All employees are eligible for basic personal tax credits on the federal and provincial levels. This information is commonly collected via a TD1 Form provided by the Canada Revenue Agency (CRA).

At the provincial level, most have a similar form name with their province code next to it. For example, TD1ON is for Ontario.

The TD1 form is a document your employee fills out when they start their new job or when they experience a significant life change that affects their tax situation. It helps you calculate the amount of income tax to deduct from each pay.

It is not the employer's responsibility to fill out this form for their employees; however, you can support your employees by ensuring they understand why they should. It’s also important to encourage employees to review and update their tax forms as needed, especially after significant life changes such as marriage, divorce, or the birth of a child.

Employment Hero will automatically apply the Basic Personal Amount for both the federal and provincial forms, though remember that this amount can change each year.

If the employee has submitted a Personal Tax Credits Return form claiming an amount other than the Basic Personal Amount, you’ll need to enter this information into Employment Hero manually.

To do this:

1. In People, click on Employee list and then use the search bar to find the employee you require and click on their name.
2. Scroll down to the Pay & compensation section and click the Taxes, credits & exemptions tab.
3. In either the Federal or Provincial section, click the + Add button to open the creation window for personal tax amounts.
   • If they gave you the Federal form, fill in the amounts in the Federal section.

   • If the employee has entered a value on the form in the field Additional tax to be deducted on the TD1 provided, then enter this value into the corresponding box.

     The additional taxes to be deducted need to be entered on a Per Period Basis, not for the full year.

   • If the employee has entered a value on the form in the field Deduction for living in a prescribed zone on the TD1 provided, then enter this value into the corresponding box.
4. If they gave you the Provincial form, fill in the amounts in the Provincial section in the same way as you entered them in the Federal section.
5. When you’re ready, click the Create button.

That’s it! The tax credit will now appear on the employee’s profile, and it will adjust the amount of tax being withheld for them.

If your employee has more than one employer or payer at the same time and entered a “0” (zero) in the Total Claim Amount field on their TD1 form, then you would enter "0" for the employee’s Federal Total Claim Amount.

If they submitted the provincial form, you should do the same for the indicated amount under the relevant province.

If an employee indicates on their TD1 form that their total income is less than the total claim amount, you can update this information from their employee profile.

1. Scroll down to the Pay & compensation section and click the Taxes, credits & exemptions tab.
2. Click on the pencil icon to edit the fields and toggle on the Income tax - do not withhold from employee field.

Occasionally, an employee may provide you with a letter from the CRA authorizing a reduction to their income tax at source. To learn how to enter this information in Employment Hero, check out this article.

Additional Information

• When you enter Personal Tax Credits into Employment Hero, we will apply the tax credits only to the applicable year. For example, Personal Tax Credits entered for 2024 will not be used when calculating a 2025 payroll. Every new tax year, Employment Hero will update the Basic Personal Amounts in accordance with the CRA's TD1 releases.
• The employee is responsible for letting you know if there are any changes to their personal tax credits.
• Any changes made in Employment Hero are applied to the next payroll processed.
• If an employee is unsure how to fill in their personal tax forms, they should contact an accountant for assistance.