TaxBuddy Knowledge Base
Incme Tax Withholding: Paycheque Basics
Why your 'take-home pay' is lower than your salary and how to adjust it.
When you receive a paycheque, your employer acts as an agent for the CRA, withholding taxes, CPP, and EI premiums. This ensures that the government receives tax revenue throughout the year, rather than just in April.
1
Payroll Deductions
The three primary items removed from every Canadian paycheque.
Income Tax: Based on federal and provincial tax brackets.
CPP Contributions: Canada Pension Plan (CPP1 and CPP2 in 2025).
EI Premiums: Employment Insurance for future benefits.
2
The TD1 Form
This form tells your employer how much tax to withhold.
Personal Tax Credits: Claiming the basic amount or tuition.
Adjusting Amounts: You can ask for more tax to be taken off.
Multiple Jobs: Ensure only one employer claims the basic personal amount.
3
Customizing Withholding
You can change how much tax is taken off under specific conditions.
Form T1213: Request a reduction if you have large RRSP or childcare deductions.
Refund vs. Balance: Withholding aim is to have a zero balance owing in April.
T4 Box 22: Shows the total income tax withheld for the year.
Check your payroll setup
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