Chapter

1
New Employee Information

Learning Objectives:

Upon completion of this chapter, you should be able to:

1. Identify the purpose of the following components of the commencement

process:
information necessary to pay an employee
internal forms
o authorization for hiring
o union membership
o enrollment forms for benefit plans
o confidentiality agreement
federal and provincial/territorial forms
o federal Personal Tax Credits Return TD1
o provincial/territorial Personal Tax Credits Return TD1
o Qubec Source Deductions Return TP-1015.3-V

Communication Objective:

Upon completion of this chapter, you should be able to explain how to complete the
federal and provincial/territorial Personal Tax Credits Return TD1 forms and the
Qubec Source Deductions Return TP-1015.3-V form.

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Chapter Contents

Introduction ........................................................................................................................ 1-3

Commencement Process .................................................................................................... 1-3
Employment Standards Requirements ........................................................................... 1-5
Required Internal Forms ................................................................................................ 1-5
Content Review .............................................................................................................. 1-9
Review Questions ........................................................................................................ 1-10
Required Federal and Provincial/Territorial Forms ..................................................... 1-12
Content Review ............................................................................................................ 1-28
Review Questions ........................................................................................................ 1-30
Chapter Review Questions and Answers ......................................................................... 1-36

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Introduction
In Payroll Compliance Legislation (PCL), students learned about the various government
agencies and legislation that impact payroll, both from an employers and an employees
standpoint. Payroll Fundamentals I will provide students with the information and processes
necessary to produce payroll at an employee level.

The objective of the payroll function is to pay employees accurately and on time, keeping in
compliance with legislation, for a full annual payroll cycle. In this course, students will learn
payrolls responsibilities, from the hiring of an employee through to the termination of
employment. This course will demonstrate how to put payroll compliance legislation
requirements into practice, as well as provide students with the information necessary to
effectively communicate the individual pay calculation process.

Commencement Process
Many organizations have a commencement process in place to welcome new employees to
the organization. This process usually contains information about the work environment,
payroll, benefits, culture, history, the organization chart and anything else relevant to
working in the new organization.

In order to collect the information necessary to pay a new employee, to comply with
legislative reporting requirements and to enroll the employee for benefit coverage, employers
will have the employee complete a set of forms and documents, commonly referred to as a
commencement package. The documents included in the package are typically a combination
of:

organization-specific forms, such as personal information forms

government forms, such as the federal and provincial/territorial Personal Tax Credits
Return TD1 and Source Deductions Return TP-1015.3-V in Qubec
benefit forms, such as insurance enrollment forms

As discussed in Payroll Compliance Legislation, privacy legislation requires that employers

obtain an employees consent before collecting personal information, and that the
information collected must be for a specific purpose. When an employee signs an offer of
employment, they are implicitly providing consent for the employer to collect and use
information that is reasonably required for employment purposes. When the offer letter
clearly states that the organization will be collecting, using and disclosing employee
information required by government agencies, pension plan administrators and benefit
carriers, the employees signature would provide express consent.

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There are many pieces of information required in order to pay an employee accurately and
comply with legislative reporting requirements. The following list contains a sample of the
information that may be required, depending on the jurisdiction and the organization:

employees legal name (as it appears on SIN documentation)

Social Insurance Number (SIN)
address
rates of pay (salary, hourly rate, rate per piece, commission)
start date
province/territory of employment
date of birth
federal and provincial/territorial Personal Tax Credits Return TD1 (for Qubec
employees Source Deductions Return TP-1015.3-V)
federal Statement of Commission Income and Expenses for Payroll Tax Deductions
TD1X form for commissioned employees who claim personal expenses (for Qubec
employees Statement of Commissions and Expenses for Source Deduction Purpose
TP-1015.R.13.1-V
pay period frequency (weekly, bi-weekly, etc.)
hours of work or pieces produced
benefits enrollment data
pension plan membership
union membership
bank account information for direct deposit

Not all of the above would necessarily be applicable to every organization or every
employee.

