July 1 Source Deductions: Help Employers Keep More of First Dollars Earned

Revised payroll deduction tables are now available from CRA for use by HR departments, bookkeepers and payroll clerks, who will want to ensure, at the same time that they distribute staff memos, that they highlight any changes to the rules and encourage employees to make adjustments to their TD1 Tax Credit returns.

The federal payroll deductions have not changed since January, 2011, but the provinces of Manitoba, Nova Scotia and Saskatchewan have made adjustments effective July 1, 2011. Make sure that you use the updated TD1 forms for new hires in these provinces after July 1^st. Even though the changes have not been legislated into law, CRA recommends that the new payroll formulas be used to calculate withholding tax beginning with the first payroll in July. The new provincial amounts and formulas, once they become law, will be retroactive to July 1, 2011.