The answer is yes it is necessary to have your employees complete a TD1Personal Tax Credit form. In fact there is a heavy fine that can be charged against you by Revenue Canada if you are caught not having current TD1 documents completed by your employees.
The purpose of a TD1 Personal Tax Credit form is for the employer to know the amount of tax to be deducted for each employee based on the current legislation passed by the Federal Government. Your employee also has a right to ask for additional tax to be deducted and only by having a current completed form will you know the amount of that extra tax to be deducted.
Federal Governments can and do make changes to the amount of tax a person can claim as a personal deduction. When changes are made new TD1 forms are required and need to be completed by each and every employee.
There are always two TD1 forms to be completed; one is Federal and the other is either a provincial or territorial TD1 form depending in which province or territory your employee has their place of residence.
It is important to know that if your employee is working for another employer that your employee can only complete ONE TD1 tax form. In order to protect yourself, it is your responsibility to determine from your employee which company he or she will be giving their TD1 form to.
A1 Payroll Services can provide you with these forms or you can get them from any Federal tax office or on line.