The most practical way for an organization to obtain this information is through forms and
documents included in a commencement package. These documents can be completed by the
new employee during a new hire orientation meeting. This meeting is typically led by an
employee from payroll or human resources who will review the documents with the new
employee, explaining their purpose and assisting with their completion. This orientation
meeting is another component of the commencement package.

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Employment Standards Requirements

Each province and territory, as well as the federal government, has passed legislation
outlining the minimum employment/labour standards in its jurisdiction; for example, there
are standards that deal with minimum age and minimum wage. In some jurisdictions, the
minimum age is established by occupational health and safety, youth employment and/or
construction safety legislation in addition to, or independent of, employment/labour
standards. Employers must ensure that new hires meet the legislated minimum age
requirements. New hires, as well as existing employees, must also be paid at least the
minimum wage for the jurisdiction.

Employment standards also legislates the information that must appear on the employees
pay statement. Most jurisdictions require that the following information is provided to
employees, or printed on employees pay statements:

employee name
date of pay period
rates of pay and hours of work at each rate
gross earnings
itemized deductions
net pay

Required Internal Forms

While the contents of a commencement package will vary by organization, employers should
ensure that the forms capture all the necessary information to set the employee up on payroll
as well as enroll the employee for any available benefit coverage, pension plan and/or union
membership.

Common forms included in a commencement package are:

an authorization for hiring

direct deposit agreement
a union membership application (for unionized workplaces)
benefits enrollment, if applicable (for example, health and dental coverage, optional
life insurance coverage, the organizations pension plan)
a confidentiality agreement

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Authorization for Hiring Form

An authorization for hiring form is an internal document that provides basic information
about the new employee, along with the signature of any individual(s) authorized to hire
employees on the organizations behalf. The authorization for hiring form is essential when
the payroll is administered by an individual or department other than the one that does the
hiring. Large organizations will usually have a human resources department with the
authority to make employment offers to job candidates. In some cases, an organization will
designate the hiring responsibility to a senior employee at a job site or branch location while
in smaller organizations, the general manager or office manager may be the only person with
the authority to make that commitment. Regardless of the size of the organization, there
should be a clear segregation of duties between the individual authorized to hire new
employees and the individual responsible for setting up the new employee on payroll. The
payroll department must know who within the organization has the responsibility and
authority to hire, and only accept those forms signed by an authorized individual.

Information on the authorization for hiring form will include basic personal information
about the new employee, and may include information on their position within the
organization such as department, manager, start date, starting salary or hourly wage and
benefit entitlements. It may also state any probationary period that must be completed before
the employee is entitled to benefit coverage.

One of the most important pieces of information the employer must obtain is the employees
Social Insurance Number (SIN). The SIN is a government-issued number that tracks an
individuals earnings history for social security programs. Having a valid SIN allows an
individual to work in Canada.

Note:
In accordance with the Governments plan to return to a balanced budget by 20142015,
Employment and Social Development Canada (ESDC) stopped the production and
distribution of the Social Insurance Number (SIN) card as of March 2014. The SIN is now
issued in a letter format to new, or replacement card, applicants.

SIN cards currently in circulation will remain valid. This decision supports the Governments
agenda to modernize and streamline operations in order to decrease costs and to achieve
better value for money. The impact on individual Canadians will be negligible.

An employer, after hiring, must ask new employees to provide their SIN number
documentation. The employer has an obligation to obtain each employees valid SIN, and use
the name and number as they appear on the SIN documentation, for reporting purposes.
Failure to obtain the number could result in a fine, unless the organization can prove it made
every reasonable effort to obtain the number.

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Since no two Social Insurance Numbers are the same, the SIN provides a unique identity
check for each employee. SINs that begin with the number 9 are issued to individuals who
are neither Canadian citizens nor permanent residents but need a SIN for employment
purposes or to comply with other authorized uses.

The 900-series SINs have expiry dates. Employers hiring an individual with a 900-series
number must ensure that the SIN documentation has a valid date. A 900-series SIN with no
expiry date is invalid and employers should refer the individual to an office of Service
Canada (SC) to obtain documentation with an expiry date. Employers must also ensure that
the work permit issued by Citizenship and Immigration Canada is valid and that all terms and
conditions of the work permit are being followed.

