If your employee is not required to report
for work to your place of business, then you should use the tax tables for the
province or territory in which your business is located, and from where you
pay the employee's salary. If the employee is working from home in
another province, you would still use the tax tables for the province or
territory from where you pay the employee's salary.
Your "place of business" does not have to be a
permanent location, but can include temporary locations such as a construction
If your business does not have a permanent establishment in
Canada, but you have employees working in Canada, then you would use the tax
tables titled "In Canada Beyond the Limits of any Province or Outside
Canada Payroll Deductions Tables".
Due to the fact that the employee will file their tax
return for their province of residence, the amount of taxes deducted at source
may be too much or too little. If there will be a big difference at the
end of the year, the employee can request either increased or reduced income
tax deductions. Increasing tax deductions can be done by requesting this
on the TD1 form.
To reduce tax deductions in this situation, the employee must complete a Letter
of Authority which takes Canada Revenue Agency (CRA) 4 to 6 weeks to
For more information and examples, see the link below to
the CRA information on this topic.
For payments of pensions and retiring allowances, the
provincial or territorial tables of the recipient's province or territory of
residence should be used.