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Business -> Payroll taxes -> Which provincial or territorial tax tables should be used?

Which province's or territory's tax tables should be used for my employee?

The employee's province or territory of employment depends on whether or not your employee is required to report for work at your place of business.

If your employee lives in one province, but reports to your place of business in another province, then use the tax tables for the province of your place of business.

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 site.

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 process.

For more information and examples, see the link below to the CRA information on this topic.

Non-employment income

For payments of pensions and retiring allowances, the provincial or territorial tables of the recipient's province or territory of residence should be used.

 

CRA Resources:

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Payroll Deductions Online Calculator which is free of charge

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Calculating deductions

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Which provincial or territorial tax tables should you use?

 

Revised: September 05, 2012

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