Employers have an obligation to protect the personal information of employees. Using the
SIN as an employee identification number in payroll or time and attendance systems is
discouraged as it places the employee at risk and jeopardizes the integrity of the SIN.

The authorization for hiring form should also contain a checklist to ensure the organization
obtains all required information and completed benefit enrollment or membership forms. The
authorization for hiring forms will vary in content with each employer, based on their
organizational requirements.

Union Membership
In workplaces with a collective agreement in place, employees covered by the agreement are
required to pay union dues. The collective agreement will establish the amount of dues to be
deducted from the employees pay and the new employee will be required to sign a union
membership form or application, included in the commencement package, authorizing the
deduction. The union often offers its own orientation, separate from the organization, to
explain the union and the collective agreement.

There are provisions under legislation for employees to apply for an exemption from union
membership; however, this does not exempt the employee from paying an amount equivalent
to the union dues. This exemption was discussed in Payroll Compliance Legislation.

Benefit Enrollment Forms

Organizations that offer benefits, such as group insurance or registered pension plans, will
include enrollment forms for these plans in the commencement package. New employees
must complete the form for group insurance benefit coverage indicating the type of coverage
required, for example, health and/or dental coverage, and whether they require coverage for
only themselves or for their dependants as well. Employees who choose any optional
insurance coverage will also need to complete enrollment forms for these benefits;
employees who decline optional insurance coverage (for example, optional life insurance)
may be required to sign a waiver to that effect. When the employer requires the employee to
pay for any or all of the premiums for their coverage, the employees signature on the forms
authorizes the deduction from their pay.

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Employers in British Columbia with two or more employees may establish a group plan for
provincial health care for their employees and remit the premiums to the provincial agency.
This is optional for the employer. Employees must complete enrollment forms for the
provincial health care group plan and consent to the deduction of any portion of the
premiums that may be required by their employer, unless they have coverage through their
spouses and sign a waiver to that effect.

Registered Pension Plans and group Registered Retirement Savings Plans are both benefit
plans set up by an employer to provide employees with income during retirement. Employees
complete enrollment or application forms to join these plans and, by signing the forms,
consent to any required contribution deductions from their pay as specified within the forms.

Confidentiality Agreement
A confidentiality agreement is a legally enforceable agreement preventing present or past
employees from disclosing commercially sensitive information belonging to the employer to
any other party. This type of agreement is often used in high-tech industries, particularly in
computer and internet companies, to protect proprietary information such as intellectual
property. A confidentiality agreement should include a description of the proprietary
information, permissible uses and clauses dealing with the duty of confidentiality, the impact
of non-compliance and the length of the agreement. Confidentiality agreements may last for a
period of time beyond the term of employment.

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Content Review
Privacy legislation requires that employers obtain an employees consent before
collecting personal information, and stipulates that the information collected must be
for a specific purpose.
Each province and territory, as well as the federal government, has passed legislation
outlining the minimum employment/labour standards in their jurisdictions.
The information that must be provided to employees, or appear on the pay statement
in all jurisdictions, is:
o employee name
o date of pay period
o rates of pay and hours of work at each rate
o gross earnings
o itemized deductions
o net pay
A commencement package is a set of documents that, when completed by a new
employee, will capture all the necessary information to set the employee up on
payroll as well as enroll the employee for any available benefit coverage, pension
plan and/or union membership.
An authorization for hiring form is an internal document that provides basic
information about the new employee, along with the signature of any individual(s)
authorized to hire employees on the organizations behalf.
Employers have an obligation to obtain each employees valid SIN for reporting
purposes.
Collective agreements will establish the amount of union dues to be deducted from an
employees pay; new employees will be required to sign a union membership form or
application authorizing the deduction.
When an employee pays for any or all of the premiums for their group insurance
coverage or provincial health care, or when they join the organizations registered
pension plan, their signature on the enrollment form authorizes the deduction from
their pay.
A confidentiality agreement is a legally enforceable agreement preventing present or
past employees from disclosing commercially sensitive information belonging to the
employer to any other party.

