total them, sign and date, and give the form to your employer rather than the CRA. With two jobs, claim the amounts at one only. You can also ask for extra tax to be withheld.

There is no single answer, because provincial rates and personal credits change the result. The mechanics: federal tax for 2026 begins at 14% on the lowest bracket, and the basic personal amount of $16,452 shelters the first slice of income. Your province applies its own brackets and credits on top, and CPP and EI contributions come off separately. Run your province and pay period through the CRA's payroll deductions online calculator for a reliable figure.

A refund is paid as one amount for the return it relates to, not in instalments. With direct deposit it usually arrives about two weeks after an online return is filed. The CRA can reduce or hold it to cover tax you owe for another year, or a debt it collects for another government program. If you file several years at once, each return produces its own separate refund.

Yes. Severance is taxable in the year you receive it and the employer withholds tax before paying you. Depending on how the package is structured it is treated as employment income or as a retiring allowance, and a large lump sum can push you into a higher bracket for that one year. A retiring allowance may qualify for a direct transfer to an RRSP. Ask for the split between wages, vacation pay and retiring allowance.

The CRA applies its prescribed arrears interest rate, which is reset each quarter and compounded daily, to any balance left unpaid after the deadline. There is no fixed annual figure to quote, so check the current quarter's rate on canada.ca before estimating what you owe. Interest on personal income tax arrears is not deductible, and paying part of the balance immediately reduces the amount interest is calculated on for the rest of the period.

The lowest federal bracket applies to the first band of taxable income. Its upper limit is indexed to inflation each year, while the rate itself changes only when Parliament legislates a change, so check the CRA rate table for the year you are filing. Each province and territory adds its own lowest bracket on top, so the combined rate depends on where you lived on 31 December. The basic personal amount, a non-refundable credit, eliminates federal tax only for someone whose income is at or under that amount.

Some are. Unused tuition, disability, age and pension income amounts can be transferred to a spouse, parent or grandparent within limits, and tuition not transferred carries forward for the student indefinitely. Most other non-refundable credits only reduce tax to zero and are then lost, because they cannot be refunded. Donations and student loan interest carry forward for a limited number of later years, and CRA's page for each credit states its transfer and carry-forward rules. Refundable credits are paid even with no tax payable.

Mostly by claiming what the law already allows: deducting genuine business expenses, taking capital cost allowance on equipment and buildings, carrying losses to other years, and paying the small business rate on active income. A Canadian-controlled private corporation pays the federal small business rate of 9% on its first $500,000 of active business income for 2026, against a federal general net rate of 15%. Multinationals also choose where profit is reported, which transfer-pricing rules police.