Flashcards in Deducting Income tax Deck (25)
Is there an age limit for deducting INcome tax?
no age limit
Is there an employer contribution?
What are the forms available to help determine how income tax to deduct
1) for most employees a TD1 (personal tax credits return)
2) employees who are paid commission and who claim expenses may choose to fill out a TD1X (statement of commission income and expenses for payroll tax deductions)
What are the two types of TD1?
2) provincial or territorial
who must fill out at TD1?
anyone who receives salary, wages, commissions, employment insurance benefits, pensions, or other remuneration
What happens if more than basic amount is claimed on the TD1?
they must fill out the provincial TD1
When should an employee complete a new TD1?
within 7 days of any change that may result in a change to their personal tax credits for the year
What if the employee has more than one employer at the same time?
they can only claim it for one place
- check box more than one employer on page 2
- enter 0 on page 1 on line 13
- do not fill out any numbers from 2 - 12
What happens if an employee does not complete new forms
may be penalized $25 for each day the form is late
- minimum penalty is $100
- maximum penalty is $2,500
When do employees not need to fill out a new TD1?
if their personal tax credit amounts have not changed for the year
Do you need to have a completed TD1 on file for every employee?
yes, the government may ask to see it
What are claim codes?
the total amount of personal tax credits an employee claims on TD1 will determine which claim code to use
- see payroll dedutions tables (T4032)
- in some case you will use one claim code for federal and one for provincial
What is a form TD1X
statement of commission income and expenses for Payroll tax deductions
are there more than one TD1x forms (ie one for federal one for Provincial? )
no, there is only one form
on the TD1x, how do they estimate their income and expenses?
by using one of the following two figures
1) their previous year's figures, if they were paid by commission in that year
2_) the current year's estimated figures
employees who choose to fill out FM TD1X have to give you the form by when?
by one of the two dates;
1) on or before Jan 31 if the worked for you last year
2) within one month of the date their employment starts
3) within one moth of the date their personal tax credits have changed
4) within one month of the date any change occurs that will substantially change their estimated remuneration or expenses previously reported
if an employee wants to not use the TD1x and they already filled one out what do you do?
they need to provide you in writing the election they have made
if an employee is paid on commission or receives a salary plus commission, you can deduct tax in one of the following ways what are they
1) employee who earns commission without expenses
2) employee who earns commission with expenses
How do you deduct income tax for employee who earns commission without expenses
- if you pay commissions at the same time you pay salary, add this amount to the salary, then use the payroll deductions online calculator (PDOC) or other methods to determine it
- if paid periodically commission, may want to sue the bonus method to determine the tax to deduct form the commission payment (pg 30)
How do you deduct income tax for employee who earns commissions with expenses
-can use the PDOC or other methods
for employees who claim expenses on their income tax and benefit return must have their employer complete what form
T2200, declaration of conditions of employment
what are the most common remuneration subject to income tax
1) salary, wages, bonuses, cmmissions, taxable stock option benefits or other
2) most cash and non-cash taxable benefits and allowances
3) remuneration received while on vacation (vacation pay)
4) pensions, retiring allowances (also called severance pay)
what amounts do you reduce remuneration paid before calculating income tax
1) a deduction for living in a prescribed zone
2) amount that a tax service office has authrotized
3) employee's contributions to a registered pension plan (RPP) for details see page 29
4) union dues`
David is paid weekly (52 pay periods per year)
basic salary is $500.00
taxable benefits = $50.00
RPP contributions = $25.00
Union Dues = $5.50
living in a prescribed zone = $ (8.25 / day x 7 days) = $57.75
what is remuneration subject to tax deductions at source
basic salary $500
plus taxable benefits $ 50
gross remuneration $550
minus weekly deductions for
RPP contributions $25.00
Union Dues $5.50
living in prescribed zone $57.75
total of $88.25
total remuneration subject to tax deductions = $461.75