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Review Questions
1. What does the employees signature on an offer letter provide to the employer?

2. What types of documents are typically included in a commencement package?

3. Name three forms that are commonly included in a commencement package.

4. What is the payroll departments responsibility when accepting an authorization for

hiring form?

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5. What document must an employer verify when hiring an individual with a 900-series
Social Insurance Number?

6. True or False. Union dues can be deducted from an employees pay without their
consent.

7. What does an employer need in order to deduct benefit premiums from an employees
pay?

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Required Federal and Provincial/Territorial Forms

The federal and provincial/territorial Personal Tax Credits Returns TD1 forms are the
Canada Revenue Agency (CRA) prescribed forms that must be completed by new employees
and given to their employer. New employees in Qubec must complete the federal TD1 and
the Qubec Source Deductions Return TP-1015.3-V issued by Revenu Qubec (RQ). The
information provided on these forms is used by the payroll department to determine the
amount of federal and provincial/territorial income tax to deduct from an employees income.

Federally, and in provinces/territories outside Qubec, there is a Worksheet for the Personal
Tax Credits Return TD1-WS that is used to calculate partial claim amounts on the TD1 for:

age
caregiver
infirm dependant age 18 or older

In Qubec, partial claims are made on the TP-1015.3-V.

The commencement package must contain a federal and a provincial/territorial TD1 and TD1-
WS or, in the case of a Qubec employee, a federal TD1 and TD1-WS and a Qubec TP-
1015.3-V.

Provincial/territorial income tax is withheld based on the employees province or territory of

employment. The province or territory of employment is defined as:

the province or territory where the business is located, if the employee reports for
work at the employers place of business, or
the province or territory where the employers business is located and where the
employer pays the employees salary from, if the employer does not require the
employee to report for work at the employers place of business

Income tax is withheld based on the employees province of employment; however, the
employees personal tax liability is based on their province of residence. When an employee
works in one province or territory but lives in another, there may be issues with respect to the
income tax withheld from their pay not satisfying their personal income tax liability. The
following two paragraphs show options available to an employee to satisfy their annual
income tax liability in these situations.

If the employee will not have enough income tax deducted to satisfy their personal tax
liability, they can request additional tax deductions at source using the federal TD1 or, for a
Qubec employee, the federal TD1 and the Qubec TP-1015.3-V.

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If the employee has more tax withheld than is required to meet their personal tax liability,
they can apply to the CRA or RQ for approval of a reduction in tax withheld at source. If the
application is approved, the CRA or RQ will issue a letter of authority giving the employer
approval to reduce the withholdings. An application for a reduction in income tax withheld at
source can also be made if the employee is eligible for deductions or non-refundable tax
credits (for example, periodic contributions to an RRSP outside of payroll deductions, child
care, employment expenses, or charitable donations).

All three forms (the federal TD1, the provincial/territorial TD1 and the Qubec TP-1015.3-V)
require the following information, which can be verified against other documents for payroll
purposes:

name
date of birth
Social Insurance Number

In addition to the basic personal tax credit amount, employees may claim other credits on the
federal or provincial/territorial forms, or both, that will reduce their income tax withholdings
at source for:

having children under the age of 18 (Saskatchewan and Yukon TD1 forms only)
being over age 65
receiving a pension
being a student or supporting a dependant student enrolled in post-secondary studies
being disabled
supporting a dependant or an infirm dependant
living alone (Qubec TP-1015.3-V only)
being a caregiver

While the same credits may be available on the federal and provincial/territorial TD1, the
credit amounts may differ.

If an employee is only claiming the basic personal amount on the federal TD1, they are not
required to complete a provincial/territorial form as they will only be eligible to receive the
basic personal provincial/territorial credit amount. However, Qubec employees must always
complete the TP-1015.3-V, even if only claiming the basic amount.

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While it is the employees responsibility to complete these forms correctly, the employer
should review the forms to ensure that:

the employees name, date of birth, address and Social Insurance Number are correct
the employee has used the correct amounts on the form
the amounts being claimed are correctly totalled
the form does not contain any obvious false statements
the form is signed and dated

The employer should keep the completed forms with the employees records; they are not
sent to the government.

Employees must complete a new federal and/or provincial/territorial TD1 within 7 days of a
change to their personal situation if it affects the amounts they can claim on the form. If they
do not, they could be subject to a penalty of $25 for each day the form is late. The minimum
penalty is $100; the maximum penalty is $2,500. Qubec employees must complete a new
TP-1015.3-V within 15 days after an event that results in a reduction of the amounts
indicated on the previous form, unless the source deduction code does not change.

Note:
The following forms and examples are not necessarily based on the current year. The credits
available and the amounts can change each year, however the method of determining the
total claim amount is the same.

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The Personal Tax Credits Return TD1

There are twelve federal tax credit amounts that can be claimed on the TD1. For the purposes
of this course, students are required to know and understand these credits.

1. Basic personal amount Every Canadian resident can claim this amount. The basic
personal amount is set by the government on an annual basis. An individual who will
have more than one employer or payer at the same time during the year or who is a
non-resident should review the relevant information on the second page of the form.
2. Family caregiver amount for infirm children under age 18 Either parent (but not
both), may claim an amount for each infirm child under age 18, that resides with both
parents throughout the year. If the child does not reside with both parents throughout
the year, the parent who is entitled to claim the Amount for an eligible dependant
on line 8 may also claim the family caregiver amount for that same child who is under
age 18.
3. Age amount Individuals who will be 65 or older on December 31 of the tax year
and whose income for the year is less than a certain amount, can claim the full age
credit. A partial credit is also available depending on the individuals income level.
The TD1-WS must be completed to claim the partial credit.
4. Pension income amount Individuals who are receiving regular payments from a
pension plan or fund can claim an annually specified amount or their estimated annual
pension income, whichever is less. Pension income does not include payments from
the Canada or Qubec Pension Plan, Old Age Security or Guaranteed Income
Supplements.
5. Tuition, education and textbook amounts (full time and part time) Students
who are enrolled at a university, college or educational institution certified by ESDC
and who pay more than a specified amount per institution in tuition fees, can claim
this credit. Full time students can claim the tuition paid in the calendar year, plus an
amount for each month they were enrolled, plus an amount per month for textbooks.
Individuals with a physical or mental disability who are enrolled part time can make
the same claim. Part time students who do not have a mental or physical disability can
claim the tuition paid in the calendar year, plus an amount for each month they were
enrolled, plus an amount per month for textbooks.
6. Disability amount Individuals who use the Disability Tax Credit Certificate
T2201 when filing their personal tax return can claim this amount.
7. Spouse or common-law partner amount Individuals who are supporting a spouse
or common-law partner who lives with them and earns less than a certain amount per
year can claim this credit. A partial credit is also available depending on the spouse or
common-law partners income level.
8. Amount for an eligible dependant Individuals who do not have a spouse or
common-law partner and support a dependant relative who lives with them and earns
less than a certain amount per year can claim this credit. A partial credit is also
available depending on the dependants income level.

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9. Caregiver amount Individuals who care for a dependant who lives with them and
who earns less than a certain amount can claim this credit if the dependant is either
their or their spouses or common-law partners:
parent or grandparent (aged 65 or older) or
relative (aged 18 or older) who is dependant because of an infirmity
A partial credit is also available depending on the dependants income level. The
TD1-WS must be completed to claim the partial credit.
10. Amount for infirm dependants age 18 or older Individuals who support an infirm
dependant aged 18 or older, who is either their or their spouse or common-law
partners relative, who lives in Canada and whose annual income is less than a certain
amount, can make this claim. This claim cannot be for the same person for whom a
claim was made under points 8 (Amount for an eligible dependant) or 9 (Caregiver
amount). A partial credit is also available depending on the dependants income level.
The TD1-WS must be completed to claim the partial credit.
11. Amounts transferred from your spouse or common-law partner Any amounts
not used by an individuals spouse or common-law partner on their income tax return
for age, pension income, tuition, education, textbook or disability amount credits can
be claimed here.
12. Amounts transferred from a dependant - Any amounts not used by an individuals
dependant for the disability amount or any amounts not used by an individual or the
individuals spouses or common-law partners dependent child or grandchild for
their tuition, education and textbook amounts on their income tax return can be
claimed here.

Additional information is provided on the reverse of the TD1 for:

More than one employer or payer at the same time Individuals with more than
one employer at the same time who have claimed the personal tax credits on another
TD1 form cannot claim them again
Total income less than total claim amount If the individuals total income for the
year will be less than their total claim, no income tax will be deducted
Non-residents Information is provided for non-residents of Canada and their claim
entitlement
Provincial or territorial personal tax credits return Information is provided on
whether it is necessary to complete a provincial or territorial personal tax credits
return
Deduction for living in a prescribed zone - Individuals who live in the Northwest
Territories, Nunavut, Yukon or other prescribed northern zones for more than six
consecutive months can claim certain amounts. For more information, see form
T2222, Northern Residents Deductions

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Additional tax to be deducted Individuals can request that more tax is withheld
from their payments
Reduction in tax deductions Information is provided on how to apply for a
reduction in tax deductions, using form T1213, Request to Reduce Tax Deductions at
Source

Example:
Gloria Meyer, an Alberta employee, recently joined the organization and has completed her
TD1 and TD1AB.

In addition to the basic personal amount, Gloria can claim additional credits based on her
personal situation.

Gloria is a single parent, whose 18 year-old son, Mark, is attending college full-time for one
semester (four months) this year. Marks tuition fees for 2016 are $2,000. Mark is expected
to earn $2,000 in 2016 and will not use his tuition, education and textbook credit amounts
when filing his personal income tax return.

TD1 form
Gloria can claim $9,474 for the federal tax credit amount for an eligible dependant for her
son Mark.

The federal education credit is $1,600 ($400 for each of the four months that he is enrolled)
and the federal textbook credit is $260 ($65 for each of the four months that he is enrolled).
Gloria is allowed to claim Marks unused tuition, education and textbook credits of $3,860
($2,000 + $1,600 + $260) on line 12 of her federal TD1.

TD1AB form
Gloria can claim $16,451 for the Alberta tax credit amount for an eligible dependant for her
son Mark.

The Alberta education credit is $2,868 ($717 for each of the four months that he is enrolled).
Gloria is allowed to claim Marks unused tuition and education credits of $4,868 ($2,000 +
$2,868).

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Gloria Meyer

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Gloria Meyer

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The Source Deductions Return TP-1015.3-V

There are six tax credit amounts that can be claimed on the Source Deduction Return TP-
1015.3-V. For the purposes of this course, students are required to know and understand
these credits. The TP-1015.3-V is a form that includes definitions and work charts for
calculating a number of the credits.

1. Basic amount Every Qubec employee can claim this amount. The basic personal
amount is set by the Qubec government on an annual basis.
2. Amount transferred from one spouse to the other The form defines spouse and
provides information on what amounts can be included in the claim calculation. The
spouses estimated taxable income is deducted from a maximum amount, set
annually, to determine the amount that can be claimed.
3. Amount for dependants The form defines other dependant and provides a work
chart for calculating the credit amount.
4. Amount for a severe and prolonged impairment in mental or physical functions
Individuals may claim a credit amount for impairment for themselves or their spouse if
the type of impairment is within RQs criteria, as stated on the form.
5. Age amount, amount for a person living alone and amount for retirement
income Individuals who will be 66 or older can claim the age credit for themselves
and for a spouse who is also age 66 or older. Individuals who live alone or with
dependent children or minors can claim an additional amount. Individuals in receipt
of retirement income can claim that income for themselves, and for a spouse who
receives retirement income, up to an annual maximum. These credits are calculated
using a work chart.
6. Amount for workers 64 or older Workers age 64 or older can claim a credit for
themselves.

Individuals can request on the TP-1015.3-V to have additional income tax withheld. As well,
allowable deductions can be claimed on the form for:

housing deductions for residents of designated remote areas

deductible support payments if the support payments meet certain conditions

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Example:
Luc Laframboise, a Qubec employee, is a new hire. Luc completed his federal TD1 and his
Qubec TP-1015.3-V.

In addition to the basic personal amount, Luc can claim other credits based on his personal
situation.

Luc is married; his spouses estimated 2016 income is $5,000. He has one child, Pierre, age
17, who will be in full-time studies at university for one term (four months) in 2016. Pierres
tuition fees for 2016 will be $2,500 and he expects to earn $625 at his part-time job this year.
Pierre will not be using his education and tuition credits when he files his personal income
tax return.

TD1
Luc can make a partial claim of $6,474 for his spouse.

Pierres tuition fees for 2016 are $2,500. The federal education credit is $1,600 ($400 for
each of the four months that Pierre is enrolled) and the federal textbook credit is $260 ($65
for each of the four months that he is enrolled). Luc is allowed to claim Pierres unused
tuition and education credits of $4,360 ($2,500 + $1,600 + $260).

TP-1015.3-V
Luc can claim an amount transferred from one spouse to the other of $6,550, using the
calculation method provided on the form.

Luc can also claim an amount for Pierre, as he is enrolled full-time in post-secondary studies.
Using work chart 1, Luc can claim a total of $1,630 using the following amounts:

the amount for full-time studies of $2,130 for 1 term

less $500 (80% of Pierres estimated income of $625)

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Luc Laframboise

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Luc Laframboise

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Content Review
The information provided on the federal and provincial/territorial Personal Tax
Credits Return TD1 and the Qubec Source Deductions Return TP-1015.3-V is
used by the payroll department to determine the amount of federal and provincial/
territorial income tax to deduct from an employees income.
An employee can request additional tax deductions at source using the federal TD1
or, for a Qubec employee, the federal TD1 and the Qubec TP-1015.3-V.
In addition to the basic personal tax credit amount, employees may claim other credits
on the federal or provincial/territorial forms, or both, that will reduce their income tax
withholdings at source for:
o having children under the age of 18 (Saskatchewan and Yukon TD1 forms
only)
o being over age 65
o receiving a pension
o being a student or supporting a dependant student enrolled in post-secondary
studies
o being disabled
o supporting a dependant or an infirm dependant
o living alone (Qubec TP-1015.3-V only)
o being a caregiver
While it is the employees responsibility to complete these forms correctly, the
employer should review the forms to ensure that:
o the employee name, date of birth, address and Social Insurance Number are
correct
o the employee has used the correct amounts on the form
o the amounts being claimed are correctly totalled
o the form does not contain any obvious false statements
o the form is signed and dated
The tax credits that can be claimed on the TP-1015.3-V are for the:
o basic amount
o amount transferred from one spouse to another
o amount for dependants
o amount for a severe and prolonged impairment in mental or physical functions
o age amount, amount for a person living alone and amount for retirement
income
o amount for workers 64 or older

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Allowable deductions can also be claimed on the TP-1015.3-V for:

o housing deductions for individuals who are residents of designated remote
areas
o deductible support payments if the support payments meet certain conditions

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Review Questions
8. What does payroll use the information provided on the Personal Tax Credits Return
TD1 and the Source Deductions Return TP-1015.3-V for?

9. The Worksheet for the Personal Tax Credits Return TD1-WS is used to calculate
partial claim amounts for:

a. age
b. infirm dependant age 18 or older
c. caregiver
d. all of the above

10. An employee, who lives in Qubec and works at an employers permanent establishment
in Ontario, will have income tax deducted based on _________ tax rates and file their
personal income tax return, subject to _________ tax rates.

a. Ontario, Ontario
b. Qubec, Ontario
c. Ontario, Qubec
d. Qubec, Qubec

11. True or False. New employees must complete a federal Personal Tax Credits Return
TD1 even if they are only claiming the basic personal amount.

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12. True or False. Employers must send completed TD1 forms to the government.

13. Ingrid Johansson recently started employment with Concord Realty in Calgary. She has
requested your assistance in completing the Personal Tax Credits Returns TD1 and
TD1AB that were included in her commencement package.

Ingrid would like to make a claim for her spouse, who is expected to earn $4,500 in
2016. Ingrid attended college on a part-time basis for four months in 2016 and paid
tuition fees of $1,600.

Date of Birth: 10 August 1957

Social Insurance Number: 285-367-915
(Note: this Social Insurance Number is not valid, but is to be used for this exercise)
Employee Number: 49834
Address: 320 4th Ave. SW, Calgary, AB T2P 2S6

Complete the forms that follow using the information provided.

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Chapter Review Questions and Answers

1. What does the employees signature on an offer letter provide to the employer?

When an employee signs an offer of employment, they are implicitly providing

consent for the employer to collect and use information that is reasonably required
for employment purposes. When the offer letter clearly states that the organization
will be collecting, using and disclosing employee information required by
government agencies, pension plan administrators and benefit carriers, the
employees signature would provide express consent.

2. What types of documents are typically included in a commencement package?

The documents included in the commencement package are typically a

combination of:

organizational-specific forms, such as personal information forms

government forms, such as the federal and provincial/territorial Personal
Tax Credits Return TD1 and Source Deductions Return TP-1015.3-V in
Qubec)
benefit forms, such as insurance enrollment forms

3. Name three forms that are commonly included in a commencement package.

Common forms included in a commencement package are:

an authorization for hiring

direct deposit agreement
a union membership application (if a unionized workplace)
benefits enrollment, if applicable (for example, health and dental coverage,
optional life insurance coverage, the organizations pension plan)
a confidentiality agreement

4. What is the payroll departments responsibility when accepting an authorization for

hiring form?

The payroll department must know who within the organization has the
responsibility and authority to hire, and only accept those forms signed by an
authorized individual.

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5. What document must an employer verify when hiring an individual with a 900-series
Social Insurance Number?

Employers hiring an individual with a 900-series Social Insurance Number must

ensure that the documentation has a valid date and that the work permit is valid
and that all terms and conditions of the permit are being followed.

6. True or False. Union dues can be deducted from an employees pay without their
consent.

False. New employees sign a union membership form or application authorizing the
deduction for union dues.

7. What does an employer need in order to deduct benefit premiums from an employees
pay?

An employer needs the employees written authorization to deduct premiums from

an employees pay. The employees signature on the benefit enrollment forms
authorizes the deduction.

8. What does payroll use the information provided on the Personal Tax Credits Return
TD1 and the Source Deductions Return TP-1015.3-V for?

Payroll uses the information provided on the TD1 and the TP-1015.3-V to
determine the amount of federal and provincial/territorial income tax to deduct
from an employees income.

9. The Worksheet for the Personal Tax Credits Return TD1-WS is used to calculate
partial claim amounts for:

a. age
b. infirm dependant age 18 or older
c. caregiver
d. all of the above

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10. An employee, who lives in Qubec and works at an employers permanent establishment
in Ontario, will have income tax deducted based on _________ tax rates and will file
their personal income tax return, subject to _________ tax rates.

a. Ontario, Ontario
b. Qubec, Ontario
c. Ontario, Qubec
d. Qubec, Qubec

11. True or False. New employees must complete a federal Personal Tax Credits Return
TD1 even if they are only claiming the basic personal amount.

True. The federal Personal Tax Credits Return TD1 must be completed by new
employees and given to their employer.

12. True or False. Employers must send completed TD1 forms to the government.

False. The employer should keep the completed forms with the employees records;
they are not sent to the government.

13. Ingrid Johansson recently started employment with Concord Realty in Calgary. She has
requested your assistance in completing the Personal Tax Credits Returns TD1 and
TD1AB that were included in her commencement package.

Ingrid would like to make a claim for her spouse, who is expected to earn $4,500 in
2016. Ingrid attended college on a part-time basis for four months in 2016 and paid
tuition fees of $1,600.

Date of Birth: 10 August 1957

Social Insurance Number: 285-367-915
(Note: this Social Insurance Number is not valid, but is to be used for this exercise)
Employee Number: 49834
Address: 320 4th Ave. SW, Calgary, AB T2P 2S6

Complete the forms that follow using the information provided.

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Ingrid Johansson

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Ingrid Johansson

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